Cars4Agents – Why Should You Contract Hire Your Next Sign-Written Vehicle?
Wednesday 16th May 2012
John Paul Getty, known as one of the Richest men of all time once said: “If it appreciates buy it, if it depreciates, lease it”
At Cars4Agents we fully believe in John’s quote and can prove to you that leasing is certainly the way forward. In other words, the multi billionaire feels strongly about buying into assets that appreciate in value i.e. property and shares and renting/leasing into assets that depreciate in value.
A Moving Advert
Have you considered comparing the cost of a small advert in your local paper with a fully branded quality vehicle? You will find the latter represents increased value for money and it can be strategically positioned everyday to promote your business i.e. outside your premises, car park, station etc.
It’s certainly a way of getting noticed and remembered and can only increase brand awareness which leads to increased enquiries & sales.
Cars4Agents can only describe it as a ‘no brainer’.
Getting behind the wheel
The biggest cost of owning a car is depreciation: The financial loss suffered by the owner due to a vehicle's value falling from the moment it leaves the showroom.
Although depreciation varies greatly across makes and models, a typical car will lose approximately two-fifths (40%) of its value in the first year. After three years, the average vehicle will have lost around three-fifths (60%) of its initial value.
Renting your road
However, there is another easy way to avoid depreciation and manage the risk of big repair bills. This route involves renting or hiring a car for 2-5 years based on a set mileage through what's known as contract hire (commonly known as leasing).
In effect, a lease is a long-term rental agreement, through which you drive a vehicle of choice for an agreed period at a fixed monthly cost. Leasing cars is very popular in the USA, where drivers worry more about being seen in the latest model than they do about owning the metal! Nevertheless, British motorists are becoming keener on this 'renting route to the road'.
How leasing works
In a leasing contract, you do not end up owning the vehicle at the end of the contract as you have agreed to pay for its use only. Instead, you pay a fixed monthly amount during the contract term which includes full manufacturer warranty, breakdown cover, and road tax for the duration of the lease with or without maintenance (Servicing, Tyres, Brakes etc...). However, when the contract ends you must return the vehicle in good condition; refer to the BVRLA Fair Wear & Tear guidelines.
Even when covering a large amount of miles per annum leasing still proves to be the cheaper option. However, if you exceed the agreed mileage (average 10,000 miles a year), you will then be charged a “pence per mile” penalty for exceeding the agreed mileage. If it appears that you will exceed your yearly mileage allowance you can increase it mid-term. In addition, you must pay for any damage you cause to the car, which is considered to not meet fair wear and tear guidance rules.
In short, when you lease a vehicle you avoid depreciation, and the residual risk is that of the owner (Finance Company). What's more, it's the responsibility of the finance company (as owner) to dispose of the vehicle at the end of the term.
Renting versus buying
The monthly repayments to lease a vehicle are usually much lower compared with those payments to purchase one. In some cases, they can even be less than half the repayments for a loan. By the way, it's important to consider VAT (Value Added Tax), which adds 20% to the monthly rentals paid by private user, but as a business user you can reclaim up to 100% of the VAT.
Leasing allows you to get behind the wheel of a brand new vehicle, which ordinarily you couldn’t afford to have purchased. In effect, leasing can mean fixed-price motoring - driving a new car every two to five years with complete peace of mind and no hidden surprises!
Elliot Rasch - Marketing Manager
Editorial Contact Details - Rosalind Renshaw