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Cost effective vehicle acquisition

Cost effective vehicle acquisition
01 November 2018

If part or all of your job role involves obtaining vehicles for your organisation’s fleet have you ever stopped to consider why the current method of acquisition is employed instead of another?

You may cash purchase or use one form of finance or another so, if you are thinking about whether your current way of acquiring vehicles is the best method for you or if there’s another way then what are the options?

Leaving cash purchase to one side, if you’re financing figuring out whether you want to take ownership of the vehicle at the end of the contract, or have the option to, is probably the first place to start because, in essence, outside of contract purchase or contract hire every other finance product is likely to leave you with some type of vehicle disposal to oversee at the end of the contract.

In simple terms, Hire Purchase (or HP) means you simply finance the asset over the term and own it at the end, Finance Lease will require you to sell the vehicle on (forgetting keeping it on a peppercorn rental) at the end bearing any loss and with Lease Purchase you’ll pay the balloon payment, or GFV, and own the vehicle.

So, if you simply want to use a vehicle for a given period, wrap all the payments for finance, maintenance, etc up into one nice, simple monthly payment and hand it back at the end before starting again without the hassle of having to sell one vehicle on before having to find another one to buy, contract hire or contract purchase could be your solution.

Taking it on one stage further, contract purchase allows you the option to hand back the vehicle at the end but, whilst some providers can include maintenance in the same way as contract hire, it doesn’t include road fund licence so isn’t as administration free as the leasing company takes care of this for you with contract hire.

Lastly, should you decide to go down the contract hire route how do you ensure you get competitive rates but maintain a uniform level of service from just one supplier? Simple, don’t use just one leasing company or use a provider that can make a number of leasing companies available to you.

You may want to see what a fleet management company could do for you.