Should I buy my ex lease car?
As those who are used to contract hire vehicles know, at the end of the term usually 36 months the finance company will make arrangements to collect the vehicle. It may be possible to purchase the car you have been using but it will not normally be offered for sale, you need to ask for a price. Will the finance company offer you the car at a bargain price?
Unfortunately it will probably not be at a bargain price. The prospective purchaser will probably think that it is an ideal opportunity for the finance company to get rid of the vehicle without any hassle, the finance company will probably think that it is an ideal opportunity to get a higher price for the vehicle, setting the value at somewhere in between the trade and retail price.
If you are interested in buying your ex contract hire car maybe for a member of your family, bearing in mind they are unlikely to do anything special on the price, does it represent a good deal? Well it does have its advantages, in that there is a lot be said for perhaps one of your children driving a car where you know the vehicle’s history from new. For example you will know that it hasn’t been in any major accidents and that any less serious body damage has been repaired satisfactorily at the main dealership.
Although they should not, it is not unheard of for the hirers of contract hire vehicles to have damaged bodywork repaired at a local garage rather than the main agent. Sometimes this can affect the anti corrosion warranty. If the finance company becomes aware of this on the vehicles return, it can be costly for the hirer.
How will the finance company dispose of your car if you do not buy it? Different companies have different policies when it comes to selling their vehicles, some are now using EBay, which seems to be working quite well. As a general rule, they will be disposed of through the trade most commonly at auctions.
The ideal situation would be if you could buy at the trade price, which they will almost certainly end up selling it for. To do that however you would have to know how and where they are going to sell it, of course if they are using EBay, sometimes they will be lucky enough to receive almost retail money for the vehicle.
Alternatively you could go to the auctions and buy an ex lease car but it can have its drawbacks. Firstly you would be buying somebody else’s car, so unlike your own car you wouldn’t know how it has been treated and by the time you bought it would usually be outside its warranty.
At almost all auctions you will see private buyers bidding for cars, although auctions are designed for the trade. Those in the trade who buy at auctions sometimes make mistakes but private buyers make an awful lot more. Some ex contract hire vehicles are sold “with no major defects” and some are “sold as seen”. If they are sold as seen that doesn’t necessarily mean the vehicle has any faults, some companies sell all their vehicles in this way. Conversely if it is sold with no major defects it does not necessarily mean there are not any, it is essential to check the vehicle out. The car can be rejected within a certain time scale.
Private buyers can often be seen paying far too much for cars, as they get carried away with excitement of the moment. Trade buyers know what they want to pay for a car, that’s not to say that they don’t sometimes get tempted in to paying a little more but not too much more. Whereas private buyers sometimes can’t seem to stop bidding and auctioneers have been known to take “bids off the wall”, this is where a very enthusiastic private bidder, who is clearly not going to stop bidding, is bidding against a non existent bidder.
You can do a lot worse than to buy an ex lease car; you can as a general rule expect it to have been regularly serviced, the mileage to be correct and for any faults it has incurred to have been rectified under the warranty. If you can find a car that is being sold at the end of a 24 month term, it is ideal because with the majority of vehicles will still have one year’s warranty remaining.
Do make sure that you check the service history, because if the hirer has forgotten to carry out a service and the leasing company has not picked up on it, it could invalidate the warranty. Also be aware that at auction “no major mechanical defects” usually means major components like engine and gearbox etc; the vehicle could have a reoccurring electronic problem that probably would not be covered. In summary buying your own car at the end of the term is probably the safest bet.