There is a more economical way to obtain a car!
Most of us have traditionally financed a car through the Franchise Dealer while we have been sat in their shiny showroom or using a bank loan having negotiated with the dealer to get the best discount we can.
But times are changing and over recent years a better option has become available, namely, Personal Contract Hire.
Initially, only companies were the able to obtain vehicles through a Business Contract Hire agreement, in which they never owned the vehicle but enjoyed the benefit of it through the hire period.
In recent years this method has become available to private individuals through Personal Contract Hire and has proved to be a much more economical option compared to buying a vehicle.
Contract hire agreements are typically over three or four years although two-year agreements have become more commonly available. Whatever period you choose, you find a benefit in this method.
As an example, consider that you are looking for quality German saloon.
The particular model you like is £40,000 and no doubt you can negotiate the price to £38,000 in the showroom. And say you are happy to pay it over four years.
So, to avoid uncompetitive dealer finance packages you decide to get a bank loan for £38,000 over four years which will cost you about £875 per month, so in total £42,000.
Over the four years you have enjoyed the vehicle, spent a little on road fund licence and maintenance; it has a three year manufacturer’s warranty and at the end of the four years you have a car worth about £15,000.
You could continue to enjoy the car for another year or so and accept increasing maintenance costs as parts wear and need replacing. Alternatively, you could go through the rigmarole of selling it and the whole thing has cost you £27,000 for that joyful driving experience.
Now let’s consider arranging a Personal Contract Hire for the same vehicle over four years. There are options as to paying an initial deposit of three, six or nine months followed by monthly payments for the remaining term of the hire agreement, but whichever initial payment you choose, over the same four year period a Personal Contract Hire agreement would have cost no more than £20,000.
In fact, even two consecutive 24 month hire agreements would still have cost no more that £24,000 and you would have had two new cars in that four year period.
But with a four year Personal Contract Hire deal, you can see that you would be £7,000 better off at the end of the period.
Why is this possible?
There are several factors, but it lies mainly in the buying power of the funders and their ability to secure significant discounts from suppliers and they have less to recover from customers in the long run.
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Now many more people are realising that Personal Contract Hire or Business Contract Hire allows them to get the car of their dreams at the most economic cost and even put them in a better car within their budget.
If a new vehicle at a great deal is of interest to you, please contact me and I will get the best deal possible for the car you want to drive.
Personal Contract Hire and Business Contract Hire