WHETHER you have a small fleet of vehicles or you are a single owner-operator you may well have taken the decision to lease vehicles.
Great, it can be a very effective and economical form of business motoring, but be aware of some of the pitfalls when the lease comes to an end.
There are horror stories out there.
These largely centre around penalties for going over the agreed mileage limit or there’s minor damage such as paintwork.
Such things need to be nailed down at the beginning of the lease.
A lease in just another way of financing your vehicles and comes in different forms:
Probably the most popular, providing a vehicle for a set period of time while never actually owning the vehicle.
Typically, a monthly rental plan is set up for the length of the contract, on completion of which the vehicle is returned to the hire company.
Personal Contract Hire
Pretty much the same as contract hire and only available to private individuals.
This is the most common form of leasing and with a PCH agreement the customer takes control of a vehicle for a set period of time, but never actually owns it outright.
Once the fixed monthly rental plan has been completed and the contract comes to an end, you simply return the vehicle to the leasing company – or you can also take out a new PCH.
Personal Contract Purchase
Similar to the PCH but on completion of the contract there is a voluntary balloon payment if you want to buy the car outright for an amount payable established at the outset.
You don’t have to buy it, there is also the option to return the vehicle to the leasing company.
While these are the most popular methods of car leasing, there are different methods of car leasing and car finance and every method has it’s pros and cons any may not be the right for you.
End of contract
Whichever method you choose, what happens at the end of the contract?
You will be faced with a number of options, depending on the type of contract: Either hand the vehicle back and start a new contract on a new car, or hand the car back and walk away.
Once you have decided what to do, the lease company will organise a collection date for the finance company to collect the car.
If you decided to take out another lease, most finance companies/car leasing companies will take this into consideration and have your new car delivered on the same day.
Sounds simple enough. Not really.
At the quotation stage, car leasing companies will ask for your anticipated mileage and excess mileage charges will occur if you do go over the agreed amount.
How much you are charged will depend on your vehicle and charges vary from car-to-car. Make sure you are made aware of your excess mileage charge before you take out the contract.
For example a 5p per mile charge will set you back £50 per 1,000 miles.
Wear and tear
Make sure you keep the car in good condition. A finance company will not expect it to sparkle as new and the BVRLA has a Code of Conduct designed to only protect consumers and the finance companies alike.
Look at it this way, what would you be looking for when buying a second hand car – signs of wear and tear, mileage, damage, clean interior etc.
Leasing expert Lease4Less said you need to make sure everything is in working order, no rust or corrosion appears on the car, the car is roadworthy and no warning lights are displayed and that there is enough fuel for collection.
Ensure the car appears in good condition for its age, minor stone chips usually aren’t a problem but if there is substantial damage to the car such as dents or scratches it’s always good to take it to a body specialist to get it checked out and have any work that is needed carried out.
Check with the leasing company before going further to see if this is within their guidelines and regulations.
Lease4Less also suggests a valet which can help in removing light body marks such as scuffs, and will also get the car nice and clean inside and out.