Contract hire - deal profitability

[12lee]

Can anyone provide some insight to to the gross profit margins for the contract hire business. I'm interested to understand:
- profitability for the lender/provider of funds
- profitability for the broker/combiner of the vehicle and the funds

I appreciate in some instances these are one and the same.

[SluffMcDuff]

For the lease/finance company gross profit would be less than 10% usually. It's all about volume

[Blown2CV]

Lease funder makes rate percentage of the balance to finance on each unit, less fees paid to brokers, losses due to repos and early terminations, and they also make money reselling each vehicle at the end of the contract on return. Brokers makes a small handling fee per unit, and also ripping end users off with inflated admin fees all over the place, over mileage charges etc. I think the funder takes some of the over mileage though.

Overall both are a volume game but funders are relatively few and are larger businesses, brokers can be anything from a bloke with a phone all the way up to... Maybe 3 or 4 blokes with phones.

[Super Slo Mo]

I don't think the brokers get the mileage charge do they? I know I certainly didn't when I dabbled in it a few years back. The 'admin fees' are their way of making a bit of margin on top of the fees they charge. These days there's not a huge amount of money left in the car for the broker, compared to how it used to be before it all became a mainstream internet business.

[Blown2CV]

Super Slo Mo said:

I don't think the brokers get the mileage charge do they? I know I certainly didn't when I dabbled in it a few years back. The 'admin fees' are their way of making a bit of margin on top of the fees they charge. These days there's not a huge amount of money left in the car for the broker, compared to how it used to be before it all became a mainstream internet business.

Well I assumed they would have to pay the funder for over mileage, but could charge punter whatever they wanted as s front end charge. Pay out 10ppm charge 35ppm maybe. I Understand the fees are to make money, that much is clear £50 for a letter, £50 to handle a speeding fine info request, £500 document fee etc etc. I thought making profit on admin fees in FS was illegal now?