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Consumers In UK Changing Habits Regarding Car Leasing

by Jim ONeil on January 2, 2011

in uk loans news

More than 530,000 new automobiles were purchased by UK consumers during the first half of 2010. The Finance and Leasing Association reports that 49.4 percent of these automobiles were leased. One estimate reveals that eight of ten new cars are purchased using a financing arrangement but it seems the type of financing is changing.

Consumers in the UK seem to be gravitating away from traditional finance options toward the Personal Contract Purchase (PCP) car leasing product. In previous years, 60 percent of dealer finance was represented by hire purchase. Personal loans taken out for a new car purchase represent 13 percent of new car purchase financing.

The move toward PCP leasing is mainly being driven by the consumer desire to save money, says Simon Norman with Car lease payments can be nearly 50 percent cheaper than car loan or hire purchase payments. This is because leasing payments are based on the amount of depreciation the vehicle will experience during the car lease contract. Hire purchase repayments take the entire cost of the vehicle into account.

One thing many people do not realize is that with hire purchase, they do not own the car until they make the final payment. This could be four to five years after taking possession. In the past, people

have avoided car leasing due to the perception regarding lack of ownership. With PCP, leasees can lock in a purchase price for the end of the contract.

PCP does have some drawbacks, including an annual mileage limit that must be agreed to at lease start. Excess mileage fees are charged if the mileage limit is exceeded. When considering PCP arrangements, shoppers should look at the contract period, upfront payment, and mileage. In some cases, the price difference offered by PCP will not be large enough to make it more attractive than hire purchase.


Fleet cars see a lot of use. Usually even though they are well maintained they have had a lot of wear put on them in a short time frame. Also the ignitions may have been modified to disable any passive anti-theft devices to work with multiple keys. This lowers their value and makes them more expensive to insure. In some cases this will also disqualify them from financing. The vehicle being sold at auction makes me imagine that it was at one point a total loss or repossesed. If totalled the vehicle should be listed with a salvage title, although some states do not require this. The vehicle would then have been repaired or reconditioned and sold at a dealership then retitled to the new owner. So if I were you, I would have some concerns.

Check with the GA DMV to see if they require salvage titles on total losses. If they don't, do not buy this car. It is entirely too possible that with the security features removed from a rental car it was stolen, recovered, then sold at auction, brought to new york for minor repair and then re-titled in GA to avoid the salvage title.

If they do require salvage titles, it is possible that the titling locations would just be a coincidence and the vehicle is fine.

So I would recommend contacting the DMV and also the National Insurance Crime Bureau, (NICB, search google). They can run a more comprehensive search on the vehicle to determine its history.

Hope this helps.

Andrew Jalbert

Not good

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