Car lease / contract hire

[triplejimmy]

Howdy, I appreciate some advice on this please.

has anyone got and experience with 'Personal contract hire'? I understand what it involves basically you pay X amount of rentals up front and then a monthly rental over the agreed term, with agreed mileage. At the end the car goes back and you start again or do something else. This sounds fine if your not worried about owning the car but, how does this work in reality?

You are essentially having a long term hire, so it's dead money. Verses a traditional PCP though where probably 90% of people choose not to buy the car it seem actually better value.

e.g. This is totally made up but, a car worth 25grand over 3years you might have to poney up 5grand deposit to get you monthly's to say 250pm. Then at the end of 3 years you might have a grand in equity to swap it for another plus probably having to top it up 2-3k.

It seems like you could lease the same car for 2.5grand up front, and 225pm, and if you wanted to swap it would just cost you the initial rental again.

Have I just been sold a good story?

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[MacRR]

You need to weight it all up, if you buy something at full retail price with high PCP interest payments and which is going to have vertical depreciation (Citroens spring to mind) that means you will have to give the car back or sell it to pay the final settlement payment then it's not a good idea.
However, if you can get a huge discount on the new price, have very low interest payments and have a low depreciating car (Focus RS?) that will be worth way more than the final settlement figure then it could be a good way of getting you into the car you want.
Of course the best way is to save up and pay cash!

 

[soofsayer]

Its really simple, and I dont wish to patronise so my apologies if it comes across that way:

Car costs X
After 3 years (or whatever the term) car is worth Y

You pay X-Y = Z

Z is made up of deposit and monthly payments.

Whichever way you slice it the number for Z usually comes out around the same pcp or lease.

The bigger the deposit the less interest you pay on the balance owing, and the less you pay monthly, assuming you want to give the car back at the end.

On HP Guaranteed future value will give you some piece of mind. On HP you have more rights to keep the car if you have covered 50% of the value of the agreement (I am putting this from memory so stand to be corrected on the %). On a lease if you dont pay they take it away and you loose everything.

Think thats it?

 

[triplejimmy]

Thanks for the input.

We've had a couple PCP and 1 we purchased the car at the end of the term and the others we have swapped. I had never really considered a lease until now as it see like it might be a better option if you don't want to own it at the end.

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[Julestys]

I run a vehicle leasing company and have been in the business for 22 years.
Leasing is a good way for manufacturers to shift metal without showing the discounts they are giving away.
Personal leasing is not for everyone, as some people want to own the vehicle at the end
A car is the biggest depreciating asset you will ever own, so you could question that logic
Free advice to anyone looking to lease for a business or personally, just drop me a message and I will do my best to advise.
Jules

 

[Julestys]

Personal contract hire has taken a large section of the leasing market, taking over from PCP.
PCH as its called gives you the larger discounts that funders get from manufacturers whereas PCP maybe not so much.
PCP is good for a car that holds its value and you can put any profit into the next deal, also if the car is not worth the option to purchase you can walk away.
It is a minefield and I am happy to offer any advice needed to fellow members
Drop me a message if I can give you more info

 

[Skel]

Hi triplejimmy,

It's quite a simple process that can sometimes be a minefield for some mate.

The 3 main ways to purchase a car are Hire Purchase, Personal Contract Purchase and Personal Contact Hire.

Easiest way to explain is:

1 Hire purchase.
Deposit, monthly payment once last payment is made you own the car.
2 PCP
Deposit, monthly payment and GFV ( Guaranteed Future Value set by finance company) at the end of which you get 3 options. Hand back to finance company (provided below mileage allowance and maintained to manufacturers guidelines) Part ex or clear GFV with cash or refinance. Normally if the current market is doing well you would expect somewhere between ?200 to ?1000 equity depending on car etc. Trick is minimal deposit to get comfortable monthly payment.
3 Personal Contract Hire
Deposit monthly payment but you never own the car or receive the V5. It's like walking into Enterprise and hiring a car for a few years and yes they inspect the car like Enterprise when handed back.
Alloys curbed your charged. Panels damaged past wear and tear your charged.
Monthly payment will be generally be +Vat.
The only problem with PCH is if you need to end the contract early you generally have to pay your remaining payments. As for the other two you get a few more rights like vehicle termination once you've paid half the cost of the car. Check T's & C's..

I've done them all and it's a personal choice which is best for you.

Hope this helps. but if you do have any questions just give me a shout.

 

[triplejimmy]

Cheers peeps some great info. Just so many choices I am a bit unsure what will work out best for me. This helps though, thanks.

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