Thousands are in negative equity on their cars.
The Daily Mail has reported today that thousands of motorists are in “negative equity” on their car loans.
Many “car purchase” schemes structure their payments on a series of monthly instalments followed by a final payment at the end of the contract. You have to pay the final payment before you own the vehicle. But these final payments estimates, which were based on the future value of the vehicle, have been highly inaccurate compared to actual used car prices today.
The Daily Mail has estimated that the total shortfall could be as much as £272 million.
Comparecontracthire.com recommends that small businesses and private buyers look at contract hire before acquiring their next vehicle. With contract hire you never own the vehicle as all you do is pay a fixed monthly rental for an agreed period and mileage. The risk regarding the re-sale value of the vehicle rests entirely with the contract hire leasing company.
You can also build a payment into your monthly rental to cover all maintenance and servicing costs if you are worried about future unplanned bills.
Tags: compare, contract, hire, leasing, personal, prices, purchase