Stable Vehicle Contracts by Platform81

Stable

T: 015 1 72 8 47 1 1

Vehicle Contracts

C A R L EAS I NG MADE E ASY

THE COMPLETE GUIDE

Stable Vehicle Contracts Ltd, No2 Evans Road, Liverpool, L24 9PB

CONTENTS GENERAL INFO BUSINESS PERSONAL GAP INSURANCE ABOUT US

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WWW.STA B LEVE H IC L E CO N T R AC TS.CO.U K

Stable Vehicle Contracts has been established since 2009 and is fast becoming the industry leader in the supply of car leasing and van leasing in the UK. Part of a large privately owned dealership group with over 17 sites, Stable Vehicle Contracts has the buying power to bring the very best car leasing and van leasing deals to the web.

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

HOW DOES LEASING A CAR WORK? So, everybody seems to be talking about car leasing right now. I’m sure at least three people have told you to lease your next car! In fact leasing a new car or van is more popular than ever, and I’ve been involved in car leasing since 2003. But how does leasing a car work for business and/or personal drivers? HOW DOES LEASING A CAR WORK? I’ll try to breakdown the process of leasing a car or van in three stages, which will showcase how simple this form of driving a new vehicle really is!

Start Of The Contract At the start of the contract you have to pay an initial rental, this can be a set amount i.e. £500, or multiplies of the monthly rental. This is normally 3x or 6x, for example – if the monthly payment is £100 and the initial rental was 3x….you guessed it – the initial rental would be £300! Next you set the contract term, basically the period of time you want to take the vehicle over. This is normally taken over two, three or four years. Lastly, you will need to agree with the finance company what annual mileage the vehicle is expected to do. In most cases this can be amended during the contract if your circumstances change. Bear in mind, if the total contracted mileage is exceeded there will be an excess mileage charge to pay. This is normally set at around 6 pence per mile.

Middle Of The Contract During the term of the contract it’s relatively plain sailing. Don’t forget if the vehicle needs to be serviced you must get this done as per the manufacturers guidelines or risk paying a penalty charge when the vehicle is returned.

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The simple way to put it is just treat the vehicle like it’s your own. If it needs a service – get it serviced. If the tyre needs replacing – replace the tyre. You get the picture.

End Of The Contract This is the easy part, simply hand the vehicle back at the end of the lease agreement! That’s all you need to do. Naturally if the vehicle is damaged beyond “Fair Wear & Tear” there will be additional charges to be paid. But really, just like I mentioned in the Middle Of The Contract section, treat the vehicle like it’s your own. If someone scrapes a key along the side of the vehicle and you owned it, chances are you’d get it fixed – so why wouldn’t you do it with a lease car? On a serious note, all of the major finance companies adhere to the British Vehicle Rental And Leasing Association’s (BVRLA) Fair Wear & Tear guide. This means that only genuine damage is charged, i.e. light scratches, stone chips, small scuffs to the wheels are all deemed to be acceptable.

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@CarLea seE x p er t s

As long as you can accept the fact you never own the vehicle, simply hire it from the finance company – welcome to the world of cheap motoring!

St a b leVeh ic leCon t ra c t s

HOW MUCH DOES IT COST TO LEASE A CAR? And that is a great question, but one that nobody seems to want to answer – so let me give it a go for you! “how much does it cost to lease a car?”

Finding out how much a lease car costs can be hard work! The problem with the question “how much does it cost to lease a car?” is that there are so many factors involved when leasing a car that prices will vary massively. Having said that, let me talk you through these factors so you get an idea how we get to the monthly rental.

Price Of The Car As you would expect the on the road price of the car has a massive impact on the monthly rental. Typically the more expensive the car, the higher the monthly lease rental.

Length Of Contract A common way to keep the monthly rental as low as possible is to increase the length of contract. The longest period you can lease a car or van over is normally four years. A four year lease would usually ensure the monthly rentals are kept to a minimum. However, there are certain instances when the finance company will offer a cheaper rate on a two year contract. This is because a two year old vehicle will be sold back into the manufacturers used car centres where a higher resale value can be reached than if it went to the auctions.

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Deposit/Initial Rental Again it sounds obvious but the greater the deposit/initial rental you can afford to put down the lower the monthly rental will be on your lease car. The total amount you pay over the length of the lease period is roughly the same. So it really just depends if would rather put more down up front and pay less each month or lower upfront and higher each month.

Mileage The higher the annual mileage the lease agreement is set on, the higher the monthly rental will cost. This is because as you pile the mileage onto your vehicle, the resale value is decreasing at a rapid rate. So the finance companies will factor this into the monthly rental. Don’t think about setting the annual mileage lower than you will actually do, there are excess mileage charges at the end of the contract if you go over the total agreed contract mileage. These excess mileage charges range depending on the vehicle, but typically are between 6 – 10 pence per mile!

Resale/Residual Value The resale value, or residual value as its more commonly called, is the amount the finance company expect the car or van to be worth at the end of the contract. The higher the residual value the lower the monthly rentals will be. This is why you will find that an Audi A6 can be cheaper to lease than a lower value car, say a Ford Mondeo. I hope this has gone some way to help you understand ”how much does it cost to lease a car?” and how the monthly figures are calculated.

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PUT MORE DOWN UP FRONT AND PAY LESS EACH MONTH OR LOWER UPFRONT AND HIGHER EACH MONTH. T. 01 5 1 72 8 47 11

@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

HOW TO CHOOSE YOUR CAR LEASING PROFILE

As you trawl the vast amounts of car leasing websites you will notice that there are many different variations of leasing profiles you can choose from. They can sometimes be confusing and make it difficult to compare offers. Your car leasing profile is made up of two main factors. 8

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Initial Rental This is the amount of money the lessee is prepared to put down at the start of the contract. It is typically calculated by multiples of the monthly payment, normally by 3 times or 6 times. For example, if the monthly payment is £100 a 3+ payment profile would mean an initial payment of £300 and 6+ would mean £600. The higher this initial payment is, the lower the monthly payment. However, over the length of the contract the total amount paid is very similar so it really just comes down to personal preference.

Term This is the length of time the lessee commits to take the vehicle for. The most common car leasing term is either two, three or four years. Normally the longer the term the lower the monthly payments. However, there are exceptions to this rule! From time to time the finance company will enhance the residual value (the amount the vehicle is worth at the end of a contract) for shorter termed contracts. This makes the rental cheaper on a two year contract than it is on a three year.

Tailored To Your Individual Requirements The leasing profiles which are advertised are simply there to show examples of the payment. It can be tailored to your individual requirements, so if you want a 1+29 agreement – just ask!

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

BUYING VS LEASING

? t s e b s i h c i h W

If you have ever been in the position of choosing your next new car, I guess you all ready know of all the agonising decision there are to make. Do you go new or used? What make? And the big one COLOUR! So once all these questions have been answered comes the hardest of them all…..buying Vs leasing cars - which is best for me?

It’s a question I can’t answer for you I’m afraid, sorry to disappoint! Each and every one of us has different needs and wants in life which will determine the outcome. But that’s what makes us interesting – right? Buying Vs Leasing Cars It’s a tough question! So although I can’t give you the answer, let me share a couple of the good and bad points of each method. This way buying vs leasing cars will be a little more straight forward a decision to make.

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

Buying Good Points Of Buying A Car • •

Definition

Comes with a full manufacturer’s warranty, this gives peace of mind most faults will be repaired without any charges Ownership. The car is yours, in effect it is an asset. If you are prepared to keep the vehicle for a long time, the total costs of running the car could be cheaper.

In this instance we will define buying as in the traditional sense of buying a car i.e. purchasing a new vehicle via your own funds. Not getting a bank loan or any form of car finance.

Bad Points Of Buying A Car • •

• •

Depreciation. As soon as the car is driven away from the showroom it will lose money. Cost of change. If you choose to change cars the cost to do this can be high. Dealerships will typically only offer trade value, which will make the difference between what your car is worth and the cost of the new car bigger than first expected. Hassle. Selling a car privately is one way to guarantee returning a greater value for your car than part exchanging at a dealership, but this could take up a lot of your time. Wear and tear. As the vehicle gets older, more and more mechanical issues tend to arise. The means more trips to the costly mechanic.

Summary If you are happy to keep a car for a long period – say 6 years and longer – buying a car is properly more suited to you than leasing a car would be.

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SELLING A CAR PRIVATELY IS ONE WAY TO GUARANTEE RETURNING A GREATER VALUE FOR YOUR CAR THAN PART EXCHANGING AT A DEALERSHIP, BUT THIS COULD TAKE UP A LOT OF YOUR TIME.

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Leasing Definition

• • •

•

Just like buying a new car outright, when leasing the vehicle will have a full manufacturers warranty. Road Tax Included. Certain lease agreements include road tax for the full contract period. This takes away the hassle of arranging yourself and the cost each year. Ease of change. One of the major benefits to leasing a car is the ease in which you can change cars. Essentially every two, three or four years (which ever contract period chosen) you will be able to get a brand new car – without having to payout huge sums of money. More car for your money. Leasing will allow drivers to have vehicles they would never be able to afford to buy outright, this is because you only pay for the period of use.

Bad Points Of Leasing A Car •

•

Fixed period. Once you agree to the contract period, that is how long you have to keep the car for. To exit a lease agreement early will mean paying a termination fee, on average expect around 50-60% of the remaining installments. Contracted mileage. At the start of the car lease you will have to state the mileage the car is expected to do over the contract period. If this is exceeded there are excess mileage charges, typically these are between 6 – 10 pence per mile. However, most finance companies allow customers to change the contracted mileage mid term. This way you can spread the additional mileage charges.

For these purposes when we refer to leasing a car this could be a Business Contract Hire, Personal Contract Hire, Personal Contract Purchase or Lease Purchase agreement.

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ROAD TAX INCLUDED. CERTAIN LEASE AGREEMENTS INCLUDE ROAD TAX FOR THE FULL CONTRACT PERIOD.

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Good Points Of Leasing A Car

Summary Car leasing is great if you want to change vehicles regularly. It allows you to drive a car you perhaps would not be able to afford otherwise and keeps upfront payments to a minimum.

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

What Is A

If your business is looking for a comprehensive, fixed cost motoring package where full usage of a new vehicle is important but ownership is not, then you should consider contract hire. Car Contract Hire Is Becoming Popular For Business Users

Car Contract Hire Is Becoming Popular For Business Users This is essentially an operating lease, which enables you to drive a new vehicle of your choice on a â&#x20AC;&#x153;fully inclusiveâ&#x20AC;? basis. Maintenance can be included as part of the contract, leaving you with only fuel and insurance to consider as extras. As you are hiring the vehicle as opposed to buying it, at the end of the contract you simply hand the vehicle back, leaving you with no disposal worries (subject to mileage and condition). Contract Hire is also an extremely tax efficient method of funding a business vehicle, as rentals may be offset against taxable profits. Additionally, if your business is registered for VAT, 100% of the VAT payable on the finance element of the rentals may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage, then only 50% of the VAT payable on the finance may be recovered.

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Key Benefits A low initial outlay, usually 3 months advanced rentals Contracts available for periods of 1 to 4 years depending on the vehicle usage Monthly rentals are pre-determined for the entire contract period Known additional charge if the contract mileage is exceeded Road Fund Licence is included with the contract Full maintenance may be included as part of all contract hire agreements As the vehicle is simply returned at the end of the contract, there are none of the problems or risks associated with disposal If registered for VAT your business may reclaim all, or some of the VAT payable on the finance element of the rentals. This form of funding is considered to be â&#x20AC;&#x153;off balance sheetâ&#x20AC;? and the vehicle will not be shown as an asset within the companyâ&#x20AC;&#x2122;s balance sheet

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

Reasons Your Busin To Contract Hire V

For some business’s choosing how they source company vehic to choose from, all with their own pro’s and con’s. Contract hi

Contract hire allows you to fix the cost of the vehicle over a set period of time. By setting the estimated annual mileage and contract term, the monthly payment is calculated. For an additional fee you can even include servicing, maintenance and replacement tyres within the contract hire payment. This gives total peace of mind, as you know exactly what the vehicle will cost each month – no nasty surprises!

From the moment a new vehicle is driven out of the showroom it starts to loose value…. quickly! With a contract hire agreement the residual value risk is entirely with the leasing company. So no matter what happens with the residual value of the car, at the end of the contract hire agreement you hand the car back – no further charges.

Cash flow is king for most business’s, so why tie up vital capital in what is essentially a depreciating asset? Contract hire agreements only require a minimal outlay upfront, this is typically 3 or 6 times the monthly rental.

If your business plans to use the vehicle solely for business use, then you are able to reclaim 100% of the VAT. However, if the vehicle will be used for any personal mileage in addition, then the amount you can claim is reduced to 50%. WWW.STA B LEVE H IC L E CO N T R AC TS.CO.U K

ness Needs Vehicles

cles is a real pain. There are a number of different methods ire is the most popular funding type in the UK.

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@CarLea seE x p er t s

Vehicles funded on contract hire agreements do not have to be shown on the balance sheet. An accountants dream!

St a b leVeh ic leCon t ra c t s

What Is A Pers (or Personal Contract Purchase e PCP as it’s referred to) is on of the more commonly used personal lease agreements. r One of the main reasons fo its popularity is down to the fact that a Personal Contract u Purchase agreement gives yo e at the option to buy the vehicl the end of the contract term for a guaranteed price. A deposit is required, this can either be a multiple of the rental (i.e. x3 or x6) or a set amount that you are comfortable with. You must set the annual mileage estimated. The greater the deposit amount, the lower the monthly rental. The contract term is normally set between two and four years. Generally speaking the longer the contract term, the lower the monthly payment. However, on occasions the finance company will offer a better monthly payment on a shorter term – so it’s always worth checking! The monthly payments are fixed for the contract term. Next comes the Guaranteed Future Value (GFV) – you will also hear this being referred to as the “balloon payment”. This is the amount the finance company calculate the car to be worth at the end of the contract term. There are three options available at the end of Personal Contract Purchase agreement:

Buy The Car –

You can purchase the vehicle at the GFV price. Make the payment and the title/log book etc are put into your name. Part Exchange – You can part exchange the vehicle. If the vehicle is worth more than the GFV then use that amount towards the deposit on your next vehicle.

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sonal Contract Purchase Agreement? Hand The Car Back –

That’s right, you can simply hand the car back at the end of the contract term and walk away. Even if it’s worth less than the GFV! There are no charges for doing this, unless the vehicle is damaged beyond fair wear & tear or the agreed mileage allowance has been exceeded.

To sum up…a Personal Contract Purchase agreement is a great way to get a brand new vehicle without having to put down a large deposit, there are no residual risks and there is flexibility at the end of the contract.

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

WHAT IS

GAP INSURANCE? What Is GAP Insurance?

Let’s give a quick example:

Typically, motor insurers will provide “New For Old” cover for new vehicles during the first 12 months of ownership. This simply means if your vehicle is declared an insurance write off during the first 12 months, your insurance company will provide a like-for-like replacement vehicle. If an insurance write off occurs after the first 12 months, things are more than likely going to get expensive.

“Steve is involved in a crash (don’t worry, Steve’s fine) and his insurance company have declared his beloved Audi A4 a total write off!!! Bad times. Steve’s insurance company have decided market value is currently £15,000, but to settle his finance agreement including any early termination fee’s Steve needs £20,000. Very bad times!!

Insurance companies will only payout market value, which is normally around the trade price. Don’t forget, as soon as you drive a new car off the forecourt it starts to depreciate in value – especially in the first few years. However, during the early stages of any finance agreement you are paying off mainly interest – much like how a mortgage works. So you could find yourself owing more to settle the finance than the car is worth.

So Steve has a shortfall (or GAP) of £5,000 from what his insurance company are prepared to payout and what he needs to settle the finance agreement. Normally Steve would need to make up this shortfall himself….but Steve took out GAP Insurance. GAP Insurance covers the shortfall between an insurance payout & any outstanding finance. GAP Insurance covers the shortfall between an insurance payout & any outstanding finance. Steve’s GAP Insurance (Guaranteed Asset Protection) company will meet any shortfall between what the motor insurance company payout and what is required to settle any outstanding finance agreement. This meant Steve wasn’t out of pocket and allowed him to lease another new car. Good times!!”

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Here’s a few reasons you should consider GAP Insurance: • • • • •

Over 500,000 vehicles become a total loss each year UK Car Crime is a third of all crime. A vehicle is stolen every minute 33% of these are never recovered. Cars seem to be depreciating at a far greater rate than ever before. Motor Insurance settlements are always less than the price you pay for your car. • When write off’s occur you lose out and have to raise the funds for any shortfall and the deposit on a new vehicle. • Write off’s occur all too often, protect yourself.

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@CarLea seE x p er t s

St a b leVeh ic leCon t ra c t s

ABOUT US We work differently to most online brokers, as we specialise in supplying a limited number of brands. This enables us to focus on making sure we are offering the cheapest lease deals available on these brands. We currently specialise in Audi leasing, Volkswagen leasing, Mercedes Benz leasing and Land Rover leasing. However, with well over 50 years experience our team can supply any make and model required. Stable Vehicle Contracts supply both personal lease and business lease agreements. Personal lease customers can choose between personal contract purchase agreements or personal contract hire agreements. We will be able to fully explain the differences between the two lease agreements to help you pick the contract that suits your needs best. Business lease customers can take advantage of our advisors expert knowledge to deliver a finance package tailored to your businessâ&#x20AC;&#x2122;s individual needs. All our car leasing agreements and van leasing agreements are supplied via main UK dealerships. This means every vehicles comes with the full manufacturerâ&#x20AC;&#x2122;s warranty and breakdown assistance. Delivery within the mainland UK is also included free of charge. Delivery to Northern Ireland can be arrange at an additional charge.

At Stable Vehicle Contracts we fully understand that pricing is important when choosing your next car lease or van lease, but we do not compromise on customer service.