What is short-term leasing?
- The provision of a car from three months to six months
- Longer periods are available – known as medium term leasing – from six months to 18 month periods
- Short-term leasing is a useful way for SMEs to stay flexible with their company car fleet
- Providers vary in the cars offered: some will be brand new, others can be up to 18 months old
- Full maintenance can be provided to offer SMEs peace of mind fleet management of the car
UNDERSTANDABLY, there’s an increasingly cautious mood among businesses over 2017 prospects.
While 2016 finished strongly, and growth is forecast for 2017, there are many uncertainties in the year ahead.
Suren Thiru, who is the head of economics for the British Chambers of Commerce, reckons that there remains a high degree of uncertainty over the near-term outlook.
He says: “The recent resilience in UK growth is expected to weaken. Higher inflation and continued speculation over Brexit will weigh on the UK’s growth prospects, with consumer spending and business investment likely to be hardest hit.”
Such clouded prospects are the reason why some car leasing experts are predicting a requirement for more flexible leasing demand that allows SMEs to move quickly with the economic headwind.
Phil Jerome, managing director of Meridian Vehicle Solutions – a supplier of short-term leases – told me: “The effects of Brexit are so difficult to forecast that the majority of businesses are adopting a wait-and-see approach to this year, something that is likely to affect all kinds of areas from capital investment to recruitment.
“What medium-term rental offers against this backdrop is a flexible solution for companies that don’t want to enter into longer-term arrangements.
“If you are recruiting someone and need a car for their probation period, for example, or if you are employing someone on a fixed-term contract, then it is a very viable product.”
Now, Jerome runs a business dedicated to short- and medium-term leasing. So you can see where he is coming from.
But undoubtedly the benefits of short-term leasing are really useful for SME businesses wanting to stay flexible.
Where once there was just either contract hire – car leasing for a fixed period of three years with expensive get-out clauses – or daily rental, it’s the bit in the middle where many smart businesses are now gravitating.
“In most cases, the monthly cost of short-term rental of between one to six months is only marginally higher than a traditional three year/60,000 mile contract,” says Jerome.
It’s certainly an area where more suppliers are offering short-term leasing facilities to SMEs.
“We have gradually shifted into a more sophisticated model where a wider range of suppliers have created a wider range of provision, offering different lengths of hires and leases across a wider range of vehicles,” continues Jerome. “All of this can only be good for fleets.”
In Meridian’s case, they only offer three models. All are brand new. And premium.
- Mercedes A-Class
- Volvo V40
- Volvo XC60
You can see the appeal – who wouldn’t mind being handed an A-Class if they are working on a short-term contract? Or if you’re a company car driver between vehicles thanks to manufacturer lead times, then an XC60 would be a very handsome set of wheels on your driveway.
The other area where short-term leasing can also help is in the provision of cars for start-ups and new businesses. Usually, without a trading record, it can be very difficult to access car leasing deals.
Many short-term leasing companies don’t have such a problem.
So short-term leasing is worth exploring: it can keep you mobile and flexible all at the same time.
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