Volvo XC60

1. Volvo XC60 Diesel D3 163bhp DRIVe ES 5-door with Start Stop – List Price £26915
2. Vauxhall Antara Diesel Estate 2.2 CDTi Exclusiv 5-door 2WD – List Price £18975

If you have spare cash you could probably walk into any dealership and negotiate a discount off the recommended manufacturer list price but this will not help you when you look at how much money your brand new vehicle will lose over time, or how much money you can save by looking at contract hire.

The difference in List Price for the two vehicles is nearly £8,000 and you might not believe it but the contract hire monthly rental on the same terms is near enough the same at £287.68 excluding VAT for the Vauxhall Antara and £287.40 excluding VAT  for the Volvo XC60.

The two prices above are based on a two year contract, 6 rentals in advance, non-maintenance contract hire at 10,000 miles per annum. Please note these rentals may change at any time.

Why is the rental nearly the same when the cost difference is nearly £8,000 if you buy outright?

There are a number of factors but the main two are as follows.

1. The Volvo XC60 has a better resale value in 2 years with 20,000 miles on the clock, than the Vauxhall Antara.
2. The leasing company may have negotiated a better fleet discount for the Volvo XC60.

So before you buy a car, see what the contract hire rental is for your final vehicle choices, as you can protect yourself from vehicle depreciation and also drive a better car than you think.

Renault Scenic

This question is often asked and is quite easy to explain if you know how a contract hire rental is made up. There are many factors that our leasing company partners consider when setting their contract hire rentals.

The number one factor is the residual value (re-sale value) they set for each vehicle. After that the other items considered is the amount they buy the car for, including volume bonuses (and this will vary), their monthly overhead in the rental, profit and interest, vehicle recovery (RAC cover) and maintenance cover, if you opt for full maintenance contract hire.

So don’t always assume that if a car costs more to buy that it may cost more to contract hire.

A great example of this are the following two MPVs, which we have shown contract hire rentals for on 3 years, non-maintained, 3+35 rentals and 10,000 miles annum i.e. like-for-like quotes.

The Renault Scenic has a manufacturer list price of £17,450 and The Citroen C3 Picasso a list price of £13,565 – a list price difference of £3,885.

Yet, the contract hire rental is the same for both cars at £209.00+VAT per month.

If you want to find out what other cars may cost less on contract hire , even though they may have higher prices to buy, try the Vehicle Type contract hire shopper, choose the type of car (i.e. MPVs), your monthly budget and then see what you can get for your money.

Used Car Expert, the leading used car magazine, has undertaken an analysis of the depreciation of small family hatchbacks (1.6-litre petrol or comparable engine) and has discovered some interesting results. They looked at the resale value of three year old values against their new price, with 30,000 miles on the clock.

They found that many new car buyers will have lost up to 50% of their money in this time. Depreciation is never on most people’s minds when they buy a new car and this is why business car leasing is becoming more popular with many small businesses, as the risk around depreciation is with the vehicle leasing company.

• New car prices are an approximate guide price of the price paid for a new car 3 years ago

Nissan Cube

CAP, the UK’s leading motoring industry data provider, has set a residual value of 45% for the Nissan Cube, after three years and 30,000 miles on the clock. This is a strong residual value setting and reflects Cube’s position as an iconic brand for Nissan.

Vehicle depreciation is a crucial factor for any new car buyer and also if you are looking at car leasing as well. The residual value set by the vehicle leasing company is crucial in how high, or low, your car leasing rental will be. The Nissan Cube has a simple line up with a 1.6-litre manual petrol model (42.8 combined mpg and CO2 emissions of 151g/km) and a new 1.5-litre diesel model will be launched in May of this year.

Autoquake.com, one of the UK’s leading used car auction sites selling ex-fleet cars, has announced that according to their figures, that used car prices are falling faster online than on dealer forecourts. A car which would have sold for £10,000 on Autoquake.com a month ago is now typically listed at £9,312.

Fredrik Skantze, Autoquake.com’s Co-founder said “After months of rising prices, we’re seeing signs that the used car bubble has burst. Values at auction have begun to slide and our prices are lower than they were a month ago”.

One thing is for sure, when you a buy a car rather than contract hire, you are liable for all the used car depreciation. So before you buy it is worth considering car leasing as an option.

The top ten Autoquake.com average percentage prices reductions last month are below. 

59 Plate

When you buy a car you probably never think about what it is likely to be worth in three or four years time. Car depreciation does differ between different manufacturers and models and Glass’s guide has just published the top ten worst cars.

However none of the top ten are currently in production and this has also had an impact on their second hand value. The analysis was conducted from value of all cars over three years old which are available in the UK – over 6,500 models in total.

The top 10 models which retain the least of their original list price (as a percentage) after three years and 39,000 miles are as follows.

1) Alfa Romeo 166, 14.4%

2) Rover 45/MG ZS, 20.3%

3) Rover CityRover, 20.4%

4) Rover 75/MG ZT, 21.3%

5) Proton Impian, 22.0%

6) Mitsubishi Space Star, 22.5%

7) Nissan Terrano, 22.9%

8) Alfa Romeo 156, 24.2%

9) Renault Laguna, 24.3%

10) Cadillac CTS, 24.8%

Other car ranges which are lurking below the bottom ten are the Nissan Primera, Fiat Croma, Vauxhall Vectra and Vauxhall Signum. Before you buy your next car you should consider car leasing instead, as you are protected from all the depreciation risks of ownership.

Not only do you have to worry about what the car will be worth in three years time, if you buy it, but also each car has different running costs. You can opt for car leasing with full maintenance cover as well, so that all your servicing, maintenance and mechanical repairs can be paid for as part of the rental

The best way to see which cars depreciate more than others is to try the Car leasing £ shopper price guide as this displays all cars between a rental range. You will be really surprised that some cars, that actually cost more to buy, will actually have a lower contract hire leasing rental. This is primarily down to the depreciation of certain manufacturers and models.

HPI, the vehicle information service, is issuing their own “Tips of the week” to the motoring public.

Their current tip is to appreciate depreciation before you buy a car. Some cars hold their value more than others and cars with large fuel consumption and increases in Vehicle Excise Duty, are proving hard to shift when you come to re-sell them. In particular cars with large petrol engines, 4×4′s and people carriers are the models they mention.

On the other side the cars they recommend you should choose are small, economical models with low CO2 emissions as these are in greater demand.

Contract hiring a car or van, protects you from depreciation, as the finance companies have already taken this into account when they calculate their rentals. That is why you will see that certain cars and vans have a much higher rental than others, even when they cost less to buy. It is because the whole life cost of depreciation has been taken into account.

You can still choose a 4×4, people carrier, large petrol engine, but by contract hiring you can see which ones hold their value better than others.