SMALL business owners should look to contract hire as a way to finance vehicle fleets during tough economic times. The Fuelcard Company’s Jakes de Kock files this special report on contract hire.DURING the credit crunch and recession, small businesses can save on costs by using contract hire.

Contract hire, or leasing, is a fixed cost scheme allowing small firms to budget more effectively.

One monthly payment can cover most costs with businesses only needing to insure and fuel the vehicle. In addition, contract hire finance companies enjoy advantageous VAT arrangements. This includes being able to recover VAT at the current rate when a car is purchased. So the vehicle is effectively being bought at less cost.

This reduction, in the amount of capital to finance, is passed onto the customer in the form of a lower rental to pay.

As it’s vital for small businesses not to over commit funds, contract hire makes sense. The majority of costs are pre-calculated on a fixed monthly basis, so it eliminates nasty surprises.

Another way for small business owners to benefit from contract hire is that they can obtain better deals on higher priced cars than if they were buying the car outright. The reason? More expensive cars often have lower rental charges than cheaper ones because the contract hire firms anticipate the more expensive cars will have a higher future resale value – the higher the value, usually the less the monthly rental will be.

Further information

The Fuelcard Company (www.fuelcards.co.uk) is one of the largest commercial fuel card resellers in the United Kingdom. The Fuelcard Company recently joined forces with the Federation of Small Businesses (FSB) to offer members free fixed price fuel cards and preferential prices on fuel.

Read the Advice Centre article Why contract hire can save you money

Also read our Special Report on The cost of buying company cars