We can see great deals out there in the contract hire market with residual values pushing down monthly payments, but even when a great car lease 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 loan. First get the loan then go out with cash to buy the car. The result is sometimes contract hire companies 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.
It is an interesting equation that the contract hire business is directly affected by the used car market more than the new one. Speaking to an Audi dealership recently he told me how few cars are beeing sold and how many are being released on contract hire options, the reason being such high residual values at the moment. In short this means monthly payments are down and superb cars are being driven away cheaper than last year. Talking to a seperate Mercedes dealership they exlpained than when it comes to contract hire, do not assume the cheapest C series saloon will be have the cheapest monthly payments, oh no there is one particular model which is cheaper to hire than the base model, because it’s current residual value is so high.
When a contract hire agreement is made the monthly payment is based on how mcuh that vehicle will be worth at the end of the contract. the more it is worth, compared with th intial buying price, the less the monthly payments should be. So the current high resellable prices has meant contract hire for some models is cheaper than ayear ago. Of course you should do your own research as there is still variable prices out there from dealerships and brokers.
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.
Many online directories don’t give the customer the full story. Sometime competitive contract hire prices are published to get customer interest, only to withdrawn when insufficient cars are bought that month, or the price looks cheap, but it is not until you read the small print that you find each car has to do less than 6000 miles and there is a 6 month deposit to put down. Leasebam was designed to combat some of these issues. In short, you ask for a price on what you want, and get a real prices based on your requirements from several contract hire firms in one go.
It has been a bit hard for some of the car lease companies to get behind leasebam. They don’t like their prices to be next to others and even though there is no such thing as an exclusive lead, they still feel they want all customers to themselves. However price comparison websites, have proven that customers want more than this. They want choice and clarity regarding the prices. Leasebam offers this as a solution and soon many contract hire firms will be queing up to be on the site.
There are some makes and models thta are not automaticall associated with contract hire and with the exception of a small crowd who have some private car lease options recently. the name Dodge probably does not register. One of the new Dodge models to come to market is the Dodge Journey. A sort of cross between an estate car and a people carrier, it can tick all the boxes for say families or businessmen who need a larger car, but do not want to pay a premium for it. the Americans would call it a crossover, between a SUV and station wagon. There is no doubt the storage solutions are excellent with child booster seats and some nifty electronics including places to keep you drinks cool, fo the one day it is summer in the UK. There are also some very good contract hire private hlease deals, although in lost cases this has been Dodge themselves trying to get these models out into public view. The Dodge Journey in many individuals view is the one of the nicest looking and practical cars from Dodge.
You should look carefully at monthly premiums to consider depreciation values. Sometimes Dodge themselves take a hit on depreciation, something private car lease companies can’t do. It maybe that Dodge Journey contract hire is not somethnig you have considered, if you are looking for quality this may not fit your ideals, but at least check out the deals available, you may get some very cheap driving for some time.
Here is an owner of a contract hire business based in Newcastle. She became semi famous when she appeared on the Dragons Den to ask for £50000 to help market her contract hire business.
However Ling was a bit unsure about here figures so she never go the investment. Anyway she did have a good business idea regarding contract hire and her site lings cars is very Eastern and takes a while to understand.
She claims 20% of cars in the USA are bought using contract hire but only 1% here in the UK. However other sources suggest that up to 50% of cars are leased in the UK, although not quite the same thing, it is a simialr concept.
Watch Lings attempt to raise mony for her contract hire website here.
There are some companies that offer short term contract hire options. Of course the monthly payments will probably be higher as longer term, especially as most of the depreciation of a vehcile occurs in its first year, and depreciation is a major factor in your monthly premiums.
Anyway for some short term contract hire may be a solution ot get you by until you are buying a car or funds become available. You never know you may like contract hire so much you end up doing this full time.
There are just some vehicles you would just like to own either for leasure driving or even for work reasons and a Land Rover or Range Rover may be just the ticket. These vehicles are often descibed as the best four wheel drive cars in the world, so one way of getting your hands on one of these vehicles could be by considering Contract hire.
In better words you just hire the Land Rover for a set duration and then hand the car back. Keep you money in the bank. You will have to do your sums to see if contract hire is right for you, but at least it should be a consideration.
Our new blog or news section is based around the world of contract hire and how it can help businesses keep money in the business and still have new cars or where it is easier to control outgoings.
However contract hire is not for everyone so will be showing you some of the downsides of considering contract hire. So Ok we are not here today, but tommorrow we will update and search the net for useful information.