How do I compare contract hire and leasing offers?
August 16, 2008 – 7:17 amContract hire and personal contract hire rates do vary considerably from one company to the next. One reason is because different companies take a different view on residual values (the value of the vehicle at the end of the term) and also as is the case with many products and services you are not always comparing like with like.
The Internet can be a good place to find competitive offers, which is where most contract hire brokers advertise. One of the difficulties of looking for the lowest possible rate, each time you buy a vehicle, is that on each occasion you will probably have to deal with a different broker, because different contract hire brokers will have special deals at different times. This stops you getting to know the broker and getting to know and trust a good broker is vital, because contract hire broking is an unregulated industry.
Seeking out the very lowest price on a car is only really practical for the smaller company that only occasionally changes a vehicle, or for the individual using personal contract hire. For a company that buys more than one or two cars a year, they really need to find a well established reliable broker that is competitive across the board. Where they can rely on the service and in particular the delivery date that has been quoted; there are unfortunately companies that quote delivery dates that are not achievable in order to secure the business.
In the case of a company that buys more than the odd vehicle it is not terribly practical to be dealing with a different broker each time they acquire a vehicle. A company such as this would probably be better off, developing a long term relationship with an established contract hire broker that would manage the whole fleet and provide all the related services; for example ongoing licence checking of the employees and negotiating manufacturers terms on behalf of the client.
For those who are the occasional buyer then the Internet is a good place to start looking. A search in Google under contract hire will produce nearly 4,000,000 results and under personal contract hire in excess of 750,000. So how many of these companies do you look at? The evidence is that very few people venture past the first page; you will also find offers under vehicle leasing, car leasing and contract hire and leasing.
There are sites that act as directories for a range of contract hire and leasing brokers. Some people are quite happy using these sites others don’t like them. There is nothing essentially wrong with them, although it is important to be aware that they don’t take responsibility for, or police their advertisers. So whilst the site may be very reputable it does not necessarily follow that their advertisers are. There is certainly evidence of contract hire brokers that advertise on these sites offering prices and delivery dates that are unachievable.
Of those advertising on the directory websites there will be some well-established and reputable contract hire brokers. They are often not difficult to spot; they will invariably be those that advertise in a very straightforward manner. If the deal being offered is for twenty-four or thirty-six months you would expect the advertiser to show the profile i.e. three payments in advance followed by thirty five monthly payments, or three payments in advance followed by twenty three monthly payments. If they don’t state the payment profile then they are quite likely to be offering something different, which will make it difficult for you to make a comparison.
Some companies manage to show a lower monthly rental by taking six rather than three payments in advance. There is nothing wrong with a deal that takes six payments in advance, as long as overall it works out less expensive than one that takes three payments in advance. The problem is that that they rarely do.
If delivery dates quoted are better than those quoted by other companies it is really a matter of speaking to the contract hire broker and trying to gauge if you are talking to a company that is straightforward in its dealings. It can be difficult to know, but if the delivery date is much sooner than others are advertising and they also require a deposit (sometimes refundable when the car is delivered), that could be time to start worrying. There is a lot to be said for the old saying, “if something appears too good to be true, it probably is”.
Pricing is another area some contract hire brokers mislead the public, advertising cars at prices knowing they cannot supply at those prices. The thinking behind this is that they will be contacted by those who are attracted by the deal and they can then tell them that that particular batch of cars have been sold but they have something similar etc. It is planned that contract hire and leasing brokers will become regulated in the future; just as insurance brokers are regulated by the FSA. It is expected that these companies will then have to change their ways, or go out of business.
Contract hire broking is an industry where customers are frequently let down, sometimes this happens where small brokers who have to work through other brokers, have themselves been let down by the main broker.
Perhaps one route to follow would be to find say three or four companies offering the lowest prices and then speak to them all; try to establish if they really can provide the vehicle at that price, on the promised delivery date and that they are not going to contact you after a few weeks and change the price, the delivery date or both. Ultimately choosing a company that inspires the most confidence, even if it is 2 or 3 a month more in terms of contract hire rental may be the best option.
Tags: Automotive & Cars
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