Five ways an SME can save money when financing a vehicle.

Compare Contract Hire.com advises small businesses to consider contract hire when financing their next vehicle.

There are 5 reasons as follows;

1. Contract hire is a fixed cost motoring scheme, allowing you to budget more effectively i.e. like fixing your mortgage rate. One monthly payment can cover most costs. All you do is insure and fuel the vehicle.

2. The contract hire finance companies recover VAT at the current rate when they purchase a car 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. (N.B there is some restriction on recovering the VAT that is added to the monthly finance rental).

3. A more expensive car may actually have a lower monthly contract hire rental than a cheaper costing vehicle, due to the future forecasted re-sale value that the finance house predicts. Therefore you can drive a better car than you think you can afford, by searching by monthly rental, rather than vehicle cost.

4. Cars lose money over time so why invest your hard earned cash in an asset that reduces in value?

5. The FSB (Federation of Small Businesses) has recently advised small to medium sized companies to shop around the market to manage their costs. This good advice can be applied to vehicle finance as well and getting four or five quotes from various contract hire companies is advised before ordering your next vehicle as prices may vary considerably.

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