Contract hire vehicles are always a logical choice for any business when it comes to funding their vehicles. Low initial deposits, low commitment and the added advantage of keeping the expenditure off balance sheet while being any to off set payments against forms of company tax means that it has to be a consideration for any business.
There is however one very large miss understanding when it comes to contract hire vehicles.
This is that no matter who promises what , sales person and brokers alike full ownership of any contract hire vehicle can never pass directly to your of your company. We hear constantly from customers who reliably in form us that they have been promised that at the end of the contract they will be able to “do a deal ” with the retrospective finance company.
This is not a given and in fact is un ethical. After all you are funding your vehicle on contract hire and claiming other benefits associated with this form of package. For full ownership to pass to you would mean that you would be benefiting both ways.
So lets set the record straight once and for all. Promises are simply that in an ideal world this may happen and it far from being set in stone.
Ownership of a contract hire vehicle can and will never pass directly to you.
In the world of gap insurance when you buy a vehicle on contract hire this means that as you can never own the vehicle and therefore you can never be disadvantaged from it no longer being there. As such you can not protect the invoice or replacement cost. Instead however you can protect yourself against the financial shortfall between your own insurance companies market valuation of the vehicle on the day it was written of and the amount outstanding on finance including outstanding rentals.
Don’t forget that your contract hire company will have based your rentals not only on how much you paying them but also on how much the predict being able to make when they eventually sell your contract hire vehicle.
If your vehicle is therefore written off the now have no vehicle to dispose of and are therefore within there rights to demand up to 90 % of all outstanding rentals.
This can mean you are left in the position of having no contract hire vehicle and a huge invoice to settle one thing is however for sure and that is that it will not belong to you.