Where Do You Live?


State:



With car contract hire, the risk is assumed by the car leasing company; you’re paying your monthly fees at a fixed rate for the length of the contract, so it’s irrelavent to the customer what the car is worth at the end of the contract term. At times residual values of cars have been hit very hard and when this happens it is the finance company that suffers the loss, not the hirer.

 

The risk for a company increases when they decide to purchase their vehicles outright and have an overdraft with their bank instead of a leasing agreement. This is a higher risk situation for the company as they’re now in the position where a bank can, at any point, demand full payment of the overdraft. If the last two years (2008 and 2009 at the time of writing) have taught car leasing companies anything it’s that banks in this country can not be relied upon completely, particularly when it comes to providing financial security and peace of mind to the customer.

 

There are additional costs to consider also; the vehicle needs to be sold and this will require a member of staff to prepare, photography, list and show the car for prospective customers. Aston Martin BMW contract hirecan be sold on relatively easily second hand, but many models (from other manufacturers) can depreciate quickly and become very difficult to sell. It is often the case that a company will take delivery of a new model without managing to sell the old one..

 

 

More recently, companies are starting to realise that the least time consuming and most secure form of vehicle finance is when you have fully budgeted motoring costs and you can just hand the vehicle back at the end of the term,; which is only available with contract hire.

Technorati Tags: , , ,