Thinking Of Contract Hire Or Car Leasing? Here’s Some Information You Need To Factor In
Companies who are considering car leasing or contract hire for their vehicles are getting a bit of a shock when it comes to the delivery lead times being quoted by manufacturers.
With the recession hitting the United Kingdom and United States motor industry hard, many manufacturers have reduced their car stock pile to zero and are only building to order. The result? If you want to take out a new contract hire or car leasing agreement, you’ll probably have to wait at least three months to get your vehicle.
And there’s no sign of the situation changing soon with some manufacturers deciding to mothball plants for months at a time in an effort to reduce costs.
But not to worry, there is some good news. Contract hire rates for vehicles remain level although there has been a marked shift away from 2 year contracts to 3 years as finance companies try to establish some stability in the market.
If you are unaware of what contract hire's are, below is an explanation.
Contract Hire is an agreement to lease a vehicle (car or van) for a set time period (and mileage) at a fixed monthly cost. The monthly Contract Hire rental amount is based upon the original cost of the vehicle, the mileage that is to be covered and the Contract Hire rental period (for example 24 months). An allowance for depreciation is also factored in to the final Contract Hire monthly cost. Maintenance packages can often be included within a Contract Hire agreement but these are not obligatory. Such Contract Hire maintenance packages would typically provide cover for all car or van servicing within the period of the Contract Hire agreement. Contract Hire agreements are usually preferred by vat registered companies,sole traders and partnerships.
