Contract hire to car hire?
Contract hire to car hire?
Author
Discussion

transactor

Original Poster:

152 posts

228 months

Friday 4th January 2008
quotequote all
Hi all

Im thinking of starting an executive car hire firm in the north of England, not many cars just a handful..I cannot afford to buy each car outright and have been looking at contract hire and lease hire deals, was just wondering is it possible to take a car out on contract hire and then use it for rental purposes obviously with the right insurance policies

ive heard this is how car hire firms do it but not sure, anybody got any knowledge on this please?

the sort of cars im looking at are things such a BMW 6 Cab, 911 Cab, BMW 7 Series, F430, CLS that kind of thing. I can afford to spend around £5K a month for the contract hires plus another grand or so for insurance..I think ive got a market for it and dont have any overheads as i already have an office and parking space by a main road

any experts in the field here on PH?

ta

transactor

Original Poster:

152 posts

228 months

Saturday 5th January 2008
quotequote all
ta for your reply mate

there seem to be lots of people about doing it, i think the ones who lose money are those who jump in too deep to begin with maybe or dont control their costs like any business really

as for your pointers insurance is not that massive, probably 200 a month per car, finance NA as im using my disposable income, maintenance NA as they will all be new cars with warranties, the only thing you need to do is service them, advertising and business costs, well as im running it alongside an existing business these will be very minimal

i do want to do it firstly as a business which is why i will be careful what market i aim for and what vehicles, Prestige rather than Performance but quite fancy the idea of driving around in the cars when theyre not being used. I have a nice-ish car already just nothing in the 911, Ferrari league Even if i dont get my full outlay im not really going to lose much as im not borrowing anything and im getting the pleasure out of it, beats having it sitting in a bank account somewhere

my question to any people out there who work for finance houses, contract hire firms etc is are you able to contract hire a car and subsequently use it to hire out?

JustinP1

13,363 posts

260 months

Saturday 5th January 2008
quotequote all
Whilst the idea in theory sounds nice, and it would certainly be great to be able to use these cars while they are not being used, I do think you are in a minefield where people who are experienced arnt making that much money at the moment.

Just for the 430 alone, you would be looking at £2400 a month plus VAT on 1 three year deal.

If your budget is 5k a month then this wont go far. I also do not think any of the hire companies would allow it being used for private hire - I am pretty sure this one of the principle exclusions for use.

If your budget is £1000 for insurance, then this may also be a large underestimation. If you were a 40 year old male with 5 years no claims bonus with the car doing 5000 miles a year in an alarmed garage you would be lucky to get insurance at £200 per month for the fezza, slightly less for the others but not hugely far off.

You are looking for a policy to let pretty much anyone (over 25) take the high performance car they are inexperienced in out on a private hire basis, whilst they are parked at an office on a main road. *If* you could get a policy on this basis, you really would be paying through the nose.


Tearz

464 posts

235 months

Sunday 6th January 2008
quotequote all
transactor said:
Hi all

Im thinking of starting an executive car hire firm in the north of England, not many cars just a handful..I cannot afford to buy each car outright and have been looking at contract hire and lease hire deals, was just wondering is it possible to take a car out on contract hire and then use it for rental purposes obviously with the right insurance policies

ive heard this is how car hire firms do it but not sure, anybody got any knowledge on this please?

the sort of cars im looking at are things such a BMW 6 Cab, 911 Cab, BMW 7 Series, F430, CLS that kind of thing. I can afford to spend around £5K a month for the contract hires plus another grand or so for insurance..I think ive got a market for it and dont have any overheads as i already have an office and parking space by a main road

any experts in the field here on PH?

ta
Hi, I am in the car hire business - It's not always possible to take a car out on a contract hire and then re-rent it - I did the same problem so I've had to get a car on contract hire from manfacturers directly rather than using a car leasing companies.

Getting the right insurance can be a pain in the ass - you will need a motor trade policy to cover all of yours and it don't come chesp and also you will need another insurance to rent out your cars to customers.

I work very closely with City Inter Rent and Dream Car Hire and I know how difficult it is to enter into the car hire market and it is not easy to earn a living.

Have you done the business plan?

Cheers

T

Edited by Tearz on Sunday 6th January 12:29

Deva Link

26,934 posts

275 months

Sunday 6th January 2008
quotequote all
transactor said:
I can afford to spend around £5K a month for the contract hires
Even it was possible to contract hire (or to raise the money to finance the cars some other way) I think you'll really struggle unless you have a lot of security to guarantee the loans.

transactor

Original Poster:

152 posts

228 months

Sunday 6th January 2008
quotequote all
Tearz said:
transactor said:
Hi all

Im thinking of starting an executive car hire firm in the north of England, not many cars just a handful..I cannot afford to buy each car outright and have been looking at contract hire and lease hire deals, was just wondering is it possible to take a car out on contract hire and then use it for rental purposes obviously with the right insurance policies

ive heard this is how car hire firms do it but not sure, anybody got any knowledge on this please?

the sort of cars im looking at are things such a BMW 6 Cab, 911 Cab, BMW 7 Series, F430, CLS that kind of thing. I can afford to spend around £5K a month for the contract hires plus another grand or so for insurance..I think ive got a market for it and dont have any overheads as i already have an office and parking space by a main road

any experts in the field here on PH?

ta
Hi, I am in the car hire business - It's not always possible to take a car out on a contract hire and then re-rent it - I did the same problem so I've had to get a car on contract hire from manfacturers directly rather than using a car leasing companies.

Getting the right insurance can be a pain in the ass - you will need a motor trade policy to cover all of yours and it don't come chesp and also you will need another insurance to rent out your cars to customers.

I work very closely with City Inter Rent and Dream Car Hire and I know how difficult it is to enter into the car hire market and it is not easy to earn a living.

Have you done the business plan?

Cheers

T

Edited by Tearz on Sunday 6th January 12:29
hi Tearz

im only looking at a few cars, i have premises and everything already as im kind of in the motor trade already. Have trade inusrance the only thing id need is insurance for the self drive

do you know how other companies get their cars? surely they dont buy them all...what kinda cars are you hiring out? im not looking at national coverage or anything just local and specialist

cheers

transactor

Original Poster:

152 posts

228 months

Sunday 6th January 2008
quotequote all
Deva Link said:
transactor said:
I can afford to spend around £5K a month for the contract hires
Even it was possible to contract hire (or to raise the money to finance the cars some other way) I think you'll really struggle unless you have a lot of security to guarantee the loans.
hi, im not getting any loans so wont need security. 5k was a conservative estimate of what i can afford to spend, if it doesnt work i wont lose anything and wont be at risk from any kind of creditors. I know theres a market and know i can make money out of it

ta

Deva Link

26,934 posts

275 months

Sunday 6th January 2008
quotequote all
transactor said:
Deva Link said:
transactor said:
I can afford to spend around £5K a month for the contract hires
Even it was possible to contract hire (or to raise the money to finance the cars some other way) I think you'll really struggle unless you have a lot of security to guarantee the loans.
hi, im not getting any loans so wont need security. 5k was a conservative estimate of what i can afford to spend, if it doesnt work i wont lose anything and wont be at risk from any kind of creditors. I know theres a market and know i can make money out of it

ta
err...contact hire, lease, etc etc are all effectively loans - someone, somewhere in the chain has to buy the car in the first place. You'll have to satisfy the provider that you're good for the payments for the length of the contract.

JustinP1

13,363 posts

260 months

Sunday 6th January 2008
quotequote all
transactor said:
Deva Link said:
transactor said:
I can afford to spend around £5K a month for the contract hires
Even it was possible to contract hire (or to raise the money to finance the cars some other way) I think you'll really struggle unless you have a lot of security to guarantee the loans.
hi, im not getting any loans so wont need security. 5k was a conservative estimate of what i can afford to spend, if it doesnt work i wont lose anything and wont be at risk from any kind of creditors. I know theres a market and know i can make money out of it

ta
As Deva Link has said, if you have a lease or Contract Hire, you are effectively entering into a credit agreement. You have chosen about £400k of cars there.

Even if we entertain the possibility that you can get these cars for £5k a month, the kind of deals you can get on these performance cars are probably 3 and 35 which means you will need £15k deposit up front followed by payments of 35 times £5000 which is £175k over three years.

Effectively you will be signing yourself up personally for £180,000 of risk. Each of these contracts will of course have a get out clause - but they will be bloody expensive and usually the best part of what you have outstanding to date.

So, if it doesnt work out, it certainly *won't* be the case that you wont be losing anything!

Ecurie 25 and others seem to be doing well. Not sure how much money they are making, but they have the guaranteed income from their membership fees. With 5 cars, you wont have enough to make a membership deal look good.

I don't know about your personal financial position, but even if you can get the finance and insurance sorted out, would you have enough to pay out the £7k of payments per month over the winter slow season?

The simple fact will be will be with that amount of debt on your books, I really don't want to proverbially wee on your bonfire as you seem like an enthusiastic businessman, however the realities and costs involved I do think will be crippling.

makro

5 posts

223 months

Wednesday 19th March 2008
quotequote all
We have a car leasing brokerage and get loads of enquiries every day from PPL trying to set up a dodgy prestige car hire firm - innit! There seems to be a growing market for PPL who trade in 'cash only' and don't pay any UK taxes.

Not that I'm a big fan of the current tax regime you understand, but don't fully paid up UK citizens have to pay 'some' taxes if they want access to the services on offer in this fantastic country...?

You know, what happens if their one and only daughter gets Leukaemia and needs a transfusion?

So, I guess we're talking PPL who are outside the scope of the Inland Revenue and Customs and Excise and the rest but potentially have unaccounted for 'cash' sloshing around? Who do they go to for a Range Rover Sport or Q7 or X5 on contract hire or lease?

Without, an official UK status they have to rely on community friends to help them out...

So what happens the friends with some official status and history here contract hire the cars and then rent them out...to all and sundry without the agreement of the leasing company & perhaps without valid insurance?

So my question is what happens when the drivers kill someone in the 'illegal' rental car and moreover does anyone really care or are these operators just part of the criminal element who seem to literally get away with murder!

Answers on a postcard please.....best one wins a mystery prize!

dreamz

5,299 posts

223 months

Wednesday 19th March 2008
quotequote all
i know quite a few "prestige" companies in and around manchester through hirings on weddings etc and some are friends of friends who have started up such firms

as lucrative it can be during certain periods of the year - a few companies stipulate that during eid week the car hire has to be for the full week before hand not just on the day. saying that it is notoriously tough. there's alot of black money in this business. people look for ways to legitimise illegal money and we're not talkin the odd few quid. these people can afford to take a loss for a few weeks and not look at the bank statements.

there's ALOT of these firms started up now. and the prices are falling quite alot. you've gotta be in a good area to cut it and cities is where i think these businesses run