Why is it so difficult to compare the various contract hire deals on offer? One reason is that some contract hire brokers would rather you didn’t make a direct comparison, because their rates are rather expensive. In any event rates do vary from one lender to the next, because they tend to take differing views on the vehicle’s residual value (What they believe, or you could say hope, the vehicle is going to worth when you return it to them).
The Internet can be a good place to find competitive offers, which is where most contract hire brokers advertise. One of the difficulties of looking for the lowest possible rate, each time you buy a vehicle, is that on each occasion you will probably have to deal with a different broker, because different contract hire brokers will have special deals at different times. This stops you getting to know the broker and getting to know and trust a good broker is vital, because contract hire broking is an unregulated industry.
Where a company has a number of vehicles in its fleet, trying to always find the lowest price advertised, each time they acquire a new vehicle, is not a very practical option. It is probably a good option for the individual looking for a vehicle on personal contract hire, providing they have the time to spend checking out the contract hire broker, they are intending to use. The company acquiring several vehicles a year would probably be better off finding a broker whose prices are keen across the board and who will keep to the delivery date and prices quoted.
In the case of a company that buys more than the odd vehicle it is not terribly practical to be dealing with a different broker each time they acquire a vehicle. A company such as this would probably be better off, developing a long term relationship with an established contract hire broker that would manage the whole fleet and provide all the related services; for example ongoing licence checking of the employees and negotiating manufacturers terms on behalf of the client.
If a client’s requirement is for just one vehicle, then looking on the Internet can be a good idea. The main search engine is Google; this is where the vast majority of searches are carried out. There are about 4,000,000 entries listed under contract hire and more than 750,000 for the key words personal contract hire, so where does one start? Most searches start on page 1 and few go past the first page, although it may be sensible to at least venture onto the second page. The other key words to try are contract hire and leasing vehicle leasing and car leasing.
On page one you will usually see sites that advertise deals from a large number of contracts hire brokers. These sites are usually very reputable however some caution is advisable. The reason is that there can be a significant difference between those brokers who advertise in directories and who are listed on the first page of Google. This is because those companies that are listed one page one of Google will generally have taken years to get there so you will usually be dealing with a company that is very well established. A company that advertises on a directory can be, but is not always, a newly formed company that perhaps may not be quite so concerned about their reputation.
Of those advertising on the directory websites there will be some well-established and reputable contract hire brokers. They are often not difficult to spot; they will invariably be those that advertise in a very straightforward manner. If the deal being offered is for twenty-four or thirty-six months you would expect the advertiser to show the profile i.e. three payments in advance followed by thirty five monthly payments, or three payments in advance followed by twenty three monthly payments. If they don’t state the payment profile then they are quite likely to be offering something different, which will make it difficult for you to make a comparison.
It is not unusual to find that a company is asking for six initial payments, it’s difficult to see why a company would do this other than to make the monthly rental appear lower than their competitors. When comparing with other companies it is important to take into account the three additional payments that you will be making.
Often delivery dates are quoted, that the contract hire broker knows they cannot achieve. However it does not necessarily mean that a broker advertising an earlier delivery than their competitors cannot deliver the vehicles on time. It may be that the have access to vehicles that others do not, or that they have pre ordered cars. One should exercise caution with any deal that appears far more attractive than others on offer, especially if a deposit is required.
Pricing is another area some contract hire brokers mislead the public, advertising cars at prices knowing they cannot supply at those prices. The thinking behind this is that they will be contacted by those who are attracted by the deal and they can then tell them that that particular batch of cars have been sold but they have something similar etc. It is planned that contract hire and leasing brokers will become regulated in the future; just as insurance brokers are regulated by the FSA. It is expected that these companies will then have to change their ways, or go out of business.
On occasions, when a client is let down by a contract hire broker it is because the broker themselves have been let down. This can happen when a broker that is too small to secure terms with the finance companies, has to use another company’s terms and offers, so they are only as reliable as the company they are working with.
A practical solution when a customer is trying to choose a suitable contract hire broker can be to select perhaps three companies offering the best prices and telephone them all. Ask them about the price and delivery date and ensure that they are comfortable with the answers. Very often those that are not entirely honest, give themselves away on the telephone. It could perhaps be better to choose a company that one feels comfortable with, even if the vehicle is going to cost two or three pounds more.