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on is right for you?
end but it depends on the residual value and how it’s sold. It’s just
a slicker product for that type of environment.”
Vans with the strongest residual values tend to be self-funded models from sole traders and SMEs, as their speciication renders them more attractive to used buyers than typical ex-large leet vehicles, which can be white noise in an auction hall according to James Davis, director of commercial vehicles at Manheim Remarketing.
Over-speccing
“The large corporate leet won’t want to over spec the vehicles, whereas you tend to ind an increasing number of SMEs, certainly sole traders, will go to their local franchised dealer, ind the metallic van, put alloy wheels and leather on it and seats in the back because it doubles up as a family car on the weekend.
“It creates much smaller volumes but it also creates a different product, almost car-like in its behaviour. Then if it’s on a PCP
or a manufacturer lease, you’ve suddenly got some really unique stock, really nice age, lovely mileage, great spec – and the franchise dealers can’t get enough of it.”
Strong residual values and
the popularity of car-like vans, particularly with small businesses, is likely to lead to a diversiication in the types of inance products on offer according to the FTA’s Cartwright.
“One of the things I think we
will see going forward something similar to what’s happening in the personal car market, where different funding options have actually made it signiicantly more attractive to go for a new vehicle – personal leases, lexi rental, that kind of thing.”
17 TVD lssue 27 2016
“If, for example, you’re a construction irm and your vans are constantly on site getting battered then contract hire is not a good product for that vehicle, purely on the basis that when it comes to
the end of the contract, there’ll be damage, dents and you’re going
to be charged x, y and z in end-of- contract charges.
Finance lease
“The best product if you’re in that that scenario is inance lease. There are no early termination charges, end of contract charges or excess mileage charges – you basically take a hit on whatever that vehicle is sold for.”
Finance lease is not necessarily more expensive than contract hire according to Coley, but it is a more
lexible package. At the end of the contract, the leasing company sells the vehicle for the customer and the price is dictated by condition and residual value.
“With contract hire, you’re ixed; it is a 48-month, 80,000-mile contract. You can extend it or change it mid- term but you’re pretty restricted
to term and mileage. With inance lease, you’re not restricted. So if you hire a van and you’ve only done 40,000 miles in four years, you could say ‘I’ve got economic life left in that van, it’s still in mint condition so I’ll have two or three more years on that lease’ and pay what is called a peppercorn rental – that’s a small element of rental per year to use the vehicle.
“If the vehicle comes back battered, you’ll feel it at the back