Is it a good idea to buy the car you have been leasing?
As those who are used to contract hire vehicles know, at the end of the term usually 36 months the finance company will make arrangements to collect the vehicle. It may be possible to purchase the car you have been using but it will not normally be offered for sale, you need to ask for a price. Will the finance company offer you the car at a bargain price?
Probably not, what they will usually do is make an assessment as what they think they will get in the trade, which is usually on the optimistic side and then take a price between that and the retail price of the car. They presumably work on the basis that as you are not a trade buyer, they have no reason to offer it to you at trade price.
If you are interested in buying your ex contract hire car maybe for a member of your family, bearing in mind they are unlikely to do anything special on the price, does it represent a good deal? Well it does have its advantages, in that there is a lot be said for perhaps one of your children driving a car where you know the vehicle's history from new. For example you will know that it hasn't been in any major accidents and that any less serious body damage has been repaired satisfactorily at the main dealership.
Although they should not, it is not unheard of for the hirers of contract hire vehicles to have damaged bodywork repaired at a local garage rather than the main agent. Sometimes this can affect the anti corrosion warranty. If the finance company becomes aware of this on the vehicles return, it can be costly for the hirer.
How will the finance company dispose of your car if you do not buy it? Different companies have different policies when it comes to selling their vehicles, some are now using EBay, which seems to be working quite well. As a general rule, they will be disposed of through the trade most commonly at auctions.
Of course if you wanted to buy your own vehicle at a potentially lower price, which you almost certainly would if they are disposed of through the auctions, you would have to know where that particular company disposes of their cars, which would be difficult.
You could consider going to an auction and buying an ex lease vehicle, although it wouldn't be the same as buying the vehicle you have been driving for the past two or three years and its warranty probably would have expired, which makes it rather more risky than buying the car you know.
At almost all auctions you will see private buyers bidding for cars, although auctions are designed for the trade. Those in the trade who buy at auctions sometimes make mistakes but private buyers make an awful lot more. Some ex contract hire vehicles are sold "with no major defects" and some are "sold as seen". If they are sold as seen that doesn't necessarily mean the vehicle has any faults, some companies sell all their vehicles in this way. Conversely if it is sold with no major defects it does not necessarily mean there are not any, it is essential to check the vehicle out. The car can be rejected within a certain time scale.
One of the pitfalls for private buyers at auctions is that they get carried away and have a tendency to bid far too much for vehicles, knowing when to stop is vital. Trade buyers know roughly what they can sell a car for and what it is going to cost them to clean it up and put a warranty on the vehicle, so significantly overpaying for a car is not an option; particularly when you take into account that as soon as the next month Glasses Guide comes out the car will almost certainly have dropped in value.
Overall ex lease cars can be quite a good buy, particularly if you can find one that is being sold after 24 months; it means it will usually have a further year warranty, so you would have little to worry about in terms of the mechanical condition of the vehicle, because it would be covered by the warranty. Most warrantees have the option to renew them on an annual basis, up until the vehicle has done 100,000 miles but there are some exceptions to this.
Do make sure that you check the service history, because if the hirer has forgotten to carry out a service and the leasing company has not picked up on it, it could invalidate the warranty. Also be aware that at auction "no major mechanical defects" usually means major components like engine and gearbox etc; the vehicle could have a reoccurring electronic problem that probably would not be covered. In summary buying your own car at the end of the term is probably the safest bet. - 21392
Probably not, what they will usually do is make an assessment as what they think they will get in the trade, which is usually on the optimistic side and then take a price between that and the retail price of the car. They presumably work on the basis that as you are not a trade buyer, they have no reason to offer it to you at trade price.
If you are interested in buying your ex contract hire car maybe for a member of your family, bearing in mind they are unlikely to do anything special on the price, does it represent a good deal? Well it does have its advantages, in that there is a lot be said for perhaps one of your children driving a car where you know the vehicle's history from new. For example you will know that it hasn't been in any major accidents and that any less serious body damage has been repaired satisfactorily at the main dealership.
Although they should not, it is not unheard of for the hirers of contract hire vehicles to have damaged bodywork repaired at a local garage rather than the main agent. Sometimes this can affect the anti corrosion warranty. If the finance company becomes aware of this on the vehicles return, it can be costly for the hirer.
How will the finance company dispose of your car if you do not buy it? Different companies have different policies when it comes to selling their vehicles, some are now using EBay, which seems to be working quite well. As a general rule, they will be disposed of through the trade most commonly at auctions.
Of course if you wanted to buy your own vehicle at a potentially lower price, which you almost certainly would if they are disposed of through the auctions, you would have to know where that particular company disposes of their cars, which would be difficult.
You could consider going to an auction and buying an ex lease vehicle, although it wouldn't be the same as buying the vehicle you have been driving for the past two or three years and its warranty probably would have expired, which makes it rather more risky than buying the car you know.
At almost all auctions you will see private buyers bidding for cars, although auctions are designed for the trade. Those in the trade who buy at auctions sometimes make mistakes but private buyers make an awful lot more. Some ex contract hire vehicles are sold "with no major defects" and some are "sold as seen". If they are sold as seen that doesn't necessarily mean the vehicle has any faults, some companies sell all their vehicles in this way. Conversely if it is sold with no major defects it does not necessarily mean there are not any, it is essential to check the vehicle out. The car can be rejected within a certain time scale.
One of the pitfalls for private buyers at auctions is that they get carried away and have a tendency to bid far too much for vehicles, knowing when to stop is vital. Trade buyers know roughly what they can sell a car for and what it is going to cost them to clean it up and put a warranty on the vehicle, so significantly overpaying for a car is not an option; particularly when you take into account that as soon as the next month Glasses Guide comes out the car will almost certainly have dropped in value.
Overall ex lease cars can be quite a good buy, particularly if you can find one that is being sold after 24 months; it means it will usually have a further year warranty, so you would have little to worry about in terms of the mechanical condition of the vehicle, because it would be covered by the warranty. Most warrantees have the option to renew them on an annual basis, up until the vehicle has done 100,000 miles but there are some exceptions to this.
Do make sure that you check the service history, because if the hirer has forgotten to carry out a service and the leasing company has not picked up on it, it could invalidate the warranty. Also be aware that at auction "no major mechanical defects" usually means major components like engine and gearbox etc; the vehicle could have a reoccurring electronic problem that probably would not be covered. In summary buying your own car at the end of the term is probably the safest bet. - 21392
About the Author:
Should you have any queries or questions with regard to Fleet Management, Licence checking, Contract Hire, Personal Contract Hire, Lease Purchase or vehicle Hire Purchase, please do not hesitate to contact us. Bowater Price plc 01494 536 536. www.bowaterprice.com.
posted by X - Men @ 12:19 AM
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