Why Companies Are Turning To Contract Hire

Tuesday, 7. June 2011

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One of the biggest challenges faced by businesses and consumers is access to finance. Vince Cable, Business Secretary, appeared before MP’s recently and strongly expressed his disappointment that the banking industry was still not honouring its pledge to lend more money to businesses. Referring to British Banking Association (BBA) figures he explained that £4.7 billion less was lent to companies in March this year compared to February. He said, ‘In terms of access to finance, there sis still a serious problem and that is confirmed to me every time I meet business people around the country.’

This is clearly a reason why some companies are turning to contract hire as a preferred way of financing their fleet. As some companies are moving back into growth this has to be financed. If you are a manufacturing company and more orders start to arrive you need to be able to finance the stock and increased staff costs.

With lack of support from banks, companies are looking at alternative ways to finance their vehicles that enables them to free up money for investment. Similarly, with consumers, money is needed to finance everyday living so if you have a loan or an overdraft with your bank it makes sense to turn elsewhere for your finance such as a leasing company.

Use too much of your bank’s resources and you may find that there is nothing available when you have an emergency! The government needs to take some positive action and you need to take care over the way you finance your vehicles. Don’t put all your eggs in one basket. By Graham Hill