Car Leasing Blog

This subject is the cause of many different phone calls daily, and lets face it - its an important one.

The first thing to get your head around is the difference between the registered keeper and the owner of the leased vehicle.

Registered Keeper - definition

Here is the definition of registered keeper according to the parking and traffic appeals service:

Registered Keeper The person or organisation recorded by the Driver and Vehicle Licensing Agency as being the legal keeper of a motor vehicle.

So basically, it is the registered person and address where the vehicle is to be kept on the most regular basis - NOT THE OWNER

Vehicle Owner

The vehicle owner is the person whom hold the title to the vehicle, so if you purchased a car for your distant neice who lived 100 miles away from you, the vehicle would need to be registered in her name, however the title (and subsequent ownership) would remain with yourself unless transfered.

Insurance companies tend to get a little bit confused (excuse the pun) about this and can sometimes lead to an insurance company refusing insurance.

The problem rarely occurs with Business Contract Hire, but can be a little problem with Personal Contract Purchase and Personal Contract Hire.

Do not dispair though, you should always have a good ring round on your car insurance renewal, and once you have explained the way things are, you will soon enough find an insurer.

One of the good places we have found for providing insurance for leased vehicles is Confused.com so it might be worth a check on there.

Dont forget! Leased cars must be insured fully comprehensivley, you really dont want to have to pay for one that gets nicked!

The best way of answering this one is as follows:

The maintenance contract will usually cover anything that warranty and insurance dont, which can be catagorised into the following

• Routine Maintenance and Servicing
• Reasonable Replacement of Tyres due to wear and tear

And sometimes a form of fleet managment system. The common misconception among leasee’s is that the contract will continue to cover replacement tyres for punctures,etc. This is not the case. The maintenance company will normally allow for replacement tyres for every 15,000 miles or so throughout the contract.

We get asked this one all the time.

The official stance is this : should the vehicle require any work to return it to its origional state for sale, that work will be charged (at almost certainly an infalted rate) back to the leasee (you)

However, this only really applies to painted signwriting because nowadays stickers and magnetic livery are much more aesthetic than they used to be.

The general suggestion we make is to get either stickers or magnetics, not only can magnetics be reused (when you get a new one) but they can be quickly removed should you be carrying expensive tooling for the type of industry you are in (or the van may be dual use)

This is quite a difficult question to answer, nominally because there are different contracts available to companies in the uk, so for this article we will deal just with the most popular company car leasing option - Contract Hire

Contract Hire is essentially a hire contract similar to that you would get from any rental company, it just has a longer fixed term and fixed mileage.

First of all lets deal with the term element. The term can range from 3 months upto 5 years, but realisticly, the best deals are to be had over a 2 or 3 year period.

Mileage - always a sticking point for most businesses so let me answer the main queries first:

No you are not limited to 10,000 miles per annum. You choose the mileage up front (anything upto 70,000 miles per year) and then the rental is calculated accordingly.

No you will not pay £1 per mile excess mileage. And if you do - dont bloody sign the contract!! The avergae excess mileage rate is in the region of £0.04p - £0.12p per mile.

Off sheet accounting, is one of the prominent reasons why companies would opt for Contract Hire. Dont worry, you dont need to be an accountant to understand this, and I will keep it simple.

If you purchase an asset (such as a desk or car or building), the value of that asset is placed on the balance sheet of a company and depreciated annually by your acountant. As such you pay tax on this value placed. Not always good for alot of people. The benefit would be that your balance sheet looks better.

When you lease an asset, there is no entry in the balance sheet (because you dont own it) so the payment (or 90% of it in the case of Contract Hire) is the effectivley ‘lost’ in the profit and loss account (meaning no tax on the payment)

So basically, for cars you can ‘write off’ 90% of the payment against each monthly profit and loss account and for vans and commercial vehicles its 100%

VAT - Another handy one. Cars first:

50% of the VAT payable on a Contract Hire agreement can be reclaimed, positivley affecting cashflow (as you are only paying VAT on the payment instead of the whole vehicle).

On the maintenance element of the contract, 100% of the VAT can be reclaimed. Which is nice

Next vans and commercial vehicles.

100% of the VAT can be reclaimed on the van or commercial, and 100% on the maintenance as such.

Road Fund Licence - Is covered in a contract hire agreement throughout, you dont have to worry.

Initial Capital Outlay - Is usually restricted to the equivalent of 3 monthly payments, but in some cases (and multiple orders) can be reduced to monthly in advance.

There is my bried overview of contract hire for businesses, please,please,please do not hesitate to ask if you have any questions. I am more than willing to help

Take care for now.
 

Ok, so you have probably arrived here because you are thinking of or are in the process of leasing a car personally.

Before you do, please take the time to read through these top 10 tips.

1. Do it through a reputable company. This doesnt mean it has to be a dealership or bank, just make sure the voice on the end of the phone has an office, Consumer Credit Licence (CCL) and a Data Protection licence. Without these, your personal data could very easily be compromised and, with identity fraud at its highest, this could cost you a lot.

2. Make sure you choose the right contract. There are a few different types of personal leasing contract available on the market. Make sure you understand the implications of the contract you are undertaking. Get out clauses, early termination fees, is the future value guaranteed,etc.

3. Make sure the company you are dealing with take all the approriate anti fraud measures prior to issuing a contract. We need to battle ID fraud, and you sending proposals without proof of your own ID means that anyone could.

4. Check the returns policy for the vehicle. When it goes back, you need to make sure you are covered for any dents,scratches,etc by the BVRLA fair wear and tear policy.

5. Check, and i mean Check the vehicle order when you send it back. I have lost count of the number of manuals which turn up as autos, 3 doors which turn up as 5 doors,etc.

6. Sign for it yourself. And please,please,please do not sign for it if it is not perfect. Scratches will not get sorted later, despite what the delivery driver says. Write it down on the delivery note - you have got some come back.

7. Make sure you are insured - Most insurance companies will insure personally leased cars as a matter of course, but they need to know. Dont give them an excuse not to pay.

8. Make sure the personal leasing company you are dealing with has a customer service department. If anything goes wrong, salesmen arent too interested in getting it fixed after they have been paid commision.

9. Organise the return of your vehicle well in advance. If the contract goes over its return date, at best you will be charged. At worst you will pay for the remainder of the vehicle (I have seen this happen a number of times and cost consumers thousands).

10. Try to get any repairs (dents, scratches,etc) fixed at your local body shop prior to return. You will get charged for them otherwise and there is no way of getting the vehicle back afterwards to get it done.

 If you try to follow these tips of personal leasing, you shouldnt go far wrong, but any problems, give me a shout