Ease of leasing a vehicle compared to ownership.

Ease of leasing a vehicle compared to ownership.

Although now far fewer companies are buying cars and not having the leasing route, which in most respects is a much simpler option, it is still business to do. Why is this so? Well in some cases the company is cash rich and do not see any sense in using any form of funding for the company's vehicles. It is very rare cases, it may be that the company car is going to be done by such a high mileage, the purchase looks more attractive.

For most businesses, leasing, or is commonly known as the United Kingdom, contract hire is a much better option. There are many uncertainties attached to the vehicle owner, and most important is the most important question of what the vehicle could be worth when they come to sell it?

There are plenty of guides to future values, such as the CAP, but the vehicle be worth what they are predicting a three-year period? The difficulty in the CAP is that they can only assumptions based on what they know. They can not take into account the sudden deterioration in the economy or things, such as the 2008 fuel costs of the shock.

Try as they may accurately access the future values of the leasing companies sometimes residual values terribly wrong and they suffer the financial consequences. What do they want to do, but can not, it is built more flexibility, so that the unknown factors that can change the future values. However, the contract hire is a highly competitive industry, and they lose their competitive edge, they were trying to protect themselves in this way.

If the main differences between the contract hire and ownership of vehicles, the disruption the company's staff, when it comes from the sale of vehicles at the end of their useful life. Someone, the company must be given to job destruction, and whether it will consult the dealer to get the best part of the exchange terms, which also sell to the trade or privately advertising is still the staff from their normal duties. Of course, to get the best price, the cars do not normally need to be ready for sale.

Can not be much consolation to full motoring costs; to know from the beginning, which is the vehicle will cost, right down to the last penny, which is not possible to purchase a vehicle.

It is also the capital cost seems strange that some of the companies to commit something to the order of 350,000 own money in a relatively small fleet perhaps 20 cars. Some people use car finance company, or what is better known as hire purchase or finance lease agreement, then at least they did not commit their own capital, but it does not help with the very real worries of the residual values.

All the existing benefits of the contract hire, such as off-balance sheet borrowing fully budgeted cost and the vehicle with a maintenance contract, a considerable reduction in staff time, why more companies do not use this method? It is perhaps only by the fact that some companies are still not fully aware of all the benefits of this extremely versatile financial method.