Contract Hire Specialist

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.

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.