The country should be a wsh with low interest rates as the Bank Of Englands standard rate is still the lowest it has ever been, but motorists are struggling to find low rates when it comes to buying a car, according to the Mail On Sunday. the best rate they could find was 8%+ in order to buy that dream car. The bansk still do not want to lend money for a purchase that will just depreciate, they are expecting a high dpeosit also. This of course is hurting the retail arm of used and new cars as few people have the cash to buy outright.
The motor car is normally the second most exensive purchase you will make and so many financial experts believe if you can get a contract hire on a low interest rate, then it makes sense not to have to worry about resalesbale value and let the dealership have this responsability. Of course contract hire is also a finance agreement, so often is directly related to the availability fo finance. As officially we are supposed to be out of reccession, the worry is that interest rates rise not get less, so we need to keep an eye on how it will affect retail sales and the contract hire market.
We can see great deals out there in the contract hire market with residual values pushing down monthly payments, but even when a great deal is found there still seems to be a stumbling block for some, that is getting the deal underwrtitten. Finance companies have removed some of the barries to finance in recent months but we are stil finding a high decline rate. One contract hire broker suggested that only 50% of business actually gets underwritten, meaning twice as much work for the same return. Clearly the credit crunch is affecting some businesses in other ways, even though there is a healthy demand to lease these cars and for some makes the scrappage scheme has not benefited them as much as some korean cheaper made cars have.
It is a shame it is not possible to get the finance first then look for a contract hire deal afetrwards a bit like how we often buy a car with a bank loa. First get the loan then go out with cash to buy the car. The result is sometimes contract hire comapnies make a financial decision on clients before deciding how much support to give with their purchase if they feel the deal will be scuppered with the underwriting at the end.
Redundancy and the need for change and an argument that there will not be enough driving instructors around in the future, if the current trend of learning to drive continues even with the current finacial crisis, has resulted in a huge increase of schools offering driving intructor courses. In order to deliver a professional image, it is usual for such schools to choose contract hire, to finance the running of what can be a substantial amount of vehicles. In the long run contract hire can work out more expensive, but the fact that new cars car be aquired quickly and the fleet of cars are renewed every 3 years, makes contract hire an atractive option for driving instructor schools.
Clearway offers driving instructor training in Cleveland, it has arround 20 cars all on contract hire, which means the brand is effectivly presented and any student passing his exams wishing ton stay with Clearway as an instuctor can get the same car on contract hire in the same colour and use the signage of the cars, without the need for buying. This is a way of getting students to business in the quickest possible time and so maximise the profits of a new business in it’s initial years.
The car of choice for the Clearway group is currently the Citroen c3, branded in blue. These C3’s are all purchased using contract hire and are fully mantained to ensure the business keeps going in times of servicing or breakdown.