Initial Lease Rentals Set To Increase From 3 Months To 6 Months

Monday, 17. August 2009

I mentioned in recent items the move in the industry from 3 rentals in advance to 6 rentals when contract hiring vehicles, suggesting that this could be as a result of lenders requiring more security by taking larger upfront payments. It has now come to light that this is more likely to be the case and 6 advanced rentals likely to become the norm, according to David Edwards, chief executive of NVR Fleet UK. It is not so much the contract hire companies that have demanded a higher upfront payment but the finance providers who fund the contract hire companies. You see the leasing companies have to borrow the money from somewhere in order to finance the purchasing of the cars that they in turn lease to clients. It is the re-structuring of the debt on the part of these ‘wholesale lenders’ that has led to a demand for more deposit being paid upfront by the leasing companies which will have to be passed on to their contract hire customers. It’s not likely to be long before we see some smaller contract hire companies only able to offer 6+ profiles so you had better start saving your pennies for the initial rental on your next car. By Graham Hill