Are the special deals really worth it?

Low interest rates and special deals – especially around Fieldays, as we’re finding at the moment – on the face of it offer big savings to fleet buyers. But do they really work in the long run? We talked to Lance Manins, CEO of Driveline Fleet Ltd.

CV: Has the current low interest rate environment increased or decreased levels of finance and lease vs outright company ownership? LM: We’ve noticed that offers of low interest rates are becoming more frequent in mainstream vehicle advertising. In reality, it’s a bit of marketing trickery aimed at deflecting attention away from the actual price of the vehicle and the structure applied to the finance. In our experience these promotions offer a low interest rate but very few other benefits, which may work for consumer buyers; businesses, on the other hand, have access to a range of leases and preferential finance products that consumers don’t. Most businesses will still choose to lease or finance vehicles over company ownership because they want to use any available capital available for stock, or expansion, rather than spending it on a depreciating asset. One of the main benefits of dealing with a tier one lease company is accessing the heavy discounts available on new vehicles that you just won’t find on the high street.

CV: How has the current low interest rate environment affected the fleet and equipment finance and leasing market in terms of the relative popularity of different forms of finance and lease?

LM: We have found that low interest offers have simply raised awareness to the wider funding market. As such clients are wanting us to review both lease and finance solutions with them, so that they are fully informed as to the benefits and disadvantages of each product. Generally clients are wanting to avoid mixing business funding with personal funding tied up with the house mortgage, which means that they still look to a separate funder for those business assets. Low interest offers certainly haven’t had a detrimental impact on our business; if anything they may have actually contributed to our success as clients interrogate the numbers more, and our flexible Smartlease stacks up favourably against other lease products in the market. CV: What are the main drivers for companies to choose a finance rather than lease product? LM: The main drivers for choosing a traditional finance product are usually the ownership factor, and how a client prefers to account for the asset. In broad terms clients looking at late model or ex-lease vehicles will often opt for a fixed term finance structure. Sometimes that’s because they’ve just always done it that way, or they’ve been burnt previously by strict fixed-term lease products that have heavy charges for excess km and refurbishment costs.