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596 – SME Networking and business car leasing

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23 June 2011

Small business owners enjoying the SME business networking event organised by the Best of Richmond

Best of Richmond networking event: business owners said they were more and more inclined to use leasing of various types rather than buy a car

Rise in small business owners looking to lease their next car

I WENT along to an SME networking event earlier this week. Organised by The Best of Richmond, it’s one of a series of monthly networking events around the borough.

There were 70 small businesses there – a good turnout and very relaxed the event was, too. While I wasn’t looking for business per se, I was interested in what these small business owners were doing with their cars – and how they were financing them.

And one of the things that came across very clearly was that the idea of owning a business car was not on their agenda – leasing very much was, either on a personal lease (most) or through the business on a contract hire or finance lease.

“I really don’t want the capital cost of a new car,” said one; “Owning a car doesn’t make much sense anymore – I’d rather pay for using the car and have a new car every three years,” said another.

It was all very interesting stuff – and supported the Finance & Leasing Association’s own findings: that cars were being put on personal leases with HP reducing in importance.

“Car buyers are primarily focused on getting a good deal on finance rather than ownership, said Paul Harrison, head of Motor Finance, at the Finance & Leasing Association (FLA).

Paul said the FLA’s latest statistics showed a shift in customer choice. In April, new car leasing and Personal Contract Purchase (PCP), where the car remains the property of the finance company, were up by 41% and 10% respectively. In contrast, Hire Purchase was down by 31%. Leasing and PCP together made up 70% of finance provided for new cars bought through dealerships in April.

“Car buying behaviour is changing. Motorists looking for a new model do not always want to be tied into an agreement to buy. Currently, the most popular dealer finance options involve renting the car for the duration of the contract, and deciding at the end whether to buy it, trade it in, or hand it back to the dealer,” continued Paul.

“Economic conditions also mean many people are choosing shorter-term contracts to help them keep greater control of their budgets, and ensure that their financial commitments reflect their personal circumstances.”

A PCP is certainly a good idea – it’s how we’re funding my wife’s Fiat 500, which she uses for her interior design business, which she runs alongside Business Car Manager duties.

If you want to know more about these financing methods, have a look at our Knowledge Bank with our range of free pdf downloads.

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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