Vehicle Leasing To Beat The Credit Crunch
Topics: car leasing, finance, financing schemes, car financing
As the word recession is bandied around every possible media outlet and dominates increasing discussions from boardroom to pub, it is an obvious and fair assumption that the general public are tightening their belts.
Safe investments and purchasing methods are the order of the day and the way to negotiate the rise and falls in value and interest associated with an economic slowdown.
If you can spread the cost of your holiday across payments you know you will be able to meet then why not spread the cost of your new car too?
Fixed installments that won’t jump if interest rates soar as a variable rate loan could and, at the end of the installment period, you get to keep your car.
There was a time when even the mention of financing, car leasing or contract hire sent people running for cover to hide their money for fear of high interest rates and exhaustive contracts. But is this still the case?
As with most things, plenty of competition in the financing market is beneficial to the consumer and the days of signing your earnings away for 5 years and paying sky-high interest rates are long gone.
There’s also a wealth of choices out there depending for both personal and business users in terms of both payment processes and cars available.
Take the Audi A5, for example. A stylish Grand Tourer that offers a high level of performance and handling from a selection of powerhouse engines.
To buy a sleek runner like this would mean a hefty payment that not everyone can afford as a one-off or to sign up to various dealer-finance schemes.
Rather than signing a financing deal with a dealer, using a company such as BCH for financing your new car means a wealth of choice for both payment schemes and cars.
Whilst a dealer may have a finance scheme that suits your budget needs, they may not offer the make of car you had really set your heart on.
Given that you will be owning the car for at least the duration of the loan payment, it’s safe to say that it’s worth paying for the car you really want rather than settling for what you can get with a certain dealers finance scheme.
Taking advantage of leasing and payment schemes from a PCP company means you can choose from a wide selection of cars including the Audi A5, a BMW 1 Series or even, for example, a Range Rover Sport. A diverse selection of vehicles that you would be hard pushed to find in the same dealer’s showroom.
So how can you pay for a car with such credit crunch avoiding methods?
First off the bat is Contract Hire. Contract hire is a method used by businesses to hire vehicles from a provider for a set period of time, the provider retains ownership of the vehicles and the risks associated fall with them. When the contracted period is up, the vehicle is returned to the licensing company.
Finance leasing, again used primarily by businesses - think commercial wagons and company cars - is one where the monthly rental is based on how much the vehicle costs, the length of the lease and how much the car will be worth in the future given the annual mileage.
For those companies looking to keep the vehicles after the contracted time of a finance lease or contract hire is up, there’s a Contract Purchase. Contract Purchase works in the same way with monthly payments over a fixed period of time only, at the end of which, the company can pay an pre-agreed sum (a balloon figure) and purchase the car.
An alternative method to keeping the car after the fixed term of payments is Lease Purchase. This method offers a flexible deposit and repayment purchase and often carries a flexible percentage of the purchase price stored up for a final repayment. The future value is estimated on the value of the vehicle based on the annual mileage.
A newer form of car financing on an individual - as opposed to company scale - is Personal Contract Purchases (PCP).
For those looking for lower monthly payments this could be the answer as the cost of the car is not spread over the loan period. Instead, when the vehicle-loan period comes to an end you have a couple of choices. You can pay a balloon payment and keep the car, part exchange it for another vehicle or, simply, hand it back to the dealer and walk away.
If the idea of handing the car back to the dealer and walking away sounds like the solution you’re after, then Personal Contract Hire should appeal. With this method, also known as personal leasing, the setup is a personal variation on the contract hire. This is a long-term rental agreement with monthly payments for a car that you use and, at the end of the contract, return without any further obligations.
This is, of course, just a brief summary of the possible approaches on financing your car, or even fleet of cars, and each has many more details and plenty of companies willing to offer the best deal and advice on said method.
What’s needed is up-to-date, expert and impartial advice on all aspects of vehicle financing and taxation and the surrounding legislative matters and offer the guidance around the benefits of each financial situation.
As more people search for less capital-heavy methods of buying a new car such companies are sure to see as many benefits as their customers are.
Next time you see a new Volkswagen Golf sitting in a showroom or Lexus IS cruise past you and think “there goes the car for me,” a personal contract purchase could mean getting behind the wheel with affordable monthly payments that help you drive in comfort and keep the bank manager happy.
Tony is an online marketer, article writer and researcher currently interested in car leasing at www.bchsolutions.co.uk
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