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Do you really need to own your next car?
Why not consider and compare the options?
If you have ever wondered how your next door neighbour can afford to always have a latest model high quality car on his drive and thought he must do lots of overtime. Maybe not. It could just be that he’s discovered what many business users have been doing for years and that he contract hires a vehicle.
You could be doing the same, because with personal contract hire you could change your vehicle from as little as 6 months to 3 years completely hassle free and without it costing you large amounts of hard earned cash, usually for just 3 payments in advance, 4 - 6 payments in advance for non status contract hire. This means you could be driving a higher quality vehicle than you could otherwise afford to buy.
Here’s how it works
Personal contract hire is like a longer term car rental. So instead of withdrawing your life savings or telephoning the bank for a loan, you call us, or make a short online enquiry and we will call you. Tell us what kind of car you are looking for and we will offer you a personal contract hire quotation.
Because you are in a rental agreement and are not buying the vehicle, the monthly costs paid by you are based on the car value today and its estimated value at the end of your contract. This figure varies depending on your annual mileage. Your monthly payment can also include full maintenance of the car including road tax so that all you will need to pay for additionally is car insurance and your fuel.
Personal Contract Hire Comparison Example
Let us say you fancied a NEW BMW 3 Series, perhaps a practical 320D ES saloon model. The best 2009 price for a 3 year personal contract hire based on an annual mileage of 10,000 Miles is currently £309.95 + VAT per month. The initial deposit is 3 payments in advance. So you could be driving a brand new 3 series for less than £85 per week, and if you would consider a nearly new one for even less!
The price does not include full vehicle maintenance but based on an annual mileage of 10K it really isn’t necessary. You would be driving the vehicle whilst still within the manufacturer’s warranty and most vehicles only require a service every 10K anyway. At the end of your agreed personal contract hire you can hand the car back or arrange to purchase from the finance company (Yes you get the option to purchase) or extend the contract. Total cost of 3 year contract inc deposit and VAT £13,544.
Now compare this example with purchasing the same new car. The current 2009 list price for a standard BMW 3-Series 320d ES 4 dr saloon is £25,385. If you could afford to buy the vehicle outright you have still had to find £25,000 from savings. You also have to think that once you have purchased the car you will lose money every month in vehicle depreciation, 3 year old 30,000 mile examples of this vehicle are currently being advertised for around £12,500,
roughly half price and some feature non standard extras inc metallic paint etc. Using this example of a BMW 3 Series diesel you purchased outright for 25K, you are likely to get approx 50% of it’s value back if you sold it in 3 years at 30,000 miles. That is £12,500 back and a gain of approx £1000 over the personal contract hire deal above. It’s very close indeed and don’t forget the depreciation on an ever popular 3 Series diesel will be less than other makes and models of car plus you did have to part with £25,000 cash in one go.
In the end if you still wanted the option to buy you could go for a personal contract purchase option with a balloon payment at the end.
More likely than buying the vehicle outright for cash though, you would look to purchase the vehicle on finance, say over 60 months, 5 years. Based on a low APR of 10.9% and a deposit of 10% leaving a balance of £22,846 your monthly payment would be £489.81. Total amount payable £31,927. And that’s on a low rate! Had any adverse credit? If so the rate would be more like 19.9% giving a monthly payment of £583.70 and total amount payable of £37,561.
When you compare personal contract hire with a standard finance deal you can see why it is extremely cost effective and can still make sense even if you could afford to buy the car outright for cash. Why not keep hold of your money? Still think you need to own your next car?
To find out if personal contract hire could be your best option, send over a short confidential enquiry with your choice of vehicle and we will get back to you with a quotation. (Please include “Personal Contract Hire” in the comments box thanks)
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| Personal contract hire means you could be driving a new Mercedes for less than you think |
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