The flexible alternative to vehicle finance

With external costs increasing faster than the eye can see, the question of how to finance a fleet of vehicles is increasingly playing on the minds of fleet managers and business owners nationwide. While vehicle finance may be an appealing alternative to buying a fleet, there is actually a more attractive option that brings with it more benefits. 

Enter flexible vehicle hire, an option that has never been more pertinent than in today’s climate. Over the last few years we have seen a remarkable increase in commodity price increases… Fuel, for one, has increased in price by 34% since 2009, tyres are up 15%, oil and lubricants up 25%, breakdown and recovery up 15% and braking parts and consumables are up by 5%. This all makes for some rather sobering reading if people are trying to balance the cost of financing a fleet too and, considering that 90% of businesses still own some or all of their vehicles, they’ll be depreciating in value at the same time as we’re facing these increasingly harsh economic pressures.  

But, alas, there is an alternative to vehicle finance and it comes in the form of flexible vehicle hire. Soaring in popularity for years now, partly due to the unstable economy, which is unfortunately showing little sign of recovery in the near future, more and more businesses are opting to hire vehicles as and when they need rather than commit to contract hire or finance agreements that allow little flexibility should times get tough. For businesses that may see seasonal fluctuations, having the flexibility to add to or remove vehicles from your fleet at any time without penalty could be the make or break factor. And it isn’t necessarily the case that because external costs are going up, fleet suppliers put their costs up too… buying in volume enables them to counteract price increases, making flexible vehicle hire even more relevant and beneficial in the current market.

Businesses’ needs change with the seasons – and the extent of this can’t always be anticipated – but, for financial reasons, a fleet needs to be utilised 100% of the time to increase efficiency. This is often why hire rather than purchasing and financing fleets makes more business sense. There is no depreciation, no need to worry about residual value, risks are removed, and the support of the supplier is guaranteed should emergency back up or replacement vehicles be required. Really, it’s a win-win situation with the constraints of contract hire and finance agreements completely removed.

Flexible vehicle hire is where the clear benefits lie for those who aren’t always able to forecast their fleet and want an element of ‘wiggle room’ rather than be tied down to a specific contract linking them to x number of vehicles for x years, and finance agreements costing £x per month. Some of the benefits of flexible vehicle hire include:

- The ability to control fleet costs and forget about forecasting fleet.
- Flexible hire periods and fleet sizes
- Access to the latest fuel-efficient vehicles, which may have been previously unaffordable
- Enjoying customised vehicles, for example including tow bars, roof racks, beacons and livery – all tailored to individual requirements
- Freeing up budget that would otherwise be spent on purchasing (or financing) vehicles

With no contract, no risk and no ties, flexible vehicle hire is the best step for smart businesses that don’t want to be paying over the odds in interest, and it brings with it the benefits of owning a fleet without the commitment factor. Fleet suppliers can often support customers with insurance needs too, taking the onus off them and freeing up more of their valuable time.

Fuel cards may be another sensible option to think about alongside flexible hire, helping to control costs even more with the added bonus of reducing emissions. This is particularly noteworthy at the minute, following the closure of the Coryton refinery in Essex and the onslaught of panic petrol buying that’s sweeping the nation as petrol prices are anticipated to rocket even further.
Key benefits of fuel cards include:

- Understanding and controlling fuel costs
- Tracking fuel purchases nationwide with online management
- Efficient VAT recovery - no need to collect till receipts
- Paying for fuel directly instead of refunding your employees
- Having more accurate costs and getting rid of over inflated expense claims
- Controls can be installed to enable fuel-related purchases only
- Significant reductions in administration through consolidated invoicing

This is just a little bit of food for thought for businesses wincing at the thought of vehicle finance. But one thing’s for sure; the benefits of flexible vehicle hire grow at a similar rate to the spiralling external costs we’re currently seeing in the market. People need to be smarter, think about cost-saving measures and look at the benefits of having an all inclusive fixed cost that covers servicing and MOTs as well as the actual rental, so that they can forward plan for what’s set to be another challenging year. 

visit www.northgatevehiclehire.co.uk or follow Northgate on Twitter at http://twitter.com/northgatevhire.