How is that for a reciprocal question posed by Mike Rutheford for the Telegraph? It’s almost like asking wasn’t it great that 60% of our gold reserves were sold to the highest bidder?

Then again, whom are we talking about over here? Anyone with expertise in working in the real world? (another reciprocal question…)

With the UK going to the polls today do you think the answers to any of the above mentioned questions will change? Is that another reciprocal question…

The answer is of course, that nothing ever will change and as long as our docile population allows to have other people’s hands go into their pocket and remove the cash contained therein, things will more or less remain the same – that is, tax, tax and more tax.

Whilst you choose to live in this marvellous and beautiful country and there’s precious little that can be done about taxes, there is quite a bit that can be done about controlling expenses.

It is certainly easier to keep our proverbial heads in the sand, however this approach will only take you so far; it is far better to face the reality square on and if having a vehicle is of necessity for yourself and your business, leasing a car is an excellent option for controlling motor expenditures. No doubt, you will still pay the yearly road tax, maintenance, insurance, fuel – and be susceptible to the fluctuations of these.

By getting good advice however, it is possible to at least control the monthly outgoings by fixing most of the expenses at the outset – which is what a good vehicle leasing broker could and should do.

Whether you opt for a personal or business contract hire (and we will discuss those options in subsequent blogs), a lease will cap the expenses as it pertains to the rental and maintenance of the car and the road tax is usually included in the monthly rental – with the exception of some special deals (make sure to ask the question).

Remember – Governments come and Governments go but the Bull**** stays forever. Enjoy the ride.

Our Mythical Bushwalker reaches a yawning gap between his current standpoint and his destination.

A huge abyss stares up at him mockingly.

All that connects him to the pot of gold on the other side is a flimsy, tattered and weather beaten rope bridge.

“Almighty god” he cries out heavenward, “if I make it to other side in one piece – I promise that 80% of my fortune will be donated to charity”. Having placed his trust in a Higher Power, our bushwalker cautiously places one foot on bridge.

When he is a quarter of the way through he turns heavenward and says “Almighty god, if I make it through to other side – I promise that 50% of my fortune will be donated to charity”.

When he finds himself halfway through to other side he turns heavenward and says “Almighty god, if I make it through to other side – I promise that 30% of my fortune will be donated to charity”.

When he finally makes it across to other side in one piece and none the worse for his exploits he turns heavenward and says “Almighty god – I was joking and you thought I was serious!”

 Lest you think that this little quip is nothing more than the ranting of a bored soul, you may wish to think again.

Our eagle-eyed Chancellor of the Exchequer in his latest Pre-Budget Report slashed by 50% the Carbon Tax payable on cars with an emission of 72 co2.

At first glance this looks and feels like a real savings – 50% tax cut on low emission vehicles. Heck, Santa Claus must have come in early this year.

The catch is, are you ready for this one? – there is no such car in existence in the UK with this level of co2 output.

The lowest level of co2 output is the Smart car diesel coupe with an output of 89 co2.

“My dear suckers – I mean tax payers – when I said that the Almighty squatters of Her Majesty’s Government would cut your taxes we were joking. And you thought we were serious”.

First off, let me say a huge THANK YOU to all of you who have taken the time to share your feedback with me – you can’t imagine how much it means to me to have the blogging acknowledged.

Please also share with me what you would like to see posted here, what topics should be covered in the future, with regards to contract hire, leasing, motor insurance etc.

 End of Quarter 1 is just around the corner (!) so not a bad time to reflect on some big and small changes that have occurred since the start of the year with regards to financing and leasing a vehicle.

 There have been many, and most have been ignored by our media.

 The biggie was the VAT ‘reset’ to 17.5% at the start of 2010 from the previously 15% enjoyed by all consumers.

I don’t know about you, but I prefer to keep more of my hard earned dosh in my pocket. VAT increase has an immediate affect on everything. First and foremost – fuel costs go up. Our current economy (and for the foreseeable future despite Al Gore and honchos) is based on fossil fuels and any tinkering with VAT impacts fuel prices.

Fuel prices in turn have an impact on every single thing which forms part of our daily life, food, clothes, electricity, water – you name it. Technically food may not be vatable, but the transport of food certainly is. And who do you think gets saddled with the extra costs?

 Not surprisingly, the VAT increase also affected the price on cars; let me explain.

Every vehicle has a VAT element as part of the On The Road price. (OTR is an acronym we can leave aside for now and which will be covered at a subsequent blog.)

When VAT is tinkered with, it immediately changes the ‘bottom line’ price of the car. Even businesses who can claim back some – or all – of the VAT outgoings on their lease are also affected by this increase. The VAT that is reclaimable is only on the monthly lease but the car price increase will push up the monthly rentals.

If you think this VAT ‘reset’ is the last we’ve heard – you have got something else coming. Many experts believe that a further VAT increase is imminent. Never mind that we are already overtaxed and spend about 6 month of the year working to enable our elected representatives to spend to their hearts’ content, VAT rates will likely again be tinkered with.

Mind you, the recent “scrapage scheme” where older cars where traded in for new one’s gave HMRC a boost as it brought in more money in VAT then it ‘spent’ on the scheme – but that is besides the point.

While the rest of us spent the new year raising our wine glasses in hopes for a better future, some of spent it by raising the Vodka And Tonic (he,he,he…).

 

Millions of Britons are being charged heinous amounts of interest or are being refused credit altogether.

The issue is not as complicated as banks and others make it out to be, but neither is simple nor obvious. How do the financial institutions measure your risk?

And don’t kid yourself that it does not affect you, the way in which your risk is measured affects you almost every day in more ways than you can imagine. Are you applying for a credit card? A bank account? A mortgage? A car loan? A mobile phone? Cable TV? Broadband connection to the internet?

These and hundreds of other ways in which we request overtly or covertly the financial institutions’ resources invite them to measure your risk profile.

And to top it off, every time you are refused, a ‘blotch’ will appear on your report which in itself will push your score lower. A classic case of Catch-22.

How do they measure consumer risk? The answer lies in two words – Credit Score.

Every person has a credit score based on historical behaviour and it is largely this historical record that finance institutions use to determine how our behaviour will most likely be in the future.

There are other factors involved as well such as employment but a large part of your score is determined by historical behaviour and monetary habits.

A higher score translates in cheaper finance rates and faster decisions by the decision makers.

In today’s financial climate more than ever, it is imperative that you aim for the highest possible score.

A low or average score should not be taken personally as none other than one of the greatest world investors found out when he received only an above average score!

Though the US and UK have different ways of calculating the numbers, they are not much different.

There are three things you will have to do.

The first thing you will need to do is to get your credit score and find out what it is.

Often there will be factual errors that will damage your score and than can be fixed with a simple phone call or letter.

Second thing to do is to dispel myths and facts about improving your score.

Much of what you will read in the link above applies to the UK as well.

The third and final shield in your defence arsenal against high interest rates and fees is – patience.

It takes time for modified behaviour and factual changes to start having an impact on your score. Give yourself at least 6 months of being actively engaged in the process and then request your score again.

Good luck!

What is the difference between a stockbroker and a pigeon?
The pigeon is the one that leaves a deposit on the Ferrari!

Seriously though, the car manufacturing industry has by the sheer power of advertisement reconfigured the basic meaning of a simple word – Deposit.
‘Deposit’ nowadays means different things depending on the context in which it is used.

If you are renting a house, a deposit will usually consist of a couple or three months rent paid upfront that is either refundable at the end of the term or can be used in lieu of rent for the final two months of the rental agreement (usualy the former).

For Hire Purchase where one ends up owning an asset at the end of the contract, a deposit will usually entail a 10% down payment of the full value of the asset followed by x amount of payments.
So far – so straighforward.
In Contract Hire and Leasing, a “deposit” is somehting entirely different. If for example, you take out a 3 year contract you would expect to pay 36 monthly payments. 12×3=36.
The pricing matrix however of your regular Contract Hire agreement is a 3 month ‘deposit’ followed by 35 payments. At times it can also be a 6 month ‘deposit’ followed by 35 payments.

If you explicitly ask for a 1 month ‘deposit’ followed by 35 payments you will get it, but the default agreement is 3 months followed by 35, also known as “3 by 35″.
The reasoning (note that I did not use the word logic) behind this structure is that a larger upfront payment mitigates and shrinks the monthly payments.

In my view, so would putting £10,000 upfront lower the monthly payments. When all is said and done, if the initial payment is not refundable or is being used as a top-up to the monthly rentals then it does not look, smell or behave like a deposit.

It surely looks good on paper being able to advertise £199.99+VAT per month for a Ferrari but to me the pigeon seems to be the one who is more honest.

The following is a true story with a couple of details changed slightly to protect the privacy of the individual:

Maureen is looking for a car. Nothing extraordinary there as it happens every day, all day.

What sets Maureen apart is that she is slightly disabled and as such requires an automatic car that does not require much effort to get in and out of. What’s more, she needs room for her two children, pet and her partner.

Maureen is a clued up and educated consumer, precisely the type Mustard Leasing is keen to do business with. She has set for herself a realistic budget, knows exactly what she needs but keeps her mind open for alternative options – which is why she contacted a vehicle and finance broker.

She prefers a three year contract but though originally requested that maintenance be included as a monthly add-on cost, she will consider sorting out the maintenance at her local garage as this will save her a tidy sum over the term of the contract.

She is keen to drive a new car but will also look at a used car, low mileage options that are still well within the manufacturer’s warranty schedule. Our specialist second hand dealers will only sell legitimate cars and what you get is exactly what it says on the tin.
The recent plunge in value in the second hand car market is currently delivering astounding value for money.

Two weeks and five vehicle suggestions later she is the proud owner of (shock-horror) a family car 57 plate with 54+ thousand miles on the clock.

An SOB, slickmaister had done a royal job on her and unloaded an automatic VW for nearly £10,000!

The manufacturer’s warranty will run out in 6 months’ time and with the relatively large mileage she will be looking at perodic maintenance schedules which she has not budgeted for. And this is assuming the vehicle sold is the one advertised.

No doubt, she has also purchased the dealers extended warranty but Maureen will probably be surprised when it carries all sorts of caveats that makes the Warranty all but useless.

We did offer her our almost impossible to beat Hire Purchase finance, but the above SOB slickmaister talked Maureen out of it and sold her their finance package as well. Monthly figures are easy to massage and the dealer can always throw in a ‘facility fee’.

I feel bad. Not only because our company has lost an educated and informed prospect, but I feel bad for what Maureen will experience. It is going to be painful.

Rather than enjoying her family whilst in the car, she will be looking forward to a maintenance intensive vehicle and a depleted savings account. At the end of her contract she will be left with a depreciated asset and a big headache.

It has been proven scientifcally that 80% of people are visual and hence their weakness when entering a dealership as opposed to visiting a reputable, online contract hire specialist.

Nonetheless, not all is lost. If this story can serve as a ‘teacheable moment’ and encourage others to shop around and not be taken in by a slickmaister, then Maureen will have at least done some good.