PCH Terms And Conditions
Friday, 2. November 2018
One very important thing to remember is that a contract hire agreement:
IS NOT A LOAN AGREEMENT!
I have run training courses and seminars for leasing company employees and executives, dealership staff and consumer groups. In each, when I talk about contract hire agreements I tend to describe them as more like an insurance policy. The problem is that many consumers don’t bother reading the terms and conditions because they believe them to be similar to a loan agreement.
A loan agreement provides you with some key information regarding the finance, amount borrowed, loan term, interest rate, APR, monthly payments etc. This summary is followed by a dozen or so terms and conditions, pretty much falling in line with the Consumer Credit Act 1974, with most of the terms and conditions much the same between each lender, whether it is a bank or a supermarket.
The fact is that once you have the money you can buy a car following which everything is down to you, when, where and how you have the car serviced, the type of insurance you take out, the tyres you fit, when, where and for how long you take your car abroad and how you deal with warranty claims. It’s all under your control.
However, take a car on contract hire and you don’t own it. The leasing company owns it and wants you to take care of it whilst you have the use of it. Because they end up having to sell the car at the end of the agreement and want it to fetch as much as possible at auction. They also want to maximise their profit out of the deal and the profit comes from many places. However, in extreme ignorance, consumers and SME’s with decide upon a car based purely on the rate and totally ignore the contract they are about to sign.
I have pulled out of my files 7 recent contract hire agreements and each one is substantially different from the others and each contains terms that are incredibly vague and confusing. It’s frightening for someone with the knowledge and experience that I have let alone those who are not financially astute.
Here is an example from one of the contracts:
Except where the Customer deals as a Consumer (as such term is defined in the Unfair Terms in Consumer Contracts Regulations 1994) or if in Scotland this Agreement is a Consumer Contract (within the meaning of Sections 12 and 25 of the Unfair Contract Terms Act 1977) the Vehicles hired under this Agreement are hired without the benefit of those terms implied by Sections 8. 9 and 10 of the Supply of Goods and Services Act 1982 which terms are (except where the Customer deals as Consumer defined as before) expressly excluded.
Got it? I know what it means but most people would find that incredibly confusing and could leave a customer seriously out of pocket and without a car following a warranty claim. And that’s just one of a hundred terms. So even if you take time to read through the terms and conditions you may still be as knowledgeable as if you hadn’t read them in the first place. It’s a scam.
The fact is that none of the contract hire companies are registered charities and they all need to return profits so think of the monthly rate as just one part of an equation aimed at relieving you of money. Oh, and part of their equation is cost so some employ school leavers on minimum wage to take calls from customers with little training so you can’t expect a high level of customer support if any at all. And raise a problem with a bucket shop broker and you’ll be given short shrift with the response – sort it out with the leasing company! By Graham Hill
