Surprisingly some companies continue to buy their company cars rather than lease them. Apart from certain cases when purchasing can be more cost effective – one example being when the vehicles are going to be doing very high mileage – it is hard to understand why they opt for this method of acquiring company vehicles.

For most companies, leasing or as it is more commonly called in the UK, contract hire is a far more effective option. There are many uncertainties attached to vehicle ownership; the main one being the most important question, what might the vehicle be worth when they come to sell it?

It’s very difficult, who could have predicted the oil price in 2008 and the effect it had on some of the larger cars, or the dramatic downturn in world economies that followed shortly after. CAP which is used extensively as a guide in the motor finance industry is very accurate when it comes to predicting future values but they can only base their predictions on what is known at the time.

The same applies to leasing companies; they try to take everything into account when it comes to residual values. Sometimes they get it right and on other occasions they suffer huge losses. So why don’t they build a large margin into the price to allow for what may lay around the corner and hit residual values? The answer is simple; the contract hire market is such a competitive business that they cannot do this and still retain market share, the market is very price sensitive.

If a company owns its cars rather than contract hiring them, it is when it comes to dispose of the vehicles, that there is most disruption to staff time; having to advertise and prepare the vehicle for sale and deal with prospective purchasers, or alternatively the financial loss of having to dispose of cars through the trade and accept a significantly lower price.

There can be a lot of comfort in having fully budgeted motoring costs; knowing at the outset what a vehicle is going to cost, right down to the last penny, which is just not possible when purchasing a vehicle.

There is also the question of capital outlay it seems extraordinary that some companies tie up something in the order of 350,000 of their own money on a relatively small fleet of perhaps 20 cars. Some do use car finance or what is better know as hire purchase or a finance lease, so at least they do not tie up their own capital but it doesn’t help with the very genuine worries regarding residual values.

Considering all the benefits attached to contract hire; being able to accurately plan your future motoring costs and reduce staff time spent on running the fleet, by opting for a maintenance contract, one wonders why this form of financing is not more widely used.

Women are shown to be worse drivers than men in certain studies carried out, and better in others. To decide who the better driver is, first you have to define, “better”. For example as a Contract Hire Company we consider women to be better drivers because they cause us less problems; in our experience they write off fewer cars and we have less administration because they incur fewer speeding fines.

Psychologists, who carried out a study into men and women’s driving skills at Queen Mary University London, came down on the side of men drivers. They said that not only women but also gay men didn’t do at all well when driving in a strange environment. They concluded that women’s navigational skills were inferior to that of men. This in itself doesn’t mean that they are worse drivers, because they probably drive slower when lost and speed seems to be a factor in most serious accidents.

Reading University’s Frank Mc Kenna’s conclusions were different; he said that women were generally better drivers except when it comes to parking and manoeuvring a car. But of course as he said “few people die parking” This is probably the reason why women have more accidents of a minor nature. Just how many, nobody really knows, because whereas a driver has little choice but to report a major accident to the insurance company, minor accidents often go unreported; in view of the policy excess it is often not worth making a claim.

Women generally are unimpressed by men’s driving and fail to see why men get involved in races and other dangerous situations. It does appear that men are easily drawn into situations when they feel they are being challenged by another motorist, sometimes with disastrous results. Women’s view of driving, as is the case with so many things, is very different from men; they like to leave plenty of time for their journey, arriving on time and safely. Many men just get in their car and aim to get where they are going as quickly as possible and take a dim view of anyone who impedes their progress.

According to Frank Mc Kenna, many young men are killed on the road, when misjudging their speed going into a bend. A number of Psychologists feel that although inexperience is a factor, it often happens because the young motorist has been provoked into racing another motorist, or is trying to prove a point to another road user. Unfortunately an accident can be as a result of the driver simply showing off to his mates, sometimes with terrible consequences. In these accidents that often prove to be serious, the occupants of the car are often all male, suggesting that they do not drive in the same manner when they have female passengers.

Making a comparison between men and women drivers is not easy. Certainly there are insurers that prefer women drivers; saying that the majority of very serious accidents that result in serious injury or death involve male drivers, as do the majority of speeding and drink driving convictions.

Figures, when looked at in isolation can be misleading and the case put forward by insurance companies, that women are a better risk, is no exception. They may well be a better risk for insurance companies but figures produced by the Department of Transport provide an insight into why that might be the case; women only drive on average1/4 of the number of miles per annum however 1/3 of accidents where there is serous injury or death involve women drivers. Certainly it is evident that women do not drive as many miles as men; when driving on a motorway, one only has to look around to see how few drivers are women. To complicate matters women could then argue, that the reason is that they drive less on motorways and more on A and B roads, which are not as safe as motorways. In any event it does seem to make women more risky per mile driven but then as a Contract Hire company we have always tended to look at it as perhaps the insurance companies do; that women drivers write off less of our cars.

Women appear to men not to have the same driving skills as men and that may well be the case; if they are driving less miles, they have less opportunity to develop those skills. They appear to be more uncertain on the road and more likely to stop without warning. The Department of Transport’s study did indeed confirm that women’s cars have other motorists drive into the back of their vehicle more than men do. What would have been interesting, which they didn’t say, is what proportion of the drivers who drove into the back of them were men.

According to women, men don’t make good passengers, according to men; they don’t feel safe when sitting next to a women driver, particularly at junctions. This fear whilst perhaps exaggerated is not entirely without foundation, because figures produced by the government show that women have a far greater chance of having an accident at a junction. It is possible that contract hire and insurance companies have in the past only looked at women drivers from their own rather narrow viewpoint, rather than looking at the broader picture. The conclusion may be that men do have far better driving skills than women but tend to be far more impatient and take greater risks when driving, which cancels out some but perhaps not all of the benefit.

Should you have any queries or questions with regard to Fleet Management, Licence checking, Contract Hire, Personal Contract Hire, Lease Purchase or vehicle Hire Purchase, please do not hesitate to contact us. Bowater Price plc 01494 536 536. www.bowaterprice.com.

Purchasing : cost of car + interest / term of the loan

Leasing : cost of car + interest – expected resale value / term of the lease

So as far as payment calculation goes, there really is not much of a difference if you purchase or lease, except that you don’t really pay for the whole value of the car. Technically, you are paying for the car value that depreciates during the term of the lease. However, the dealer can make money by keeping the MSRP (Manufacturer’s Suggested Retail Price) and broadening the difference between the price of the “new” vehicle and the price of that vehicle at the end of the term. Also, dealers can sell a vehicle as a certified pre-owned once they get the leased vehicle back to their inventory. A dealer sells one vehicle thrice: as a lease, as a certified pre-owned vehicle or used vehicle, and as an out-and-out used vehicle.

So the dealers make money out of it. You, on the other hand, can benefit on a lease depending on how you use the vehicle. If you travel a lot, then leasing is not the best option for you because of the mileage limit. If you are not a tidy car owner, leasing is not good for you either. You will only find your self paying off cleanup fees. However, if you are the type who is always in the market for new things, leasing can be an advantage to you. You can always re-lease or trade your vehicle in exchange of something new.
If you decide to purchase the vehicle by the end of the leasing term, you’ll only pay a smaller amount compared to the market price of the vehicle at the time you purchased it. Also, consider the tax benefits. Since the car is not your property, you won’t be paying for the whole car in terms of sales tax.