how to fund your fleet - mercia fleet management, staffordshire

How are you Funding your Fleet?

There are so many options available! When it comes to funding your fleet, you’re not strapped for choice. Which one is the best? Well, there is no single answer, it all depends on your circumstances. Let’s have a look at some of the most popular.

Outright Purchase

With outright purchase, you simply buy the vehicle. You then run it until it’s no longer economically viable, at which point you sell it. This ties up cash, but if you’re cash-rich then you’re saving more in interest than you would get from the bank; you can also write down in 12 months if it’s a cleaner vehicle. However, few companies want to tie up cash in this way and you may lose a lot of money when you sell on as you bear the full risk of the purchase.

Hire Purchase/Finance Lease

We’re lumping Hire Purchase and Finance Lease together for simplicity. Although they are slightly different, both normally end up with you owning the vehicle. They’re ideal when you have erratic usage or vehicles are worked hard because they have little value at the end. You effectively loan the purchase price from a finance house and then pay for the vehicle. You can sell at any time so it’s flexible, but you would have to settle any finance when you sell. As well, the sale value may not cover the payment.

With all of the above options, you need to pay and manage maintenance and tyres separately, along with road tax.

Contract Hire

Contract Hire is the most popular way to procure a new vehicle with many good reasons. However, it’s not best in all scenarios. With contract hire you never own the vehicle; you commit to long-term hire and pay a monthly amount that often includes maintenance too. You never own the vehicle, which is great when it comes to handing it back as you’re not exposed to any sale risk. However, it’s not great if you hand it back bashed from use as you may pick up a hefty refurb bill.


If you have more seasonal demand, hire can work well. Broken down to a daily basis, costs are high. If you just need a vehicle for a few days or weeks, then hire can be perfect. You simply pick up a car, often with everything included (even insurance) and pay a day/month/quarter rate for the privilege. It’s cheap if you only need a vehicle occasionally, but you won’t get a lot of choices. You generally book a “typical” vehicle and get what you’re given.

In reality, most companies opt for one of the above. We find that most would find a “blend” of the above better suited to their needs. Speak with us to discuss your circumstances; we’re delighted to help!

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