Many small to medium sized enterprises (SMEs) still choose to buy their cars and vans outright. It is sometimes seen as the simplest option as the fleet is not locked into any contracts and they can reclaim VAT on maintenance and repairs.

However, there are a number of downsides to outright purchase. The buyer takes the full risk on the car's resale value and repair costs, has to manage the fleet   administration itself and ends up with tens of thousands of pounds of capital tied up in vehicles - which could be better used in other areas of the business.

This is why more and more businesses are looking at leasing options such as contract hire or finance lease. The various leasing types differ in the details, but they all share considerable benefits:

1) The leasing provider can manage the admin, maintenance and servicing of the vehicles, freeing the company to focus on its core business. Few SMEs can afford a dedicated fleet manager.

2) Regular monthly payments mean that fleet costs are pre-agreed and set for the term of the contract, so budgeting is made a lot easier.

3) Vehicles are financed out of income rather than capital sothe company is free to invest in its business rather than its motoring.

4) Businesses may also have greater control over vehicle options and maintenance, which will lead to safer vehicles. Duty of Care is a particular issue for smaller and medium sized firms, where there may not be a specialist fleet manager to look after the health and safety issues.

In addition, with contract hire the residual value risk is taken away from the fleet, and the funding is off balance sheet, so it improves gearing ratios.

A fleet is more than just financing cars - it also involves health and safety issues, considerable administration and complex tax factors. Surely it makes sense to leave all that to the experts?

Call us now for advice on the best funding options for you