Due to the bulk purchases that we make, large discounts are often given thus reducing the initial cost and therefore monthly rentals payable. These savings are simply passed onto our customers, but you have to be quick, because they don’t last long!
When Leasing a car one of the questions you will have to ask yourself is, “Do I want a contract with maintenance costs or not?”.
Basically if you have it included then you pay a higher monthly cost to lease the car, but if you have any problems with it, the car leasing company pays for it to be repaired. This means you have to weigh up how much extra you have to pay, to how likely you will have problems with the car. If so ask yourself what sort of costs the type of car you have leased has. A cheap car will usually have lower maintenance costs to a more expensive car, which is something to take into account.
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If you’re looking to add a new vehicle to your fleet you should be considering the ‘whole life costs’ not just the monthly leasing amount. Simply opting for the cheapest monthly rental is not the most accurate method for assessing the true financial impact.
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This guide defines the limits of acceptable damage to which leasing companies ‘should’ accept as ‘Fair Wear and Tear’
This guide has been produced to help company car drivers, and Fleet Managers to reduce end of contract damage recharges. It is based on the guidelines of the British Vehicle Rental and Leasing Association (BVRLA), but has been interpreted by Pendle to give you a clearer understanding.
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Companies tend to prefer maintenance agreements because they make budgeting easier, are less hassle and can reduce administration. For private car buyers, the fixed monthly cost can be reassuring, but you should work out whether it is cheaper to pay for your own maintenance.
Generally, the higher your millage, the more viable a maintenance agreement becomes for a single individual. Annual mileage of roughly 20,000 miles or more can swing it in favour of a maintenance package on a new car. As well as the potential of extra servicing and wear and tear with higher mileage, many new car warranties run out at 60,000 miles.
If you’re leasing an older car, it is worth considering maintenance.
The warranty will probably run out before the end of the contract, and while the best leasing firms get nearly new cars from main dealers, others may supply from less reputable origins.
So do your sums, then balance any cost difference against the pros and cons of maintenance agreements. If you need a help, don’t hesitate to drop us a line. Our advisers are here to help.
Contract hire isn’t proving as popular as personal contract purchase (PCP) among private individuals and the self-employed. Monthly payments are often broadly similar, but at the end of the deal a PCP gives you the flexibility to own the car for an extra lump sum or, potentially, a bit of cash to put towards a deposit on another PCP deal.
If you find you want or need to terminate the deal early, PCP usually offers an advantage, too. With contract hire, early termination typically carries a penalty of 50% of the outstanding rental. The penalties on a PCP are usually comparatively small.
If you are VAT registered, though, you can reclaim 50% of the VAT on the finance costs of contract hire and 100% of the VAT on a maintenance agreement. With a PCP, you can’t reclaim any VAT. In some cases, this can make contract hire the better bet, but most buyers, PCP offers the more attractive route.
Contract hire is actually a form of leasing – effectively it is an operating lease. ‘Leasing’ is a general, catch-all term that includes finance lease and lease purchase, as well as contract hire.
The financier purchases the vehicle on behalf of the customer, who then leases the vehicle back from the financier and pays a fixed monthly lease rental for the term of the lease.
At the end of the lease the customer can either pay a residual value (final instalment) on the lease and take ownership of the car, trade it in or re-finance the residual and continue the lease.
3 + 35 – The number of initial payments + the number of payments to be made.
Application fee – Many car leasing companies will request an up-front fee. This is usually the first three months of the leasing agreement up-front – but it can be a separate fee altogether.
APR – This is the annual percentage rate – the true rate of interest you will pay on a financial agreement.
The process of car leasing is straightforward enough – you pay a monthly sum to drive a car around, usually over a two-four year period, but the car is never actually yours to own. At the end of the term you simply give the car back to the dealer, take out a new lease, or, in some cases, you might be given the option to buy.
Car leasing deals with arguably the biggest problem associated with buying a new car – the fact that the car immediately loses a large portion of its value as soon as you drive it away from the garage. Of course, the more you drive your vehicle the less it is worth but different makes and models have different depreciation rates.
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