Car Leasing News

The Government has pressed ahead with the planned 2p a litre rise in fuel duty from today, despite intense pressure from motoring groups. The further rise in oil prices looks set to push this up by 5p in total- putting an extra £120 a year on on fuel costs, for the average two-car family. This is the third rise in fuel duty in nine months, following increases in April and December.

RAC motoring strategist, Adrian Tink said,”This third fuel duty hike is unacceptable. Since the start of 2009, motorists have seen a 23 per cent rise in pump prices, meaning an extra £11 per tank for the average car”. Mr Tink also pointed out that VAT is set to rise back to 17.5%, on the 1st January 2010 and there is a further fuel duty rise due, in April 2010.

To ensure you get the best prices for your money don’t forget the website www.petrolprices.com records the cheapest prices for fuel in your location. It is also worth considering the combined miles per gallon consumption, when choosing your next car or van.

The MPG shopper at Comparecontracthire.com allows you to select the range of combined MPG fuel consumption you would like to achieve and choose the manufacturers whose vehicles you would like to see displayed. You can easily change the MPG ranges on the side menu bar if you don’t find a Bentley doing 70mpg!. And by choosing business or personal car hire you get to see the latest car leasing prices displayed as well.

Combined MPG is the figure presented for the Urban Cycle and Extra- Urban cycle together. It is an average of these two tests weighted by the distance covered in each.

If you are baffled by all the technical jargon with all the different car finance options offered to you, help is at hand. The Finance & Leasing Association (FLA) has launched an independent website which should help buyers understand the differences between car leasing, hire purchase, personal contract purchase etc.

When you look at getting a new car, you probably tend to think about What make?, What model? What colour? New or used?. These are much easier questions to answer than “How will I pay for it?”.

www.financingyourcar.org.uk is an impartial website to help you understand the different types of car finance. The website features a “car finance decider” which is a shortlist of questions about your general circumstances and car buying habits and recommends the best form of car finance for you.

As a small business, when looking for your new car, your first car finance decision has got to be “do you want to own the vehicle?”

Many of the new car dealer finance schemes are structured around a Personal Contract Purchase (PCP) finance product, which does enable you to finally own the vehicle after all payments have been made. You pay your deposit, then pay an agreed number of monthly payments for the term, then you have the option of paying the GMFV (Guaranteed Minimum Future Value) and the car is yours. It is a really simple way of buying a car.

This final payment option also gives you the opportunity, if you prefer, to just return the vehicle if you don’t want to pay the final amount. Provided you have not exceeded the mileage limit allowed and the condition of the vehicle is in a fair wear and tear condition, there is usually nothing more to pay.

PCP schemes are similar to car leasing in this way, if you never intend to pay the final payment and you don’t want to own the vehicle. If all you are looking for is to pay the least cash for the period- say three years, you can compare the total payments made on both these products, to see which suits you best. Cars will depreciate in value and the costs may not be as straight forward as they seem, so here are some guidelines on comparing PCP dealer car finance to business car leasing (contract hire);

Dealer PCP finance – the general scheme structure -(may vary by manufacturer)

- A deposit is usually required.

- Then add the total number of payments to follow.

- Total the initial deposit and the total number of payments together and see what this figure comes too.

- The dealer will specify the contract agreement for you at the outset i.e. normally three years at 10,000 miles (always check what the contractual mileage will be and confirm if maintenance cover is included). In most cases you normally have to pay for the maintenance yourself, so do ask if this is an extra cost, or if it is included in the payments you are making.

- Remember on a PCP -if you want to own the vehicle, the optional GMFV is the payment you have to make to finally gain title of the vehicle.  

Once you have established this you will then know what you have will to pay for the three year PCP contract.

When looking at a car leasing rental plan for the same car (or contract hire leasing as it is sometimes called), on a three year term, at 10,000 miles per annum, non maintained contract hire, the payment structure would normally be as follows;

Car leasing (contract hire) leasing) plan 

- Initial rental is usually three months in advance (check this as some companies may charge six rentals to make the monthly payments seem lower).

- Thereafter on a three year contract, your next payment starts in month two and you will pay 35 subsequent payments i.e. 38 payments in total.

- Your total rental payments therefore should normally be 38 times the £ monthly rental.

- At the end of the contract hire period you just send the car back and then order a new one.

- Please note car leasing (contract hire) is fixed to an annual mileage for contract period and if you go over this allowance there will be a charge. This is usually the same arrangement for a car dealer PCP finance scheme as well i.e. possible excess mileage charges and fair wear and tear. 

- VAT treatment – if you are a private customer, you need to make sure the VAT has been added to any car leasing rental quoted to you (currently VAT is levied at 15%). Some companies advertise personal car leasing prices without the VAT, which can be misleading.

- If you are a normal VAT registered business, then there is currently a 50% recovery restriction on the finance rental so if you are looking at prices without VAT, add 7.5% (half of the full 15%) to find out the true cost to your business. This is sometimes called the “effective rental”.

- If you are a sole trader and are not VAT registered then you have to add the full VAT charge at 15%.

The comparison 

Now you have got the two total figures for the car dealer PCP finance scheme and the car leasing rentals you can compare the difference.

A couple of final things to consider -the CO2g/km emissions figure is important, if you want to get the best tax relief on your vehicle, so it is probably best to look at cars with a CO2 figure of less than 160g/km if you are running a business, whether you buy or lease.

Finally before making any final decision it would make sense to speak with your own accountant, to just make sure the finance package you have chosen is right for your business.

Useful checklist (payments for PCP, rentals for Car Leasing)

Every month, the Comparecontracthire.com FN50 contract hire finance partners import all their live pricing onto the site. This major exercise takes place, usually around the second week of the month, thereby providing you with their latest pricing. Over half a million prices are downloaded every month.

When the pricing files are downloaded, the special offer sections are updated individually by each contract hire leasing partner. These offers do vary depending on each Company, the type of contract, annual mileage, length of term and the models available, however there are some exceptional bargains to be had.

Prices are displayed in a lowest cost order to help you find the car, van or pick-up for you. If the offer is not quite what you are looking for i.e. you may want to have a shorter contract length or a higher annual mileage for example, contact the partner direct for a revised quotation.

See the Home Page and the four Special Offers sections for more details.

The simple answer to this question is to compare prices from multiple finance companies, however where do you start. There are hundreds of contract hire companies on the Internet, however not that many who actually supply the finance.

If only you could compare prices Direct from the finance companies life would be much easier. Well now it is following the launch of Comparecontracthire.com the UK’s first business and personal contract hire comparison site. All prices are imported into the site from the finance companies directly.

On an Audi A3 Diesel Cabriolet 1.9TDi Sport 2 Door Manual model, the least expensive price showing on the same standard terms is £267.45 excluding VAT and £347.98 excluding VAT from the most expensive finance company.

That is a whopping £80.53 a month difference over 38 payments, or a £3060.14 saving just by comparing prices on a like for like basis.

Every manufacturer make and model is on the site allowing you to pick and choose the right car at the right price.

Ford goes into the New Year with impressive Green credentials. They have one of the UK’s most comprehensive range of green cars with low CO2 emissions.

The Ford Ka has a CO2 of under 120 g/km as do the new Ford Fiesta diesels which achieve 76.3 combined mpg and a CO2 figure of less than 100 g/km.

Ford has 185 models under 160 g/km emissions output thereby offering substantial savings to drivers and companies. They were also named Greenest Manufacturer in 2008 by Green-Car-Guide.com

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.

The Mail on Sunday has featured personal car leasing today (or personal contract hire as it is more commonly known) as a way a private individual can finance their next car.

Basically, because used car values are dropping, leasing could provide an option to protect you. Rather than buying a vehicle with your hard earned cash or using other forms of finance like hire purchase to eventually own the car, you rent the vehicle for an agreed period, with car leasing.

Maintenance costs can be incorporated as well into the monthly lease payment to give you even more protection from the costs of motoring. Graeme Banister, head of Jamjarcars, a Royal Bank of Scotland subsidiary said ” Leasing a vehicle makes perfect sense during the current economic conditions. Fixed monthly payments and protection from plummeting residual values and unforeseen maintenance costs provide high reassurance”.

Robert Hartley,  a finance manager for a pharmaceutical company, drives a lot on business and expects to change his car again in another three years. He has just swapped his three year old Renault Grand Scenic for a new version of the same model, on a contract through Jamjarcars. He said ” I was quite shocked by the low trade in value offered by a dealership and thought I would look at alternatives to buying outright”.  He estimates he will save £2000 over the three years of the lease, compared with trading in his current car and taking out a personal loan to fund the difference.

Personal contract hire is an option private buyers should therefore consider before they commit to buying.

The Mail on Sunday has also given good advice, in that buyers should compare “like with like” when checking lease deals and don’t forget to add the VAT to any rental quoted.  This is because car leasing is usually aimed at business customers, many of whom can recover some of the VAT added to the rental. 

Many companies offering car lease prices also inflate the initial rental (first payment) or reduce the annual mileage of the contract to make the ongoing rental look cheaper. It can be a time consuming process to look at several rentals, from different companies and to make sure you are comparing like for like.

The newly crowned dance champion from the BBC’s Strictly Come Dancing show has just taken delivery of a new Fiat 500.

Tom already owns a Fiat 500 and said “I have always loved Fiat 500’s and bought the old one two years ago for my wife Claire. I am really pleased with this new car and am looking forward to driving home to Derbyshire in it for Christmas”.

The model Tom ordered was a Fiat 500 1.4 16V Lounge in Funk White. If you are interested in Fiat 500 car leasing offers or deals then have a look at www.comparecontracthire.com . Here you can compare live quotes on line from up to 12 car leasing companies.

The Fiat 500 is available with a choice of three Euro 5- ready ultra low emission engines: the 60 bhp 1.2 litre and 100 bhp 1.4 litre or the 75 bhp 1.3 litre Multijet turbo diesel. The three different trim levels available are Pop, Sport or Lounge.

Whether business or personal contract hire, the differential in prices, for the same model, can be quite significant between each car leasing company. For example the least expensive Fiat 500 1.2 Pop 3 Door is showing on the site at £152.73 (including VAT) on personal contract hire from Hitachi Capital.

The contract hire terms are non maintained contract hire, three years, payment terms are 3 rentals deposit followed by 35 subsequent rentals at 10,000 miles per annum.

The next closest rental for this car is £172.50 including VAT showing a saving of £19.77 per month or £751.26 over the contract life by using the site.

Personal Contract Hire is an easy and affordable way for a consumer or private individual to finance their next car. It provides fixed cost motoring at a price you can afford.

The recent Pre-Budget report has reduced VAT from 17.5% to 15% from the 1st December 2008 for 13 months.

VAT is normally added to the contract hire base rental and cannot be recovered by a private individual. So for example on a base rental of £300 the VAT difference is £7.50 a month or a £285 saving over a three year contract with a 38 month payment plan.  

Personal Contract Hire may now be an even more attractive financial proposition than buying a car. Cars lose value over time and the resale hassle and risk is down to the leasing company.

Full details are available at www.comparecontracthire.com which is the UK’s first contract hire price comparison site allowing customers to see prices compared direct from the finance companies.