A recent survey by a major finance house has revealed that the number of companies choosing to outright purchase their vehicles has dropped dramatically. In fact, in the latest research, it shows that only 17% of the 300 companies surveyed now use outright purchase, compared to 38% in the last quarter of 2009.
In the same period, the use of Contract Hire has risen from 42% to 66%
In a statement from the Finance House who conducted the survey, it was said that “outright purchase is a good option when a company is cash rich or can borrow money cheaply and is more comfortable to carry the residual risk on the vehicle. In the current economic climate, there are fewer companies who can tick all these boxes”
It went on “it’s broadly the same reasons that contract hire is growing in popularity. Cars and vans can be acquired with minimum upfront outlay, monthly expenditure is fixed and determined in advance, and the potential burden of residual risk is removed”
OK, I know contract hire and leasing is what we provide here at BVL (so this is all music to our ears), but in all honesty, why would you want to outlay capital on an asset that depreciates like a stone, when you can use the huge buying power of a leasing company such as ourselves and simply lease the vehicle? Surely, the objective is not ownership, but rather to be able to have the use of the vehicle for the period you need it and in the cheapest possible way (and with the least amount of hassle) and that’s what contract hire is.
When the financial climate is as it is, you should keep your capital in your business, to use to fund the operations of your business and to maybe help with anything unexpected and Contract Hire & Leasing lets you do that.
So let’s have no more of this! Next time you need a car or a van to be used in your business, at least ask a contract hire & leasing company to send you some figures and at least that way you can see what it costs and who knows, you could also become part of the statistic of those who have made the switch!
