I reckon contract hire is a hopeless deal for the private motorist.
Casting around a few websites, something like an Aygo is around £180 a month on a '35+3' three-year deal.
So over three years, you make total payments of around £7,000 on a car that costs, er, around £7,000, with nothing to show at the end of it.
Buy the car, and you have a three-year-old supermini to sell after three years.
All other things - tax, insurance, maintenance - are equal.
The contract hire deal is a dead loss - or have I missed something?
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I happen to agree with you but I think we should duck........incoming....!!!!!!
:-)
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I know Ling will be along soon with her nuclear missile truck but...
I thought like you for years but now find it makes huge sense to me on the main car I have. The total of my three year payments for the C5 I've just taken on is less than the first year depreciation from retail and some £6k cheaper over the 3yrs than buying/financing myself! Can't say no to a £6K saving.
I'll admit it has a lower financial advantage on smaller cars which is why we bought our C3 used at 3yrs/23Kmls with cash for the best deal in that sector.
The figures aren't quite as close as you say though. A basic Aygo at £7,800 new discounted will be about £6350 on contract over 3yrs allowing for inclusive VED you would have otherwise paid yourself. I'd not argue that a 3yr old Aygo is worth more than £1500.
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Contract hire only makes sense when the Finance company can get a huge discount up front (say 30-40%!!!) and reflect this is the monthly charges.
Aygo or other popular car the discounts are probably small and therefore garage profit + finance company profit = poor deal for the punter
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Yep spot on FB and why it suited me so much. My car had a retail of around £23k if I remember and, daft though it sounds, it seems to have been contracted at a monthly payment reflecting a price of less than £15k.
What is important if anyone is thinking of going contract is to watch the actual prices on a contract broker site that gives them accurately in real time as they change almost daily and bargains do appear regularly.
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For larger cars it can make sense but for cheap city cars its pointless. For less than the monthly rent on contract hire I can actually buy a Panda with a small payment at the end.
It could be argued that you would have to be bonkers to buy something like a brand new Mondeo unless you were getting a massive distcount.
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...The figures aren't quite as close as you say though...
The Aygo I looked at was £185 a month - 35+3 - which comes to £7,030.
Same car was £7,300 on drivethedeal.
I reckon it would be worth around £3,500 to £4,000 after three years.
The contract hire car is worth zero to the punter - big difference.
Much dearer cars make more sense.
Very roughly, £400 a month - £15,200 - will get you a £28/30K Merc or BMW.
If you bought the car, it might make £12/15K in three years, so the nett cost to you is about the same, contract or buying outright.
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Contract hire makes no financial sense to me - Runfer D'Hills
