Leasing Becomes More Competitive Saving Money

Saturday, 20. September 2008

OK now I’ve filled you with doom and gloom let me give you the good news. Whilst this new superleasing company (Lloyds/TSB Lex) will dominate the market, because of the scale of their operation they will have to concentrate more on the large fleets rather than the SME and consumer sectors, thereby increasing competition amongst the smaller players. As a result contract hire companies such as Leaseplan, Lombard, Masterlease etc will concentrate on model specific deals. Whilst the superlease company will arrange the best terms across an entire range the smaller companies will get a great deal on a specific car that the manufacturer wants to concentrate on as he is overstocked or about to facelift. So all is not lost and leasing will almost always provide a much better and safer deal than any other form of finance on new cars, especially during harsh economic conditions. But I’m sure you won’t just take my word for it so this is what Alex Baldock, new head of Lombard Vehicle Management had to say; ‘Although many businesses lease vehicles, a substantial number either do not lease all the vehicles they might, or even still purchase outright. In addition, many have large numbers of drivers on a cash for car option, which is increasingly becoming more costly than providing an efficient fleet car on lease. With vehicle fleets accounting for such a high proportion of business overheads, any of these policies will mean that a business is making life unnecessarily difficult for itself in worsening economic conditions.’ Baldock went on to say ‘Leasing really comes into its own in difficult economic circumstances, especially where vehicles are concerned. It not only frees up capital at a time when the cost of funds is increasing but removes heavily depreciating assets from the balance sheet – at a time when residual values are in decline. A leasing company takes the unpredictable risk on behalf of its customers, along with increases in peripherals such as VED. By fixing the majority of costs, leasing provides valuable certainty at a time of increasing unknowns.’ So there you have it and of course much of the argument applies to consumers also, stabilising costs and removing uncertainty. By Graham Hill