Long term rental - worth it or not?
Content
Long-term rental - is it worth using? Opinions of UK experts suggest that long-term rental may kill the new car market. All because of the tricks used in contracts.
Table of contents
- Long-term rental, i.e. British PCP
- Where did the long-term rental come from?
- Is long-term rental profitable?
- Long-term rental - what can go wrong?
Polish long-term rental is the equivalent of the British Personal Contract Purchase (PCP). The car is rented to the driver after paying a certain own contribution (10-35 percent of the car price) and a written commitment to pay monthly installments in the amount of several hundred to several thousand zlotys.
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After the end of its useful life, it is possible to purchase a car for a specified amount, which also amounts to several to several dozen percent of the original value of the car.
Where did the long-term rental come from?
In the case of a classic lease or loan, the car dealer only gets a negotiated amount of money. The one that appears on the purchase invoice.
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In the case of long-term rental, the role of the bank is taken over by a dealer or a subsidiary. Additional fees, interest and installments go to the borrowing company, not the bank. Long-term rental allows dealers (or their daughter companies) to earn twice: on lending a car and on additional handling fees.
Is long-term rental profitable?
Simply put, it can be said that long-term rental may be beneficial for people who are not very wealthy. After paying a relatively small monthly installment, they gain access to their dream car.
Everything, however, until the time. The real boom for long-term rental (PCP in Great Britain) started in 2013/2014. Today, in 2017, this financing model accounts for approximately 90 percent (!) Of all new car sales.
However, the new car market suddenly shrank significantly (-9,3 percent unexpectedly).
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The National Association of Commercial Financial Brokers (NACFB) claims that this decline in new car sales is the result of predatory clauses in long-term rental contracts.
Long-term rental - what can go wrong?
When hiring a car for long-term rental, everything seems fine. Only after reading the contract carefully will we find out that the insurance does not cover theft or damage to the car by a storm. Accidents with total damage to the car (cassation) are equally dangerous. The insurer reimburses the owner (dealer) 100 percent of the market value of the car, which does not cover the entire cost of the car rental contract.
As a result, the person who rented the car is left without a car, and still has to pay monthly fees! Therefore, before renting a car for long-term rental, it is worth considering whether we can certainly afford this form of car acquisition ...
In the UK, the new car market has plunged unexpectedly and the used car market has regained its prominence.
Warto przeczytać: Is Bad Press Around PCP Deals Hurting The New Car Market?
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