Why are cars that cost more to buy, sometime less on contract hire?
Monday, November 21st, 2011This 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.
| Make and Model | Manufacturer List Price(Basic price plus VAT) | Contract Hire Rental excl VAT per month |
| Citroen C3 Picasso Diesel Estate 1.6 HDi 8v VT 5-door | £13,565 | £209.00 |
| Renault Scenic 1.5dCi Diesel Estate 110 Expression 5-door | £17,450 | £209.00 |
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.





