THE EASE and flexibility of a contract hire agreement over three- to 12 months is winning over small businesses – particularly during the recession.

With uncertain cash flows and lack of clarity over future business, being able to swap in and out of a car leasing contract has had obvious appeal.

Equalease, a leasing company that specialises in medium term contract hire agreements, says the number of leases being renewed on a rolling basis has doubled during the recession.

A year ago, rolling three and six month leases represented 28% of the company’s business, said Equalease. But now the percentage was closer to 57%.

Managing director Paul Ashton said: “Looking behind the figures, anecdotal evidence suggests that the increase has been caused by two factors.

“One is that the employers have been using rolling medium term leases as a way of postponing the decision to buy or long-term lease a new car until their business prospects become clearer. We have seen customers following this strategy for both existing employees and new recruits.

“The second is that we now have some customers, especially SMEs, who are using medium term leasing as their primary source of acquiring business cars. They are happy to pay the slight premium over a traditional three-year lease in order to retain the high degree of flexibility that medium term leasing brings.”

Mr Ashton said that small business dynamics were changing the company’s profile.

“Before the recession, the majority of our cars went to three key customer groups: new employees on probation; those waiting for a new car with a long build time; or to people who liked to change their vehicle regularly and were happy to pay a premium to ‘lifestyle’ lease,” Mr Ashton said.

“Now, we are operating much more at the sharp end of the business car market where acquisition decisions are being driven almost entirely by financial factors. The flexibility that we offer is finding favour with all kinds of companies.”

Equalease said that a typical price for a Volkswagen Golf 1.9 TDI Match – between three and 12 months old – was £330 per month based on a six month lease at 1,250 miles per month.

Equalease reports upswing during recession