As a large plumbing and electrical contractor, our busy customer needs quick and efficient solutions to ensure their vehicles (cars and vans) are managed professionally and flexibly. In particular, one of the big changes for our customer, has been their approach to:
1. Contract term; and
2. Initial Rental.
With contract hire, many of the leading finance companies will offer a contract term of between 24 and 60 months. Generally (although not always), the longer the term, the cheaper the monthly rental will be.
Much of this is because the car/van will depreciate quickest in the first year (or two) and so this has to be reflected in the monthly rental being paid.
There are exceptions to this where a vehicle has a strong residual value coupled with high levels of discount; in which case, the finance company will support the 2 year contract.
Our customer previously operated 36 month agreements, which is common with most personal and business customers as this falls in line with the manufacturer warranty and is generally the time period most people keep their “new” vehicles.
What is the best contract length with a lease? The answer is that it very much depends on the needs/requirements of the customer. In this example, the customer experiences higher labour turnover and is vulnerable to a more volatile market. This means that if the car is no longer required, they must “early terminate” the vehicle – a process where a customer pays around half the remaining rental to return the car. So, while a four year contract will produce a cheaper rental for the customer, it is far more of a commitment.
This is where you have to weigh-up cost vs flexibility; for some customers with a high degree of certainty a longer term and cheaper rental may be considered better.
Also, with some manufacturers offering 4/5/7 year warranties, the longer term is more acceptable.
Another element to the transaction is “initial rental”, which we have seen change for the customer. Many brokers and/or finance companies advertise their headline prices and deals using an initial rental – this is the sum payable in month 1 of the contract and is NOT a refundable deposit. If you see a rental at £300 and this is based on a 6 spread initial rental, then you must pay £1800 in month 1; if this was based on 9 spread initial rental you would pay £2700. You therefore need to consider the total cost payable across the term before you make a firm decision.
For the customer here, they had traditionally used a 3 or 6 spread initial rental to achieve a specific monthly rental. However, upon further analysis, this was not benefiting the company cash-flow position and a decision was reached to go to a no initial rental/no deposit situation to enhance funding.
In terms of the car shown here, the Hyundai TUCSON SPECIAL EDITIONS 1.7 CRDi Blue Drive Go SE 5dr 2WD DCT [Auto], this is based on the following configuration:
· Solid Paint – Polar White
· Cloth – Blue/black
· 19″ Alloy wheels
As standard the car (a special edition) includes – automatic defog system, rain sensing wipers, rear privacy glass, tinted glass, brake assist, downhill assist control, emergency stop signal system, hill start assist, apple car play, Bluetooth, cruise control, rear parking sensor, lane keep assist, 8” touchscreen with colour navigation, digital clock, auto dimming rear view mirror, folding mirrors, trailer stability assist, DAB radio, body coloured externals, automatic headlights, follow me home headlights, LED headlights, LED rear lights, climate control, full size spare wheel, 19” alloys, alarm and immobiliser. There are no additional factory options you can add to the vehicle.
On the technical-side company car and business drivers can note a P11d at £25,866.00 and CO2 at 129g/km. The 1685CC 7 speed auto diesel engine delivers 57.6 combined MPG, 141ps and 0-62 times of 11.5 seconds. Service intervals are set at every 12 months or 20,000 miles, whichever lands sooner.
Find the webs best leasing deals on the awesome Hyundai Tuscon right here @CarLease UK – you can also read more lease car reviews from Hyundai below in our lease car reviews and news blog.