Thank you to our existing business leasing customer, a Joinery and Construction business from Wigan (Greater Manchester), for collecting their brand-new car from the CarLease UK team.
When you lease a vehicle, you take it over a fixed term – generally 2, 3 or 4 years. At the end of this term, the vehicle must be returned to the finance company; they will subsequently sell this at an auction. Unlike a PCP arrangements, there is no guaranteed future value/balloon, where the customer is invited to either purchase the car or use it in conjunction with a part-exchange deal (or just return it). With contract hire, the main focus is on returning the car and replacing it (with a new contract or otherwise). However, there is a little flexibility with some finance companies.
As a credit broker, not a lender, we operate alongside a select number of finance companies and they each have a different way of managing customer contracts, including the end of contract process.
In some cases we can offer:
· A formal extension – at the end of the lease, the customer may be able to ask the broker to quote for a 6 or 12 month extension. What happens in practice is that the broker will liaise with the finance company and ask how much per month the vehicle would be if the customer were to keep it for 6 or 12 months and provide them with the mileage which the customer is covering. A formal extension is a great way for a customer to proceed if they enjoy the car they are using and are not in position to commit to another vehicle.
With an extension, there are no initial rentals or deposits to pay, so this can help if you don’t want to make any big upfront commitments.
What customers need to be aware of is that this is a formal process; you will be asked to sign a contract confirming you understand the vehicle will be extended for 6/12 months on a specific mileage and that you will NOT be able to hand it back without a cost penalty. As this is still a formal contact, you would have to early terminate, which means paying an amount equivalent to half of the remaining rentals.
Therefore, think carefully as to how long you want the vehicle for; if you are waiting for an offer to land, then 6 months may be more practical. At the end of a lease extension, the vehicle must be returned and inspected in exactly the same way;
· An informal extension – at the end of the lease, the customer may be able to ask the broker to arrange an informal extension. What happens when you informally extend a lease, is that a broker will confirm with the finance company that you are keeping the vehicle on month to month basis. What price do you pay on an informal extension? This will depend on the finance company. In some cases you will pay your usual monthly rental, so that at the end of the contract, your monthly rentals just carry on.
In other cases, the finance company will work out the overall cost and then apportion the cost appropriately.
If you originally procured the vehicle on a 9 + 23 contract and were paying £200 per month, the finance company would add the number of rentals (i.e. 32) and multiply it by £200. They would then divide this amount (£6400.00) by the contract term (24 months). This would mean you are effectively paying £266.67 per month. How long can I informally extend my car lease? Again, it depends on the finance company. In some cases you can have the vehicle until further notice whereas as others will limit this to a 3 or 6 month maximum. At CarLease UK we charge £150 plus Vat for this service;
· Vehicle purchase – also known as a driver to buy application, this allows (in some cases) the customer to enquire with the finance company about purchasing the vehicle. To confirm, the amount you will be asked to pay will not take into account any previous monthly rentals you have paid. The finance company will effectively provide a market valuation for the vehicle. It will then be up to the customer to either purchase the vehicle or not.
Please do not enter into a contract hire agreement if you are certain you want to purchase a vehicle, as this is a usership-style product. For ownership-style products, consider a PCP or HP.
For the customer here, they entered into an informal extension with the finance company, effectively paying the same amount of money per month. This was ideal, as the customer was happy with the vehicle they were using (to a point) but they knew what they wanted to spend on their next car. Rather than pressure the customer into a vehicle which was not suitable for their needs and requirements, we agreed to informally extend the contract until the new deal launched.
As soon as the deal launched, we arranged collection on the existing vehicle and the new vehicle arrived on the same day. The good thing about the informal extension arrangement is that there is no cost to return the vehicle in the same way as a formal extension.
In terms of the car shown here, the Mercedes-Benz A CLASS HATCHBACK A200 AMG Line Premium 5dr Auto (Petrol), this is based on the following configuration:
· Mountain Grey Metallic Paint
· Artico leather/Microfibre Dinamica – Black with red stitching
· Light aluminium with longitudinal grain interior trim
· 18″ AMG 5 twin spoke light alloy wheels in titanium grey with highsheen finish
· Advanced navigation pack – A Class
As standard the car includes hard-disk navigation, Bluetooth, rain sensing wipers, active brake assist with forward collision warning with autonomous braking, adaptive brake assist, brake callipers with Mercedes lettering, AMG floor mats, 180 degree rear view camera, active lane keep assist, active park assist with front and rear parking sensors, attention assist, cruise control, 10.25” digital instrument cluster and a 10.25” media display, Mercedes me connect, electrically adjustable and heated door mirrors, body coloured externals, DAB radio, mid-range sound system, diamond radiator grille, LED high performance headlamps, LED lamp, 3-spoke multi-function steering wheel, gearshift paddles on steering wheel, 64 colour ambient lighting, mirror package, seat comfort package, heated front seats and 18” alloy wheels. As the premium is one of the highest specification vehicles, there is very little to add to the vehicle – consider upgrading to a “Premium Plus” for the panoramic roof or add the advanced navigation to the Premium for a perfect A-Class.
In terms of the technical-side, the company car and business users can note the P11d at £31,470.00 and CO2 at 123g/km for company car tax calculations. The 1332CC 7 speed auto petrol engine delivers 53.3 combined MPG, 163ps and 0-62 times of 8 seconds. Service intervals on a petrol a-class are every 12 months or 15,500 miles, whichever lands sooner.
Check out the best leasing deals for the Mercedes A Class @CarLease UK – or – read more luxury lease car reviews below.