Car Leasing Blog

With diesel technology pushing the boundaries of the current car market ever further it’s no surprise that major manufacturers are releasing more and more models in high powered diesel guises. The benefits being found in all areas including fuel economy and taxation. So Audi’s recent release (apart from the R8 TDi ‘Le-Man’ style super car diesel) could find its way onto many driveways in the UK… the TT TDi Quattro!

Over the last few years, personal car leasing has become more and more prominent in the UK.

 Mainly the reasons are for convenience. Joe bloggs no longer wants to worry about his car losings it value on the drive - or a poor review in a magazine dropping the future value of his car.

Personally leased vehicles are now available from most car dealerships and even over the Internet.

Another reason is price. With the bulk buying power of car leasing companies now, and the distribution they have with the various car leasing brokerage networks, the price monthly for leasing a car has dropped dramatically.

I have seen family saloons for less that 150 pounds per month,  and shopping style runabouts from less than a hundred.

Now that’s not a bad deal for a brand new car, once every two or three years.

A huge contributor in the drive toward personal leasing has been cash for car schemes operated by employers. Conventionally, an employee might be entitled to a company car - but now companies are moving more and more toward giving a cash car allowance and letting the employee find the car (usually with some restrictions). This has a huge effect on the BIK and car tax an employee is likely to contribute making personal leasing a much more cost effective option to a company car.

Soon, I will produce a full breakdown with a comparison of costs for a typical company car user compared to taking the vehicle on a personal lease and post it here.

Personal Lease Hire is a commonly used phrase for personal leasing.

Basically, it falls into two different catagories

Personal Contract Purchase ( or PCP)

This is a regulated hire purchase agreement which normally needs to be signed on trade premises.

It encompasses a fixed rental (which includes VAT) over a fixed term and fixed mileage. Once the term has completed there is an option to return the vehicle to the funding company or pay a final payment to own.

Very importantly, should you wish to return the vehicle (which most people do) you should notify the finance company before the end of the contract.

More information on PCP Contracts can be found here

http://www.carleasingblog.co.uk/2007/11/09/pcp-contract-information/

Personal Contract Hire ( or PCH)

Personal contract hire is very similar to conventional contract hire. Once again fixed term, fixed mileage, fixed price.

One of the benefits is that PCH normally will provide road fund licence (road tax) for the term of the contract.

Also, there is no need to notify the leasing company to return the vehicle - they will contact you.

More information on Personal Leasing and PCH can be found here

http://www.carleasingblog.co.uk/2007/10/22/personal-car-leasing-top-10-tips/

GENERAL INFORMATION

PERSONAL CONTRACT PURCHASE (PCP) was designed specifically to be a personal contract for private individuals. By entering into a PCP plan, which is classed as a conditional sale agreement, it offers you protection under the Consumer Credit Act 1974 and the Financial Services Regulations 2004.

Seen as a way to avoid the depreciation trap, a PCP agreement allows you the option to set up a contract term, with monthly payments. At the end of the term, you then have the option to purchase the vehicle, or simply hand it back to the contract provider. The Title of the vehicle does not change until the final ‘baloon’ payment is made.

IMPORTANT INFORMATION

You should receive the log book for your vehicle within six months of the delivery date. It is therefore your responsibility to tax the vehicle when it next becomes due .

 Your car is covered by the usual manufacturers warrantee, and can be taken to any dealer should you have any issues with manufacture of your vehicle.

What Happens if I do not receive my log book? 

You should contact the supplier to request it to be sent on to yourself, if your Road tax is due soon or you have been unable to obtain the log book you should apply to the DVLA for a V62 form. This will allow you to transfer the log book into your own name and enable you to tax your car. There is a charge of around £25 for this but its still cheaper than the fine for driving with no tax! It is also worth taking into account that this can take up to six weeks to complete so make sure you allow pleanty of time before your tax is due to expire.

If you go for a PCP contract, there is a fantastic way to benefit financially at the end of the contract, I will go through it step by step:

With a PCP Lease, there is an optional final payment at the end of the term, which is fixed by the finance company.

One of the benefits of this is that you can hand the car back to the finance company, another is that you can buy the car, then sell it.

When they set the MGEV (Final payment), they usually use around 85% of the predicted future value of the car (to cover their back). This means that if you play your cards right, you could make this 15% yourself (or even put it toward a new vehicle)

I always try to ring PCP clients before the end of the term to make an assesment of the value of their vehicle vs the sale price of the vehicle. I have even known clients take their car to the local dealership and get £300 - £1000 more than the final payment figure on the contract.

Food for thought isnt it?