Contract Hire / Leasing

payingfornowt

Hello there.
I need some work done on my car and think it may be time to get a new one before it becomes too expensive to run.
I was thinking of entering into a contract hire agreement.
I do around 15k miles per year and would like it over 3 years with maintenance and road tax included. Not bothered about the type of car, less petrol the better.
Do any of the contract hire’s include insurance?
Does anybody have any advice, good or bad experiences with leasing cars?
Can anybody recommend a company to use? From my “Googling” it looks like there are hundreds of people that do this, some I imagine cowboys.
Thank you, have a good day.

jimpix12

Hi, I almost went with Nationwide Car Leasing and their rates seem very reasonable. However in the end I decided that it would be better for me to buy a cheaper can on HP as that way I own it at the end of the contract. Of course leasing works out usually cheaper per month than HP, but when you factor in the price of the car as an asset at the end of the term, it works out more favourably.

If you do lease I would recommend you make sure the vehicle is stock, ie ready to dispatch and not have to wait for it (factory order). This can take 2-3 months.

Anyway, at the moment you can lease an Audi A5 Diesel for £300-odd a month over 3 years on a lot of websites, but to buy this on HP over the same time would cost double in the short term. In the long term its slightly better. Here is an example:

£300 x 36 (Contract Hire) = £10,800 but you hand the car back, or:
£700 x 36 (HP) = £25,200 but then you'd be able to sell the car for probably £17,000 after 3 years (very rough figure!) thus in reality you are spending less (£25,000 - £17,000 = £8,000 spent over three years versus Contract Hire of £10,200, saving £2,200).

HP is usually always a better deal, in my opinion, but it depends on what your monthly budget affords. A lot of people lease. Having a tangible asset is something I like, but each to their own. You have to decide whether it's worth spending £700 a month versus £300 a month just to 'save' £2,200. Again these figures are just a guide and could be highly inaccurate. To me though, it was worth avoiding leasing - I didn't like the idea of driving a car that I didn't/would never own, and I hated the idea of scrutinising my mileage closely in case I went over the allotted mileage.

If you can get it on HP for a good price, I would recommend this.

Edit: just re-read the post, sorry you didn't ask for advice on this per se, whoops, some good companies I had dealings with are Nationwide, Gateway2Lease and FlexxiLease.

AdrianHi

I would suggest looking at What Car web site, go nto the details for exact cars you are interested in and look for the "lease this car now" link. You'll get a list of options, prices exclude VAT so remember to add it.
Insurance you will have to pay your self, maintenance included may not be good value, often better to pay yourself. Most deals are on 10,000 miles a year, additional mileage surcharges are usually in the rang 7p to 15p per mile depending on the car. Cheap car should be at bottom end of that range.

When checking out cars do not assume the lowest list price car will give lowest lease price. Lease companies can negotiate big discounts with certain manufacturers which result in lower lease payments for you. This is typical for Ford and Vauxhall, leasing can be cheaper than buying new and selling at 36 months.
Vauxhall Corsa 1.2 Club 5door with AC £125 a month on 3+35
The route to cheaper leasing costs can be a car that holds it's value well, the current "darling" of the new car group:
Mazda 2 1.3 Tamura 5 door with AC £144 a month 3+35 (worth the extra IMO).
Both of these cars can do in the 45-50mpg range unless driven around town all the time.
Fiat 500 is a big favourite (not my cup of tea) but lease prices are higher perhaps reflecting little or no discounts on offer.

Hintza

10,000 miles is the norm so you really need to do your sums to see if 15k make it worthwhile.

The other thing to note is if you lease you want to choose less popular cars (Jeep (I have one on lease), Chrysler and whatever else you can think of). If you say want a Golf HP will in most probability be cheapest. Gas guzzlers will offer the best deals, small cars the worst. (generalisations I know)

Remember you normally get road fund for duration of lease but get this in writing beforehand. Don't necessaril;y take for 3 years check out 1 and 2 year deals too.

A way to figure out whether you are getting a good deal is if the purchase price of the car divided by the monthly payments is between 75 and 100 you are getting a good deal at 75 and a stonking deal at 100. (the above based on 10k miles).

Remember VAT has to be added to most quotes.

Rachel85

All my cars have been leased and it can work out a good option, if you know how to avoid the pitfalls.

Firstly, try to be open minded about the car you want. As another poster said, special offers will appear on certain cars but others which have the same list price may be considerably more. If you're willing to look at, say, all medium sized cars you'll probably get something. Cars which there are a surpless of will be better value, as will models soon due for a facelift. Also try not to be too choosy about any extras as you will foot the bill for all of these (sometimes plus a little more) and not reap the benefits later as you'll not be the one selling it.

Take a look at Contract Hire and Leasing (google). They will list special deals available.

Check the terms carefully. Typically you'll look at 3+35 payments but some are sneaky and do it on 6+35 to make it look like a better deal, even though its not. Check they include Road Tax. Nearly all do but I got stung once and it was nearly a very costly mistake.

Few personal contact hire deals will include maintenance, although most companies should give you a quote to include this. You could go for something which has free servicing (as my Mini did) but any other maintenance is down to you. None will ever include insurance, and not all insurance companies will insure you as you are neither the legal owner or registered keeper.

If you're doing 15K/year you'll need to up the mileage allowance, and check any excess mileage charges as they can be really, really high. You'll also need to be sure you can maintain the car in really good condition, as you'll be charged for any damage. For example, I've badly kerbed the wheel of my current car and it doesn't actually bother me that much but I will have to get it repaired before it goes back.

Hope that helps.

Edited to say that I do really like leasing cars. I like having a car which (touch wood) I don't have to worry about major repairs. I also find it, actually, a fair bit cheaper than the alternatives. And I love changing it regularly too!

payingfornowt

Excellent responses guys. thanks!

Lemonade_Pockets

Ditto to everything said above.

Lings cars is also worth a look. List everything in ascending price order so you can see everything that you can get for your budget.

Cheapest deals tend be cars with good residuals or massive discounts. What your monthly payment effectively covers the depreciation so either of these two thing will mean depreciation is less.

Maintaince generally isn't worth it.

Shop shop around is my final advice. You'd be surprised at the variations in price. One supplier might have fantastics deals one month but fail to negotiate good deals with the MFR for the next.

Oh remember that prices are usually stated are plus VAT unless indicated otherwise. This will change at the end of the year so check with prospective lease companies whether they'll be passing the charge onto you!

payingfornowt

Thanks for the replies, love Ling website but cvsl looks cheapest so far.

One question, I was going to get the car for personal use but I do have a business so could potentially get it cheaper, the only problem is that if I was to do that would I then have to pay the VAT come end of the year? - I am not vat registered and currently dont even pay an accountant as nothing at all goes through the books.

AdrianHi

payingfornowt wrote: »

Thanks for the replies, love Ling website but cvsl looks cheapest so far.

One question, I was going to get the car for personal use but I do have a business so could potentially get it cheaper, the only problem is that if I was to do that would I then have to pay the VAT come end of the year? - I am not vat registered and currently dont even pay an accountant as nothing at all goes through the books.

Assume nothing going through books as the business is not generating income yet?
Best get advice on your situation ASAP from an accountant in my opinion.
As for VAT registration, you pay VAT and claim it back each quarter when you are registered. Lease car for business and personal use you get relief of 50% of VAT but then have to pay BIK (Benefit In Kind) tax aka company car tax personally.
I run a VAT registered Ltd company and have looked at leasing a car through the business vs. privately. It depends a lot on the car, emmissions and there for tax, how many miles you do, higher rate tax payer or not, to work out which is best. I found privately owned car and claiming 40p per mile expenses (tax free) from the business slightly cheaper than the company car option. The chancellor is way ahead of you on this one, no free lunch here;)

kitchnv

Been looking around for a forum on contract hire companies. So many cars advertised simply do not exist when you contact the company. Had 2 CH cars so far and now looking for 3rd but having real difficulties getting a good deal.

Lings seem a bit expensive but maybe that's because all there offers are genuine. I realise their prices include vat.