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Business Contract Hire – mileage allowances and amending contracts

Are you thinking about taking a contract hire car or van, but are worried about what annual mileage allowance to choose and how it might affect you if you get it wrong?

Companies are not always aware that you can request to amend your contract hire agreement mid-term.  Once you have completed the first year’s motoring you will have some mileage facts to work with.  If you have underestimated your mileage at the start of your contract or your circumstances have changed and you expect to cover more miles, then you can request what is known as a ‘contract amend‘.

If your vehicle was arranged via AJ Vehicle Solutions, you can have peace of mind that we will contact you each year to see how you are gettting on with your mileage.  If you need to consider a contract amend, we can help you to obtain a new quotation to increase your mileage allowance for the rest of the term.  The monthly rental will increase accordingly for the balance of the contract, but this would be more cost effective than paying the excess mileage penalty at the end.

There have been numerous occasions when we have informed potential new clients about this facility and they have commented with “I wish I had been made aware of this before, my previous supplier never mentioned this and I have had to pay considerable excess mileage charges in the past”.

If you would like to know more about mid-term ‘contract amend’, please do not hesitate to contact Tony Jones or Aidan Millward directly on 0121 7961930 or email our enquiries department at enquiries@ajvehiclesolutions.co.uk.

To help you in securing your new vehicle, we can provide you with official VOSA, DVLA and Department for Transport documentation to ensure you are not only choosing the right vehicle but more importantly staying safe and legal. Download links to the files can be found below.

Understanding Contract Hire & Vehicle Leasing – deposits, number of payments and admin fees

Are you confused about all the different deposits, number of payments and admin fees advertised?  We can help by shedding some light on what all this means and how to compare the offers properly.

Historical 3 + 33 = 36 months, for example

Historically, a leasing payment profile was made up of an initial payment equal to three rentals as deposit then followed by 33 regular monthly rentals. This then left a “payment holiday” period of two months at the end which was designed to let you gather funds ready for your next vehicle initial payment. This type of payment profile is shown as 3 + 33 or 3 initial rentals followed by 33 rentals and is still available today, utilised by most large corporations.

Introduction of increased Initial Payments and “Spread” Rentals

In recent years there has been a shift in how leasing offers are structured, in the pursuit of advertising ever cheaper “looking” offers. Initial payments have been increased to 6 rentals and sometimes 9 rentals, then the remaining rentals are “spread” over 35 or even 36 months (in a 3 year term). This type of payment profile looks like 6 + 35, 6 + 36 or 9 + 35, 9 + 36. Sometimes initial payments can take the form of a cash value, possibly even in addition to the 3 or 6 rentals in advance.

Introduction of Administration Fees

More recently, there has been an introduction of administration fees payable. This could be anything from £150 to £1,000. Please check all quotation details thoroughly, these admin fees can be hidden in the “small print”. AJ Vehicle Solutions does not charge any kind of administration fees on any of our Contract Hire products.

How to compare them all?

Being able to compare “like for like” is now even harder than ever on the face of it. The safest way is to simply add up the value of all the initial payments, regular monthly rentals and any admin fees payable. This will then provide you with a Total Cost for the term or what is known as the Whole Life Cost. Once you have this figure for each offer you can then compare and decide which type of payment profile suits you best.

A higher initial payment/deposit will provide you with lower monthly payments, but please remember that if you wish to replace your car with something similar next time around, you will need to provide for a similar initial payment, otherwise the monthly rental cost will dramatically increase. The best way is to settle on a payment profile that you are comfortable with and can sustain long term each time you change your vehicle.