Contract Hire vs Outright purchase: which team are you?

Tags: contract hire

In the spirit of the 2018 World Cup, we size up two favourites of the fleet world: contract hire vs outright purchase.

In terms of vehicle funding, outright purchase ran the show for decades until businesses became wise to the benefits of contract hire. It was in the early 1980’s when business contract hire began to boom and since then contract hire has grown to be the most popular method of vehicle funding. However, despite contract hire’s popularity, there are still many fleets today who still purchase their fleet outright.

Why do businesses outright purchase their fleet?

Purchasing company vehicles outright typically requires a substantial outlay of capital to meet the vehicle’s list price. But once you have met the list price, the vehicle is yours. Including in that ownership is the responsibility for all of the following:

• Taxation
• MOTs
• Servicing
• Maintenance
• Repairs
• Breakdowns
• Accident Management
• Disposal

With ownership comes the flexibility to do whatever you wish with the vehicle with no restrictions to mileage, vehicle customisation, vehicle condition and of course, you can sell the vehicle at any point and keep the cash.

How can businesses benefit from contract hire?

The fundamental difference between contact hire and outright purchase in the initial cash injection needed to purchase the vehicle. In the modern age, smart businesses want to avoid shelling out large lump sums of money and use their cashflow more positively by investing that valuable cash back into the business.

The other main benefit of using contract hire is budgeting. With contract hire you have one fixed sum that includes all your motoring costs. This allows businesses to know exactly how much their fleet will cost each month, without any hidden surprises.

Contract hire also presents businesses with the possibility to utilise newer, cleaner and more efficient vehicles. Not only can they save businesses money in running costs but also helps to keep employees happy and improve the public image of the company.

Who are you supporting this summer?

We’re of course backing England for World Cup glory but in terms of fleet, contact hire wins for us every time.

But we’re keen to find out what you think. Vote for Team Contract Hire or Team Outright Purchase by clicking the blue buttons below:

Are you able to...	Or do you...
Benefit from one fixed cost per month?	Own your vehicles?
Offer newer, more sophisticated cars to your employees?	Take the financial hit when it comes to vehicle depreciation?
Free up capital in your business by spreading fleet costs over a fixed term?	Manage all admin, service bookings, maintenance and repairs?
Refresh your vehicles every 2, 3 or 4 years?	Run your company cars and vans for as long as you can?

To discuss how moving to contract hire could benefit your business, contact us on: