Personal Contract Hire
- Thread starter tonyyeb
- Start date
My Dad actually uses the company below, they're meant to be good. If you click on through to the site, and then select 'Online Quotations', from the top left, you can put together a package and get a price. Pretty useful tool.
MVM Vehicle Contracts
MVM Vehicle Contracts
![[TW]Fox](/data/man-of-honor/2009.png){kind=avatar}
It almost always works out cheaper and better to finance the purchase of a 6 month old car using a bank loan than it does to hire a car using Contract Hire.
Contract Hire is only really a bargain when your company is picking up the tab and enjoying the lack of VAT.
Contract Hire is only really a bargain when your company is picking up the tab and enjoying the lack of VAT.
Well not really, as you pay a load of cash and don't end up with a car.
Lets assume instead of contract hiring a Golf you buy a used one for £12k, keep it 2 years, and sell it for £8k.
£166 a month it'll work out to have cost once you've sold the car on again.
Costs loads more to Contract Hire.
Lets assume instead of contract hiring a Golf you buy a used one for £12k, keep it 2 years, and sell it for £8k.
£166 a month it'll work out to have cost once you've sold the car on again.
Costs loads more to Contract Hire.
Soldato
Taken from the site Alex UK posted:-
Renault Megane 3dr Shatch 1.5 Dci 106 Dynamique 05
12,000 Miles per Annum
Full Maintenance
Over 36 Months
Initial Payment of £ 777.36
Followed by
35 payments of £ 259.12
that comes to £9846.56...a LOT of money considering you'll have nothing to show for it.
Renault Megane 3dr Shatch 1.5 Dci 106 Dynamique 05
12,000 Miles per Annum
Full Maintenance
Over 36 Months
Initial Payment of £ 777.36
Followed by
35 payments of £ 259.12
that comes to £9846.56...a LOT of money considering you'll have nothing to show for it.
Soldato
This is a common misconception - leasing only works on a new car if the vehicle you are leasing has strong residuals and the interest rates are low because you are paying interest on all the cost, but only actually repaying the depreciation.
Take a Porsche Boxster. New, on the road, £36,000. Expected depreciation over 3 years/36,000 miles is £9000. So, putting down £1000 I will be repaying 5% of £35000 plus £8000 in capital depeciation which works out at £370/month to drive a new Boxster for 3 years. If I want to keep it, I can finance the other £27000 subsequently. In reality, of course, the leasing company wants to make a profit too, but I'm paying under £400/month over 3 years/30,000 miles for my Boxster.
Or I could buy it outright over 3 years at £1118/month. I can't afford £1118, but I can afford £400 so what do you think I did to get my Boxster?
BUT!
If you compare the Boxster to a 530 diesel, then it's much less attractive because the depreciation is so much worse on the 530 and if you take something that depreciates like a stone eg. a Citroen C6 then you might as well buy it outright because the depreciation repayments will be so horrific.
It's about whether you want to tie up your cash in an asset or not. You can have money in your pocket and a nice car by leasing or you can have a nice car with the same cash tied up by buying it. Lex Vehicle Leasing will let you lease that 2-year old Golf if you like.
Do the sums - to buy the £12000 Golf with 5% flat finance over 2 years would cost £575 per month and yes, you could then sell it for £8000, but by leasing it, you could drive it for £241 per month and hand it back having put £334 in the bank every month and earning 2.5% on that which gives you about £8320 so it is cheaper to lease.
Take a Porsche Boxster. New, on the road, £36,000. Expected depreciation over 3 years/36,000 miles is £9000. So, putting down £1000 I will be repaying 5% of £35000 plus £8000 in capital depeciation which works out at £370/month to drive a new Boxster for 3 years. If I want to keep it, I can finance the other £27000 subsequently. In reality, of course, the leasing company wants to make a profit too, but I'm paying under £400/month over 3 years/30,000 miles for my Boxster.
Or I could buy it outright over 3 years at £1118/month. I can't afford £1118, but I can afford £400 so what do you think I did to get my Boxster?
BUT!
If you compare the Boxster to a 530 diesel, then it's much less attractive because the depreciation is so much worse on the 530 and if you take something that depreciates like a stone eg. a Citroen C6 then you might as well buy it outright because the depreciation repayments will be so horrific.
It's about whether you want to tie up your cash in an asset or not. You can have money in your pocket and a nice car by leasing or you can have a nice car with the same cash tied up by buying it. Lex Vehicle Leasing will let you lease that 2-year old Golf if you like.
Do the sums - to buy the £12000 Golf with 5% flat finance over 2 years would cost £575 per month and yes, you could then sell it for £8000, but by leasing it, you could drive it for £241 per month and hand it back having put £334 in the bank every month and earning 2.5% on that which gives you about £8320 so it is cheaper to lease.
Soldato
you just gave me a really big headache.WJA96 said:
**
Caporegime
WJA96 said:
there is a misconception, you think the boxster is yours. It is not. After 3 years you will still not own the boxster, yet paying £1118 a month, after 3 years you will own the car.
as much as it is nice for people to think 'he owns x car' its nicer to thing 'i own this car' ;]
Caporegime
tonyyeb said:
while that is true, people buying on credit are doing that, buying it.
personal contract HIRE is just that, hiring a vehicle.
Morba said:
But the point is to have a decent mode of transport at your disposal with the least risk and for it to remain cost effective. If contract hire did work out cheap than buying a car I would be doing it. Owning a depreciating asset rather than renting it is more risky. What if interest rates shoot through the roof when it comes to selling it and you have to drop the price to shift it. 'Owning' it wouldn't make me smug then. But then it would make the next contract hire purchase more expensive per month.... oh the headache!!
It's still cheaper to get a loan. What about, say, financing it over 5-10 years yet knowing you'll sell the car and pay off the balance after 3?
That way you are only paying 3 years depreciation + interest on the loan. Not as much as contract hiring.
Contract hiring is just that - its hiring. It's no more your car than the Focus 1.6 you may have had from Enterprise last time you rented. It's the same thing just over a longer term. You don't own the car, it isn't yours, it isnt your car, you are simply renting it.
Not for me, thanks.
That way you are only paying 3 years depreciation + interest on the loan. Not as much as contract hiring.
Contract hiring is just that - its hiring. It's no more your car than the Focus 1.6 you may have had from Enterprise last time you rented. It's the same thing just over a longer term. You don't own the car, it isn't yours, it isnt your car, you are simply renting it.
Not for me, thanks.
Fair enough. I guess owning the car means you can change the wheels, change the stereo etc... I'm looking at this sort of thing in addition to a 'weekend' car. If it was cheaper with little risk then it would be perfect. But it seems its more expensive and not even close!
Soldato
Morba said:
It's my backside in the driver's seat. It's in my garage. I pay for the servicing and I have first option to buy it at an agreed price at the end of the deal. It's mine for another 18 months and in 6 months I have to decide what colour my next one is to be. I'm not too fussed about 'ownership' having had a succession of company cars that I paid for in my tax bill.
As LJK Setright said "What I drive is less important than how I drive it and both are less important than why I drive it". He might well have added how I pay for it somewhere in there as well.
Caporegime
WJA96 said:
if that is the case, why not just buy a used vehicle for under £2k, afterall it doesnt matter what you are driving.
Soldato
Morba said:
That's a valid point too.
Soldato
tonyyeb said:
You can change anything you like as long as you exercise the purchase option at the end of the hire agreement ie. you treat it like a PCP instead of a PCH at the end. But the final purchase price will be higher on a PCH than a PCP.
I also think you're basing too much of your decision on the one website suggested and that hasn't been updated in quite some time by the looks of the fact that none of the cars on there are newer than the '06 model year.
Have you considered a PCP rather than a PCH agreement? I would also have a chat with your bank about funding a PCH as they may allow you to negotiate the purchase price on your car, then they will have one of their actuaries set a final value figure to calculate the depreciation. It's usually been much cheaper for me than using a broker.
What car do you want anyway? Then at least we can play 'Monthly Repayment Bingo'
