Honda makes it easy for you to drive a great car without the hassle of buying and selling and worrying about the cost of the MOT. Instead with personal contract hire, you can take the car for an agreed time, usually 2-3 years depending on your requirements. You pay for the running costs i.e. fuel and insurance, then hand it back or swap for a brand new vehicle at the end of the lease period.
The value of a new car depreciates faster than any other goods, losing a few thousand pounds from the value as soon as it leaves the car show room. There are however, ways to reduce the risk of depreciation with personal contract hire which means that you pay a monthly re-payment plan but don’t incur the costs associated with owning the vehicle and as long the car leaser is able to continue to afford the monthly payments, the vehicle is replaced at a specified time, depending upon your agreement plan. The payments are based on the potential sale value (residual value) down the line, taken from the original sale value and the monthly instalments you pay will make up the difference.
Personal contract hire from Honda refers to private hire for the individual and is not the commercial option. It allows a person to use the car throughout an agreed contractual period, known as the lease period and even though the vehicle is in your care and possession, you do not own it and instead hire the car from the leasing company. Usually that car will be subject to a mileage limit which if exceeded, a penalty payment will be required at the end of the term, although the mileage allowance will be determined at the start of the lease based on your own annual mileage estimates and likely usage –long distance journeys etc.
The benefits to the individual of taking out a lease agreement include:-
– You are able to plan a budget with a fixed monthly cost.
– You are able to offset your deposit against the monthly payments so if you have surplus cash from the sale of your own vehicle, you can use this to keep the monthly payments low, otherwise you will usually be required to pay 3 months instalments for the first payment.
– On average, lease companies provide lower interest rates than personal loan companies.
– The road tax will be included.
– Able to afford a higher specification or better car as more luxurious cars depreciate slower.
Disadvantages to consider:-
– You are obliged to take out fully comprehensive motor insurance; there is no third party option.
– The vehicle will not be owned in your name and there will be no option to purchase it.
– Should the VAT rate increase, so will your monthly repayments.
To find out more about Honda’s personal contract hire you can follow this link
http://www.honda.co.uk/cars/finance/personalfinance/contracthire/