Things you wish you'd known before signing a contract hire
Discussion
Spiritual_Beggar said:
Roo. said:
Worst problem with contract hire is that is very expensive to get out of early.
Depends how early? After you've paid half the value of the car, you can hand it back with no penalties.Mileage limits and service/maintainence liabilties would be my biggest worries.
Edited by Chris_w666 on Tuesday 25th November 13:09
Spiritual_Beggar said:
Roo. said:
Worst problem with contract hire is that is very expensive to get out of early.
Depends how early? After you've paid half the value of the car, you can hand it back with no penalties.
Crusoe said:
Mileage allowance is usually quite low and the cost per mile over allowance usually about 7p a mile which could soon rack up. Personally I'd not want to be tied in to restricting how many miles I can do when it would be my only car.
You can get 10, 15 & IIRC 20k milages p.a. and anywhere in between. Calculate what you think you will do per week then gross it up. Then maybe take off 1k or 2k but you need to calculate the pence per mile excess vs the slightly higher monthly contract cost.The "get out clause" is normally 50% of the remaining lease payments + any excess mileage charge on a pro-rate basis. It is not like a HP agreement...
It can work very well providing you accept that you're not going to own the car at the end of the process. Look for promotional deals that's where you will save money; do not view it as a cheap way into more "specialist" metal especially if it's from a volume manufacturer.
If you get it right you can notionally own some nice kit for a low monthly outlay and escape from the depreciation that you'd suffer if you'd brought privately; A ran a Jeep Grand Cherokee for 24 months @ £300 a month on a 20,000 mile P/A agreement for example. Raw cost £7200 over the 24 months; GE moved it straight to auction at the end of the lease and it made just over 10k. If I'd of brought privately I'd have paid 32k at the main dealer...
It can work very well providing you accept that you're not going to own the car at the end of the process. Look for promotional deals that's where you will save money; do not view it as a cheap way into more "specialist" metal especially if it's from a volume manufacturer.
If you get it right you can notionally own some nice kit for a low monthly outlay and escape from the depreciation that you'd suffer if you'd brought privately; A ran a Jeep Grand Cherokee for 24 months @ £300 a month on a 20,000 mile P/A agreement for example. Raw cost £7200 over the 24 months; GE moved it straight to auction at the end of the lease and it made just over 10k. If I'd of brought privately I'd have paid 32k at the main dealer...
Welshbeef said:
Crusoe said:
Mileage allowance is usually quite low and the cost per mile over allowance usually about 7p a mile which could soon rack up. Personally I'd not want to be tied in to restricting how many miles I can do when it would be my only car.
You can get 10, 15 & IIRC 20k milages p.a. and anywhere in between. Calculate what you think you will do per week then gross it up. Then maybe take off 1k or 2k but you need to calculate the pence per mile excess vs the slightly higher monthly contract cost.My A4 cabrio is due to go back next February. Just passed the mileage allowance so expect to take a hit, but interesting to know got two documents through recently. The first is an enquiry as to whether I would like a price to buy the car off them, the second is a very very comprehensive guide as to what is expected condtion-wise at the end of the lease.
This depends on the milaege agreement for the car, i.e one doing 30,000 miles per annum will have more allowable issues than one doing 10,000 miles.
Just need to get a scuffed alloy mended and should hopefully be ok.
As others have said, it is a contract hire, i.e. a contract for a certain period and this is a risk you take at the outset. Mine will have cost me £8,200 over 2 years all in, hopefully the Audi will have depreciated more than this and I won't have had to stump up financing buying it in the first place.
This depends on the milaege agreement for the car, i.e one doing 30,000 miles per annum will have more allowable issues than one doing 10,000 miles.
Just need to get a scuffed alloy mended and should hopefully be ok.
As others have said, it is a contract hire, i.e. a contract for a certain period and this is a risk you take at the outset. Mine will have cost me £8,200 over 2 years all in, hopefully the Audi will have depreciated more than this and I won't have had to stump up financing buying it in the first place.
mat205125 said:
I've never done one, but always wonder what their hand back standards are with regards to acceptable wear and tear - kerbing, dings, stonechips, interior wear, marks, grime.
Pretty stringent, I handed my Clio back early and they went over it with a fine tooth comb. Got billed for numerous stone chips, alloy scuffs etc. On the plus side you don't get charged for excess mileage. I'd done 40k in 2 years on a 10k pa contract. Didn't get charged for that. All in all got off lightly. Would never lease a car again though, it's too restrictive on what you can do.
chrisr29 said:
Pretty stringent, I handed my Clio back early and they went over it with a fine tooth comb. Got billed for numerous stone chips, alloy scuffs etc. On the plus side you don't get charged for excess mileage. I'd done 40k in 2 years on a 10k pa contract. Didn't get charged for that. All in all got off lightly.
Would never lease a car again though, it's too restrictive on what you can do.
Friend who does leasing advises that this is how many of the less scrupulous firms make their money, i.e. charge for these works at the end of the lease but in reality little if any of this work gets done as they are straight down to the auction later that day. He told me the other day that he's stopping doing cars as it's too cut throat and there's no longer enough money in it.Would never lease a car again though, it's too restrictive on what you can do.
An ex colleague of mine lost out to the tune of £3.5k when he had to get shot of a Freelander half way through the contract. New job plus company car meant it had to go but the lease company tucked him up nicely on the surrender value. In the end he bought the car off them outright and sold it to a dealer himself, otherwise he'd have been a lot more than £3.5k out of pocket.
If you do it, make sure you take GAP insurance also. I didn't as was not aware of it and had a real battle when the car was stolen fairly early on, they wanted nearly £8k for terminating early, their argument being that for admin purposes, any replacement car would have to be on a new contract (along with 3 months up front to boot to start that new one.. handy that); all in all they would have been near £10k better off. I had leased directly with Lexus and finally convinced them (by involving sales again) that it was fair that I buy a like for like car from the Lexus network with the insurance payout and continue the same term and contract, giving them the replacement back at the end of the 3 years. Took some battling on this point but got there in the end and it was a stressful couple of months.
Edited by touching cloth on Tuesday 25th November 14:18
I've just started a CH with Citroen Finance on a C-Crosser and before I signed on the dotted line I was handed the terms and conditions on 'fair wear and tear'. And it isn't too hard to adhere to tbh; treat the car with respect, make sure damages are undone to a standard and return the vehicle in a clean condition. Stone chips are accepted providing it matches the mileage done. All in all very sensible.
soxboy said:
the second is a very very comprehensive guide as to what is expected condtion-wise at the end of the lease.
Majority of leasing companies will work to the BVRLA 'Fair wear and tear' guide. Some companies are more penal than others, with many probably re-evaluating their leniancy on damage recharges, knowing they will achieve below there forecasted RV at auction.We do a hell of a lot of lease returns, stops customers getting charged upwards of £300 per alloy for any damage.
www.clean-image.co.uk have a lease return article, goes on a bit but full of infomation about what to look out for, can save you big time.
www.clean-image.co.uk have a lease return article, goes on a bit but full of infomation about what to look out for, can save you big time.
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