Things to Consider When Choosing a Funding Method

funding aldThings to Consider When Choosing a Funding Method - ALD Automotive

Perhaps choosing the right vehicle for your business is one of the most immediate challenges, yet choosing the right funding method is a crucial matter that requires due care and consideration. As this will govern the management of your fleet, it needs to be looked into properly if it is to yield the maximum benefits.

Here is a list of things to consider:

Suitable method

Choose the method that is appropriate for your business and not one that is based on its popularity in the market. There are plenty of different funding methods you can choose from – such as contract hire, contract purchase, personal contract purchase, hire purchase, finance lease and lease purchase. Contract hire may be a popular funding method but it doesn’t mean it’s perfect for all businesses.

Whole life costs

When deciding on a funding method, you should consider the cars you’ll be using. Some companies don’t fully analyse the range of costs over the life span of the vehicles and this can lead to unexpected costs that become a financial burden.

Insource vs. outsource

The way in which your fleet management will be handled is a primary factor to consider – is it going to be better for your company to outsource the management? Fleets made up of 500 or more vehicles are usually outsourced due to a limited workforce and a restricted budget for technical expenses.

Tax efficiency and services

Does the funding method comply with National Insurance (NI), VAT recovery, corporation tax recovery and capital allowances, as these will secure your budget? As leasing companies offer a variety of services, you should consider whether their provisions are effective for your business.

Unbiased advice

While thoroughly reviewing the funding method is necessary, you should also consider seeking advice from an unbiased third party. A collection of opinions can give a clearer insight into your preferred option. Gather feedback from representatives in the human resource, finance and procurement departments and include external consultants if necessary.

Grey fleet cars

Grey fleet vehicles imply additional risks and responsibilities such as maintenance, insurance and management difficulties, so this should be kept to a minimum.


Any changes or new implementations within the company, especially huge adjustments, should always be communicated with the employees. Although some departments don’t directly handle the decision of choosing the funding method, it’s important that they are well-informed, as their jobs contribute to the bigger business picture.

The work doesn’t end with talking to the workers. Your company should also review the annual business performance (or at least on a fixed schedule). More than serving as a fresh understanding of how the funding method affects the business, this also affords the opportunity to pinpoint areas that require improvements. One funding method is usually not applicable for all business all the time, so expect the possibility of replacing the initial funding method at some stage further down the line.

For further enquiries regarding your leased vehicles, ALD Automotive is always here to help. Please contact the leading provider of vehicle funding services in the UK on +44(0) 117 908 2000 and we’ll be happy to talk you through our excellent services.


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