Drivelease Personal Contract Hire

How Drivelease Personal Contract Hire works

A Drivelease Personal Contract Hire agreement provides you with the use of a luxury, prestige or performance car for a contractual period – usually referred to as the ‘lease period’. Though the car is in your possession, it is not actually yours to own. Instead, you make fixed monthly payments to a leasing company for the duration of the contract – and when the contract expires you simply return the car to the leasing company or take out a new personal contract hire lease. As a result you never have to worry about resale values of the car – because you never own it, so you can simply hand the vehicle back and start again

 

The finance company will work out the ‘residual value’ of the vehicle – that is its value at the end of the hire period once depreciation is taken into account. To estimate this value, the funder will require you to agree to a mileage limit for the term of the contract – exceeding this limit could see you incur penalties.

 

To determine your monthly rentals, the finance company will deduct the estimated future value (residual value) from the retail price of the car – and you pay the difference in monthly instalments.

Advantages of Drivelease Personal Contract Hire

There are many advantages to Drivelease Personal Contract Hire including:

 

Fixed prices: You can lease both new and VAT qualifying (VAT Q) pre-owned, ex-demonstrators or management cars at a fixed monthly price without interest charges. This will assist with budgeting.

 

Low initial payment: Typically from as little as three monthly rentals.

 

Cost effective: The monthly rental for a personal contract hire agreement will typically be less than that of a personal loan.

 

Vehicle Exercise Duty (road tax): This will be included for the duration of the contract.

 

Optional maintenance packages: Personal contract hire deals can include maintenance packages which again can help assist with budgeting.

 

No risk of depreciation: You don’t have to sell the car at the end of the contract so you don’t have to worry about its depreciation.

 

Wider choice of premium vehicles: With a personal contract hire agreement, you could afford a car that may otherwise be beyond your budget if buying. Luxury, prestige and performance cars tend to depreciate less so often provide the best personal contract hire deals.

Other considerations to Drivelease Personal Contract Hire

There are a few minor disadvantages to personal contract hire too, but generally these are based on perception:

 

Comprehensive car insurance: You will not be able to take out third party car insurance.

 

You never own the vehicle: In some cases at the end of the contract you may be able to buy it from the lease company through a third party not named on the agreement.

 

Fair wear and tear policy will apply: You will be required to keep the vehicle in good order and have it serviced in accordance with the manufacturers recommended guidelines.

 

Mileage restrictions will apply: You agree to a pre-determined mileage agreement – anything above and beyond that will incur extra charges.

 

Increase in the rate of VAT: Should the VAT rate increase (currently at 20%) your monthly rental will also increase.

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