Where are the most competitive contract hire deals?

By Harvey Williams

Why is it so difficult to compare the various contract hire deals on offer? One reason is that some contract hire brokers would rather you didn't make a direct comparison, because their rates are rather expensive. In any event rates do vary from one lender to the next, because they tend to take differing views on the vehicle's residual value (What they believe, or you could say hope, the vehicle is going to worth when you return it to them).

The Internet can be a good place to find competitive offers, which is where most contract hire brokers advertise. One of the difficulties of looking for the lowest possible rate, each time you buy a vehicle, is that on each occasion you will probably have to deal with a different broker, because different contract hire brokers will have special deals at different times. This stops you getting to know the broker and getting to know and trust a good broker is vital, because contract hire broking is an unregulated industry.

Seeking out the very lowest price on a car is only really practical for the smaller company that only occasionally changes a vehicle, or for the individual using personal contract hire. For a company that buys more than one or two cars a year, they really need to find a well established reliable broker that is competitive across the board. Where they can rely on the service and in particular the delivery date that has been quoted; there are unfortunately companies that quote delivery dates that are not achievable in order to secure the business.

In the case of a company that buys more than the odd vehicle it is not terribly practical to be dealing with a different broker each time they acquire a vehicle. A company such as this would probably be better off, developing a long term relationship with an established contract hire broker that would manage the whole fleet and provide all the related services; for example ongoing licence checking of the employees and negotiating manufacturers terms on behalf of the client.

For those who are the occasional buyer then the Internet is a good place to start looking. A search in Google under contract hire will produce nearly 4,000,000 results and under personal contract hire in excess of 750,000. So how many of these companies do you look at? The evidence is that very few people venture past the first page; you will also find offers under vehicle leasing, car leasing and contract hire and leasing.

On the first page you will usually see one or two sites that will advertise vehicles for many different contract hire brokers. Some people don't like using these sites and want to go into the website of one particular company and see what they are offering; they feel that they are more reliable. If you don't mind using a site that is advertising different broker offers, then there is no reason why this should not form part of your search. The only thing to bear in mind is that these sites don't generally police their advertisers; so seeing a vehicle advertised at a particular price doesn't necessarily mean that it is available at that price.

When using a directory website you have to try and recognise the more reputable companies, of which there will be many. Usually their offers will be easy to understand and they will nearly always stipulate how a deal is made up, for example they will not just say contract hire over 36 months, they will show how those payments are made up the most common profile is 3 initial payments followed by 35 monthly payments. If they do not explain how the offer is structured, it is quite possible that whilst the monthly rental looks low, the initial payment could be say 2,000.

Some companies manage to show a lower monthly rental by taking six rather than three payments in advance. There is nothing wrong with a deal that takes six payments in advance, as long as overall it works out less expensive than one that takes three payments in advance. The problem is that that they rarely do.

Where a delivery date is quoted that is much sooner than generally seems available, it may be that the broker has access to vehicles that others do not. It may on the other hand mean that they are promising a delivery date that they know is not achievable. One should proceed with caution, particularly if there is a deposit involved. The customer should perhaps speak to them on the phone and see if he feels comfortable with the information being given,

This applies particularly with pricing; there are companies that quote prices on directory websites, which are considerably less than their competitors. Sometimes if you go into their website you will see the vehicle at the correct price, which may be up to 25 more than the price they showed on the directory website. On other occasions the website will also show the wrong price and it is only when the prospective customer phones that they discover that those vehicles "have all been sold" It is hoped that contract hire and leasing brokers will eventually be regulated by the FSA and these practices will stop.

Sometimes a contract hire broker lets the client down because they in turn have been let down by another broker. This tends to happen in the case of smaller brokers that are not large enough to have terms in place with the banks and finance houses, so they work through other brokers. If the broker they are using proves unreliable on delivery or price, then they will unintentionally let their own client down.

Perhaps the answer is to find three or four contract hire brokers offering the most attractive monthly rentals and speak to them on the telephone. And attempt to ascertain if they can indeed provide what they are promising. The worst thing that can happen is to order a vehicle and then be told at a later date, that the price or delivery date cannot be met. Sometimes it can be better to pay a little more and deal with a broker that inspires confidence.

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For more information about contract hire, lease purchase, finance lease or vehicle hire purchase in the UK please contact Bowater Price plc 01494 536 536.