What is Sainsbury's Drive Car Leasing Scheme?
Often referred to as an Operating Lease or maintained contract hire, the vehicle is sold to the Leasing Company and is then leased to an individual customer (you) for a fixed period and at a predetermined monthly rental, which is referred to as the Rental Payment. The rental is determined based on the vehicles predicted value at the end of the contract, the rental period, interest, and the mileage the customer believes they will not exceed by the end of the contract. At the end of the contract the customer (you) will return the vehicle to the Leasing Company.
Why is this different to Personal Contract Purchase (PCP)?
The payments made to the Leasing Company during Personal Contract Purchase (PCP) are more akin to a loan, the customer (you) will have the option of becoming the legal owner of the vehicle once they (you) have made all payments including the final payment (sometimes known as the Balloon Payment). PersonalContract Hire is different because the customer (you) are not charged for the vehicles value at the end of the contract, the customer (you) will simply return the vehicle (subject to conditions) or it will be collected (depending upon the arrangement made with the Leasing Company).
Will the Customer (I) have to be underwritten for finance)?
Yes, it is important that the customer (you) have the necessary funds available to make all monthly rental payments and therefore all customers (you) will go through a Credit Reference Agency check before contracts are signed.
Is Sainsbury's Drive Car Leasing regulated?
Yes, all Sainsbury's Drive Car Leasings are regulated by the Consumer Credit Act 2006.
What about VAT?
VAT treatment is a key difference between PCH and products such as PCP. Personal Contract Hire rentals are based on the pre-VAT price of the vehicle, however, the month rental payment (made by the customer) attracts VAT at the prevailing rate. In most circumstances the rental for PCH will be less than PCP payments (all other factors being equal).
What is included in the Monthly Rental?
The monthly payment the customer (you) make, referred to as the Monthly Rental cover the use of the vehicle, Road Fund License (RFL) for the period of the rental and provision for additional services requested by the customer (you) such as Maintenance, Servicing and Repair (SMR) or Breakdown and Recovery. The customer (you) will pay the normal rental and an additional payment for all optional services.
Who owns the vehicle?
The Leasing Company are the legal owners and will keep the V5 Registration documentation. However, any costs associated with maintaining the vehicle (unless SMR is included in the rental) are incumbent upon the customer (you). Other costs such as Parking fines, Traffic Offences and Accident Damage are also the customers (your) responsibility (as they would be for other finance arrangements).
Can the Customer (I) buy the vehicle at the end of the contract?
Unfortunately not, under Consumer Hire legislation the ownership of the vehicle is with the Leasing Company and cannot be transferred to the customer (you) for revenue and taxation reasons. The vehicle can be sold by the Leasing Company to a 3rd party.
Whats included as part of a Maintained Contract Hire agreement?
- All scheduled servicing
- Replacement of mechanical parts (and labour) for the duration of the contract
- Tyre Replacement (due to wear and tear)
- Annual renewal of Road Fund License
- Roadside Assistance of Breakdown and Recovery
Can the contract be settled or terminated early?
The Leasing Company will consider any request from the customer (you) to terminate the contract early, but the customer (you) will be charged 50% of the outstanding rentals plus VAT.
What happens at the end of the contract?
The Customer (you) will be contacted before the end of the rental to discuss renewal and to arrange collection of your existing vehicle. The vehicle will be collected and inspected by the Leasing Companies representative to identify any damage and exceeded contract mileage.
What happens if the customer (you) exceeds the agreed mileage?
If the vehicle is over mileage then this will have an adverse effect on the value of the vehicle, which the Leasing Company would not have anticipated. The Leasing Company will charge the customer (you) a set amount per mile over the agreed contract mileage (the amount is dependent on the vehicle and will be detailed in the contract before commencement).
What happens if the vehicle is returned with damage?
At the beginning of the contract the customer (you) will be provided with a guide regarding what is deemed damage and what is deemed fair wear and tear. This guide is approved by the British Vehicle Rental & Leasing Association (BVRLA). Should damage exceed that deemed fair wear & tear the Leasing Company will charge the customer (you) any rectification costs based on industry rates.
|
