The Best Car Finance Blog In The World

There are a great number of misunderstandings when it comes to resolving problems with garages and dealerships. You can avoid the costs of a court case by turning to an Alternative Dispute Resolution company, recommended by the Government as a way to stop courts from getting clogged up.

If you have a dispute with a dealer that you cannot resolve between yourselves you can refer your complaint to an ADR company. In fact the dealer must suggest an ADR company if they are part of a trade body. If they aren’t part of a trade body the dealer must point you in the direction of ADR but they do not have to adhere to the recommendations of the ADR company, which kinda makes the whole process a bit of a nonsense.

If they are part of a trade body the dealer must be signed up to a code of practice against which their performance is judged. I have my reservations regarding this practice, especially as the courts themselves can encourage you to go through a court appointed ADR company in order to avoid taking up court time and the possibility of you carrying the costs if your court case fails.

I just feel that a court appointed ADR service would carry more weight than an independent working with the dealership’s trade body. Time will tell if my reservations were justified. By Graham Hill

One of the great things about new cars is the quietness of them. Improved car design reduces wind resistance and wind noise. Drive a diesel car and you could be mistaken into believing that diesel engines no longer rattle, they do, but because the soundproofing is of such a high standard now, you can hardly hear the engine from inside the car.

Tyre compounds and new suspension systems reduce road noise dramatically and of course hybrids and full electric vehicles are as quiet as a mouse when operating in electric mode. The problem is that many of the changes have come about very quickly so when a driver moves from a 3 year old car to a new car the noise level drops so significantly that he or she loses all perception of speed.

The main indicators such as engine noise, road and wind noise have been all but eliminated in some cars so the fear of many safety experts is that we will see a significant increase in accidents and/or speeding tickets as a result of speeding. Having read about the latest Tesla challenging Faraday Future FF91 capable of developing over 1000 bhp out of its electric engine taking it from 0 – 60 in 2.39 seconds without making a noise, I’m very worried.

Even petrol and diesel engine’d cars pose a threat to safety. So if I or anyone else has convinced you to ditch your 5 year old car for a brand new model make sure that you acclimatise yourself to the noise levels before you start ‘opening her up’ on an A road or motorway. You don’t want to be writing your new car and/or you off in the first few weeks of taking delivery! By Graham Hill

Over the near 30 years that I have been in this industry I have seen and done many things, seen some of the most crooked activities carried out by dealers, brokers and car supermarkets, amongst others, as well as fraudulent attempts to acquire cars by crooked customers.

For many years I was an expert witness for the Crown Prosecution Service in cases of vehicle and asset finance fraud so I’ve seen most things crooked that go on in the automotive industry, some of them revolving around so called pre-registered cars and ex demonstrators.

Whilst I won’t bore you with all the fraudulent things I’ve witnessed, you’ll have to buy my upcoming book for that, I’ll share a couple of things with you as I’ve had a couple of potential clients who have recently avoided contract hiring a new car in favour of a so called pre-registered car or an ex demonstrator on HP or PCP.

First of all I should point out that it is possible to get a good deal on an ex demonstrator but it’s the luck of the draw and I’ll explain why. But let’s start with ‘pre-registered’ cars. First of all let’s be quite clear, there is no such thing as a pre-registered car in the way that it is advertised by dealers. Even the head of CAP HPI refers to pre-registered cars when referring to cars that are registered then sold when they include huge discounts. The pre-registering of highly discounted cars is an illegal act made illegal by Stephen Byers when he was Labour Trade Secretary in 2000.

He was concerned that the practice carried out by manufacturers who forced their franchised dealers to buy cars, albeit at heavily discounted prices, was skewing the new car registration figures. So as part of his Supply of New Cars Order 2000 it was made illegal to pre-register cars, here is the excerpt:

This order was made under the monopoly provisions of the Fair Trading Act 1973. It prevents new car suppliers from:

• discriminating on price between dealers and fleet buyers
• providing bonuses and discounts to dealers on pre-registered cars
• imposing on dealers restrictions on price advertising

Now let me be clear, dealers can pre-register cars but not as a result of increased incentives applied by the manufacturer on individual cars. However, some dealers and manufacturers have found a way around this. As an incentive and across the board, a dealer will be set a sales target for the month/quarter/year and he will be paid a Volume Related Bonus (VRB) by the manufacturer if he can achieve the target.

This money is paid retrospectively on all cars sold during the month, quarter or year. As the bonus is not specifically on the ‘pre-registered’ cars they kind of get around the regulations. As an example let’s say the dealer is offered a VRB of £2,000 per car provided he hits his target of 100 cars for the month. With a few days to go he has sold 90 cars and he is aware that if he doesn’t sell the 100 he will lose £200,000 VRB.

So in order to hit his target he pre-registers the 10 cars in the name of the dealership and pays his normal purchase price for the cars – keeps him onside with the Supply of New Car Order. He now factors in the £2,000 per car that he will receive as additional discount then adds in the normal discount that he would include in the deal making the car a cheap car.

I’ve heard of some dealers preregistering cars and selling them through auction just to recover a reasonable proportion of the money spent out rather than have the cars sitting on their forecourt. Whilst the above may sound like pre-registered cars are a great idea there are other, far more shady, methods used to heavily discount cars and sell as new cars even though they have already been registered. Some, not all, car supermarkets have been known to use this method as well as some dealers.

The cars are diverted from where they were intended – daily rental companies, driving schools or insurance company/bodyshop courtesy cars. When supplying cars to these companies the manufacturer uses part of his marketing budget to heavily discount cars that either get them seen on the road more or are driven by potential buyers. In my experience a daily rental company can buy cars at up to 45% off the list price with 20 – 25% being very common.

In order to get around the Supply of New Car Order dealers started to set up their own daily rental companies and bought their ‘pre-registered’ cars through the new operation at huge discounts then sell them on to buyers, having never put them out on hire, with just delivery miles on the clock, on big discounts as ‘pre-registered’. Nothing wrong with that. Of course the extra name in the log book will affect the resale value of the car – but only marginally. But this is where the 3 month rule comes in.

If you have ever bought a pre-reg. car you will sometimes be told that you won’t receive the V5 log book until after 3 months. This is because in order for a daily rental company to qualify for the extra discount they (normally) have to keep the car for a minimum of 3 months or say 5,000 miles, whichever comes first. Now if the manufacturer wants to carry out an audit the dealer needs to be able to show the auditor that he still has the car.

Whilst he may argue that the car is out on hire, so can’t be inspected, he can produce the copy of the V5, supposedly proving that he still has the car, and everyone is happy. Again, whilst this is shady, is this something that a buyer should worry about? There are also some dealers who will keep the cars in stock for 3 months to avoid this situation. But here’s the crunch. Remember that I said these cars were intended for daily rental companies and they are then supposed to be sold as used cars after 3 months?

Well, many years ago I became involved in this process. Before realising exactly what was going on, I had been arranging stocking finance for wholesalers who would arrange to buy batches of brand new cars from daily rental companies and sell on to car supermarkets for a small profit, similar procedure to the operation following the Stephen Byers order.

This allowed the car supermarkets to sell new cars at less than main dealers could buy them for. The daily rental company would order say 100 cars that would be funded by the wholesaler. The cars would be diverted, at the time of delivery, to the wholesaler who would pay the daily rental company £100 per car for their trouble – they never actually saw the cars.

However, as the cars were intended for daily rental I had calls from dealers, and one comes to mind, who would say that the manufacturer had produced a batch of cars using up old stock of parts, for sale to daily rental companies. In this particular case the interior trim was lower grade, items were missing in the car such as cup holders and front fog lights were missing, all part of the standard spec. of the model badge on the back of the car.

In return the dealer knocked off £250 per car. The wholesaler agreed but do you think he explained this to the supermarkets who were selling these cars as brand new but pre-registered cars? Of course not! It would be fine to sell the cars in their sub spec. condition to the daily rental company who were supposed to rent them out.

A customer is hardly likely to refuse a rental car because the interior trim didn’t match the manufacturer’s brochure for the model he was hiring. And of course they were to be sold as used cars at the end of the 3 months or when they had covered 5,000 miles so the buyer would be buying not a new car but a used car as seen.

There is another way that you can achieve a big discount on a ‘pre-registered’ car. When there is a new model coming out or a facelift on the current model the dealers need to make way for the new model and get rid of the old model cars so he practically sells them at cost but they don’t always tell you about the new model.

I’ve also heard of cars turning up at the customer’s house only to find that he has bought or leased an old model car when he thought he was buying the new model. So check the spec. very carefully if you are going to buy a pre-registered car – it may not turn out to be what you thought you were buying. Oh and some of the cheap lease deals are cars as illustrated above so make sure that you check the spec. meticulously.

You sometimes get what you pay for. Moving on to ex-demonstrators. There are two points to be made here. First is the discount. Demonstrators are taken by dealers not just to demonstrate the basic car. They will often have a mass of options fitted, clearly so that they can be demonstrated to potential customers.

So when they tell you that they will knock 8 grand off the list price of the car that’s the list price including the options that may still make this used car, having had multiple drivers, more expensive than the brand new car with the standard spec. which is what you were originally looking for.

Their trick is to compare the cost of the demo with the full list price of the new standard car – but you’d not have paid full list on the new car in the first place. Balance up the desire of the options and the fact that the car is used against a new car without the options and with a discount. Secondly we have perception.

When you call into a dealership and take a demonstrator out with a nice salesman beside you, toodling along at 30 mph you believe that this is the way that all ex-demonstrators have been treated. Well, let me correct that perception. Many years ago in industry as general manager in one of the UK’s most successful PLC’s, I had a fleet department report into me, responsible for around 700 vehicles.

With a fleet that size we were signed into the manufacturers’ demonstrator programmes which meant that every day transporters of brand new cars would turn up, with virtually every make of car on board, that we would have on loan for anything up to 3 months, often 2-4 weeks. I would allow our sales and service staff to use these cars. As they weren’t their own company car they would proceed to ‘burn rubber’ out of our depot and treat the cars like rallycross cars till they were returned.

As we didn’t own the cars I wasn’t worried but at that point I thought to myself I will never ever buy an ex demonstrator as I know how many of them are treated. Oh and often dealer sales staff get to use the demonstrators for personal use and I’ve seen the way they drive them away from the dealership so I strongly recommend that you give ex-demonstrators a very wide berth or you may end up spending more time waiting for repairs to be carried out than actually driving the car! By Graham Hill

Sadly I have already started to see dealerships and some brokers trying to benefit from the ignorance of consumers and SME’s by manipulating the FCA rules to their advantage. So in this extract from my new updated book, launching in 2017, I have exposed some industry secrets, never before explained and then answered some fundamental questions about Personal Contract Purchase as to why most consumers use this product to finance their new cars and yet the vast majority of businesses use Contract Hire, a product that is also available to consumers.

I’m going to talk about, what appears to be, one of the motor industry’s great mysteries. Recent statistics, from a variety of sources, show that somewhere in the region of 85% of new cars, acquired by consumers, are financed on a Personal Contract Purchase (PCP), with less than 5% financed on Contract Hire, often referred to as a lease. But this isn’t the case with businesses who have accountants and fleet specialists to advise them on the best method to use. Around 85% of businesses acquire their cars through Contract Hire. So why should this be so?

One could argue that PCP is only available to consumers so businesses are denied this facility. Not true, it is possible, from some funders, to arrange a business Contract Purchase with a guaranteed future value, allowing the business to simply hand the car back or purchase it, at the contracted figure, at the end of the agreement, as you or I would do with a PCP. But businesses aren’t interested, for a number of reasons, the main one being cost. And as business takeup of Contract Purchase has been so low, many leasing companies have dropped it from their product range.

So if contract hire is so great for businesses why does it only account for less than 5% of new cars funded by consumers? The answer must surely be VAT as VAT is charged on the contract hire initial and monthly rentals? And as businesses can claim back 50% of the VAT this must be the reason for the high business take up? As PCP payments don’t have VAT added it must therefore be a better product for consumers? Again not strictly true. Firstly many businesses are not VAT registered so they can’t claim back the 50% of the VAT from the VAT man anyway. Secondly, the VAT man isn’t dopey, he will get his pound of flesh one way or the other.

In the case of a car, if you contract hire the car, without getting too technical, the contract hire company can claim back 100% of the VAT it pays on the new car. So a car costing £20,000 + VAT actually only costs the leasing company £20,000 because the car is a business asset that no-one in the leasing company will have use of. It applies its magic formula, allowing for the balloon payment, interest charges and admin costs and comes up with a monthly figure. The VAT man needs some money so he now insists on VAT being applied to the monthly payment. However, with a PCP, whilst the formula for calculating the monthly cost is very similar, as you will have ownership rights in the car the finance company cannot claim back the VAT on the purchase price of the vehicle. Don’t ask – it’s the rules.

So instead of making his calculations based on a purchase price of £20,000 he now has to make his calculations based on a purchase price of £24,000 (£20,000 + VAT). But here is the crunch. Included in both calculations are interest charges. In a lease the interest is calculated on the net purchase price of £20,000 whilst a PCP uses a purchase price of £24,000. So with a PCP you pay additional interest on the unrecoverable £4,000 worth of VAT. I hope you followed that but if you didn’t let me explain simply: In summary, and often contrary to advice given by car salesmen, paying VAT on the contract hire rentals is better for you than making PCP payments that effectively include VAT as well as an additional chunk of interest charge. MYTH EXPLODED!!!!!

Maybe the difference is in rate? Do consumers get charged a much higher rate than businesses making contract hire much less attractive. If you are a business user would you not expect to lease a car for less than a consumer and if you were a large company with hundreds of cars would you not expect to lease cars for less than say a sole trader or small business? Again the answer is no. Whilst one might assume this to be the case, thanks to a rather bizarre ruling, introduced by Labour Secretary of State for Trade and Industry at the time, Stephen Byers, there can be no discrimination between the terms offered to businesses of any size and to those offered to consumers.

The rule falls within the Supply of New Cars Order 2000. So that argument doesn’t stand up to scrutiny and my own experience suggests that most leasing companies operate a like for like rate system. So consumers and SME’s enjoy the same cheap rates enjoyed by some of the biggest companies in the country. Dealers may cite the VAT case and the differential between lease rates provided to consumers compared to businesses as reasons why you should opt for the wildly popular PCP but you now know the truth. Unfortunately as more consumers are convinced of the ‘advantages’ of PCP it becomes a self fulfilling prophecy.

The more people that take out a PCP the more that dealers can claim it to be the best product suggesting that 85% of consumers can’t all be wrong! So it’s clear to see that dealers would prefer you didn’t know the above, as the VAT implications are often part of their sales pitch. But I’m now going deeper. I’m going to take you to the dark side and expose the way that a large number of PCP users are simply led by the nose in the name of profit and are often not even offered the choice of PCH.

OK, let’s say you are a salesman working in an electronics store selling TV’s. You have two virtually identical TV’s all the same features, same size etc. For selling one TV the salesman is told he will make £30 commission but for selling the second he will be paid £100 commission. Boy will he find features in the second TV that probably haven’t even been invented yet! However many times salesmen are told to ‘treat customers fairly’ and be honest about the products and not misrepresent them, money talks. So when a salesman is incentivized to sell PCP he will of course sell PCP over HP or any other product.

The reason for the greater incentive is that the finance provider makes significantly more interest out of a PCP and as only 20% of customers ever buy their car on PCP the leasing company also stand to make a profit out of the resell of the car at the end of the contract along with any excess mileage charges and charges for repairs. First off let’s look at the shady comparison between a 3 year PCP agreement and a 3 year HP agreement and the reason why the dealer and lender prefer PCP. Your intention is to own the car at the end of the 3 years, either by paying off the final balloon payment, incorporated into the PCP, or simply paying off the whole of the HP. You are paying exactly the same APR on both agreements – this is important.

The car is a £20,000 car after you have paid the deposit. Now if you took the car on a PCP with an £8,000 final payment, also known as a balloon, the monthly payment over 3 years would be £460.45, according to an online calculator. If you add in the balloon payment you would end up paying £24,576 in total. So let’s be clear, you buy a £20,000 car after deposit on a PCP on 10% APR over 3 years and pay the balloon to own the car at the end of 3 years. If you were to take a straight HP over 3 years on 10% APR you would pay £645.34 per month which makes the total amount payable to be £23,232. So you end up paying over £1,300 more on a PCP over the same period on the same APR – That my friends is why dealers and lenders prefer you to take a PCP over an HP agreement!!! The lender makes more and in turn pays more to the dealership in commission.

I have actually been in showrooms where sales staff have said things like: ‘On a PCP you push back part of the cost to the end of the agreement. As you pay no interest on that final figure – that is the reason why the monthly costs are so low compared to HP.’ Completely wrong. The structure of the deal is such that the final balloon payment is the equivalent of an interest only loan. It is far from interest free. It’s like taking out an interest only mortgage of let’s say £200,000 over 15 years. You pay much less than a repayment mortgage per month but you still owe the £200,000 at the end of the agreement. Same principal.

Another common statement used if a customer asks about PCH is something like, ‘Contract hire is mainly for businesses, the rates are cheaper for business users and whilst businesses can claim back the VAT of course you can’t as a consumer so not only are you likely to be paying more per month in the first place you have the added burden of VAT which isn’t applied to PCP payments’. Again, as you can see from above totally misleading and completely untrue. And finally, ‘With PCP you have the choice of buying the car at the end of the agreement or you can simply hand the car back, unlike a lease where you have no choice. Added to which you will no doubt have a profit in the car at the end of the agreement which you can put down on the next car.’ Again, not strictly accurate.

With some PCH funders you have the opportunity to buy the car at the end of the lease at something around trade value but this is trade value at the end of the lease, it isn’t a pre-determined figure. As only 20% of PCP customers buy their cars at the end of the agreement it doesn’t appear to be a major benefit. And if you have a ‘profit’ at the end of the agreement it isn’t actually a profit, you have simply paid more depreciation than was necessary and you are receiving a refund of the money you have paid. Moving on to Contract Hire for consumers, known as PCH, I hear from customers constantly, after visiting dealerships, that PCH is not even offered.

This can be for a number of reasons, often the most obvious is that the salesman is not even aware of the availability of the product. And even if he is he often hasn’t been trained sufficiently to be competent enough to be able to provide you with a comprehensive guide to the product. On the other hand he may know of the product but, like the TV salesman, the incentive may not be so great for him to sell it in preference to PCP. The problem for dealerships is that generally speaking, the price they have to sell the car to their leasing company is dictated by their quoting system and is generally less than what they would sell the car for on a PCP.

The good news for consumers is that they don’t have to go through the negotiating thing, the computer system has already been geared up to your advantage. In many cases the car manufacturer provides the leasing arm with some extra bonus that wouldn’t be available when you take a PCP. It can be shocking to learn that the combined discount from the dealer and the bonus from the manufacturer can sometimes reach 45% off the retail price of the car. And it is very common for discounts of 25 – 30% to be incorporated into the contract hire rate. And here’s the thing, when you contract hire a car all that will appear on your quotes and on the agreement is the rental. No mention whatsoever of the cost of the car. But on a PCP quote and on the agreement the price of the car must be shown.

It would hardly help the sale of the used, 12 month old cars on the dealer’s forecourt if it could be seen that new cars were being sold cheaper than their 12 month old cars. Used car sales, often with more profit in, would collapse as customers learned the truth. But supply a £30,000 car on rentals of £200 + VAT per month – and it seems like a pretty good deal. The fact that a 40% discount has been built into the rate has no effect on the dealer’s used stock. Having said that, in an effort to help the franchised dealers retail more vehicles, manufacturers and the leasing companies can provide discounts in the form of: Manufacturer’s contribution, PCP contribution and Dealer Contribution but even then they won’t normally discount as much as may be achieved in a PCH. Even a discounted APR, free tank of fuel and even free service can still be considerably short of the 30% or £6,000 off a £20,000 car that can then be hidden away in a contract hire rate.

So there you have my thoughts on PCP vs PCH. I am not dismissing PCP as it can occasionally work out cheaper if the manufacturer is not giving away any extra bonus to the leasing companies but the manufacturer bonus is allowing the leasing arm to provide discounted APR on PCP agreements. It may also be convenient to pay extra per month if it results in some equity in the car at the end of the agreement. In other words, if the final payment is say £8,000 and the dealer offers £9,000 in part exchange, giving you £1,000 towards the next car. However, this is a gamble and there is always a chance that the car isn’t worth the final balloon payment. And as only 20% of cars financed on PCP are ever bought it suggests that this is rarely the case. I should also add that PCP can certainly work well on used cars, especially as you cannot usually arrange PCH on a used car.

My final thought is don’t dismiss HP if you are still hell bent on owning or at least having the option to own the car at the end of the agreement. Before the sudden surge in PCP consumers would generally use HP as their funding method of choice. They would finance the car over 5 years with no intention of keeping the car for 5 years. It was common knowledge that after 3 years you could settle the finance and for most cars you would be at the sweet spot when the settlement figure to the finance company matched the trade value of the car. It doesn’t take an accountant to realise this is pretty much what happens with a PCP. After 3 years you settle out the finance simply by handing the car back and this is the advantage of PCP if the car is worth less than the final payment, the finance company suffers the loss. With HP you may not suffer the loss, you would probably keep the car a little longer till the settlement matched the car’s value.

But here’s another revelation. Take the PCP example above on the £20,000 car with an £8,000 balloon, as you can see the monthly payment is £460.45. However, if you took out a 5 year HP on the same APR you would pay just £427.14 per month and guess what, the settlement figure at the end of 36 months is £8,135. So whilst the car salesman may rave over the benefits of PCP you may be better off with an HP agreement, in this case you would be £1,000 better off over the 3 years.

To sum up each type of finance has its place. What I’m suggesting is that when financing a new car you look at all options including HP, PCP and PCH to make sure that you are getting the best deal to suit your needs. And if you are currently looking at a used car as this is all you feel you can afford consider a new car on PCH you might be pleasantly surprised.  By Graham Hill

I’ve talked about this subject before but recent statistics has caused me to mention it again. It seems that nearly six million drivers are caught out by auto renewals of their insurance, losing on average almost £120 per annum. I have to say when I changed my insurer at my last renewal I saved nearly £400 per annum so I know how important it is to shop around every year.

The research was carried out by comparethemarket.com and revealed that the average saving by shopping around is £119.39, up from £106 at the start of the year. Younger motorists suffer most when auto renewing with premiums being up to 30% more than could be achieved by shopping around.

And don’t just go onto the comparison sites, don’t forget that some of the cheapest insurers such as Direct Line are not on the comparison websites. So make sure you try them as well. Although I would strongly advise against Zurich who tried every way they could to avoid paying out on a damaged laptop of mine.

The Financial Ombudsman Service told them on 3 occasions to pay out but it wasn’t till the Ombudsman made a final ruling, two and a half years later, that they were told that they were wrong not to payout. They are crooks – don’t use them! Also don’t overlook insurance brokers, they certainly come into their own in the event of an accident and dealing with the paperwork. By Graham Hill

One of my customers, Zamir Hussain, has rather bizarrely found himself in court following an accident that wasn’t his fault. He was provided with a like for like replacement car (not cheap considering he has a Range Rover) but after the other driver’s insurance company disagreed with the amount claimed for the hire car he now has to go to court.

He could end up having to pay all or part of the bill which is several thousands of pounds and serves as a stark warning to anyone involved in an accident. The situation requires a little unravelling so please bear with me. You’ve had an accident that wasn’t your fault and your car is booked in for repair. There is no dispute that the other party is at fault.

You now have one of two choices, you can claim through your insurance company which means that you lose your no claims discount or you can make the claim yourself against the other party. However, and this is the first point to note, you must advise your insurance company that you have been involved in an accident. Failure to do so could cause your insurer to refuse to insure you in future. You should send a letter to your insurance company making it perfectly clear that you are not making a claim, simply advising them.

So you have advised your insurance company and you are now faced with another choice. The bodyshop repairing your car may offer you a courtesy car. This is exactly what it is, a courtesy provided by the repairer, which tends to be a small engine’d modest car to keep you mobile. On the other hand your insurer may suggest that you take a like for like car and recommend a credit hire company who will provide you with a car, either the same as the one you drive or a similar grade. By taking this route you don’t lose your no-claims bonus but the car rental is in your name.

The agreement between you and the credit hire company includes payment terms. They will seek to recover the cost from the other party’s insurance company but, and this is a big but, if the other insurance company refuses to accept liability for the accident or for any other reason refuses to pay, you are liable as the agreement is in your name.  Whilst you may feel you have a right to expect a like for like replacement there is an overriding obligation on you to mitigate the costs to the other party (and his insurer) in the event of an accident.

For example if you have an accident that wasn’t your fault and you feel your car is driveable, then instead of having the car checked by an engineer you continue to drive it, you could cause additional damage. If subsequently it is found that you have caused irreparable damage to the engine the other person’s insurance company would most certainly challenge a claim for a replacement engine – and probably win.

It seems that some insurance companies are challenging hire costs, not because they are too high for the car but that a direct replacement shouldn’t have been provided in the first place using the mitigation of cost argument for the challenge. They will also challenge a rental charge for a replacement car if you keep the hire car after your car has been repaired. You may stand a better chance of your claim succeeding if you lease your car. You should point out that you are still paying for the lease of your car whilst it is being repaired so you should be entitled to claim for a like for like replacement.

Some Credit Hire companies also provide a total risk agreement whereby, unless you have deliberately tried to defraud them, they will cover the cost in the event that they end up in court and lose the case. You need to check beforehand. It now starts to get a little messy. If you end up in court you may be asked if a courtesy car was offered and why you didn’t accept it. The advice is that you should tell the credit hire company if you are offered a courtesy car (you may be asked in court why it was essential to have a like for like car as opposed to a small courtesy car).

If you are not able to use the hire car during the period that your car is being repaired, for example if you are on holiday or you are unable to drive through injury or illness then the claim for that period could be thrown out. Here is another strange twist. Credit hire is known to be the most expensive way to finance a rental car. If you walked into a daily rental company and rented the same car it could cost up to £200 less per day but to do this you would be expected to pay in advance for the rental.

So as the accident wasn’t your fault why would you take this route, surely it must be down to the other party’s insurance company to pay the rental costs direct? Wrong. If it can be shown in court that that you had the resources to pay for the replacement car at the lower rate the court could find in favour of the insurance company for the difference. And it gets worse, supposing the car was a write off. How long would you be entitled to a Credit Hire car for? Most would assume from the time you had the accident to the time you receive the payout.

Some might argue, but not be successfully, that you need the hire car to drive around to inspect potential replacement cars. However, again, rather bizarrely, if it can be shown that you could have afforded to pay for a replacement you may not be entitled to claim for more than say a ‘reasonable’ 2 weeks. The expression used by the courts is ‘impecunious’ when you don’t have the funds to pay for a replacement in the case of a write off or pay for cheaper daily rental if your car is being repaired. So beware if you have a few quid in the bank.

Finally, there is the ‘upsell’. Only ever consider an upsell if the Credit Hire company doesn’t have a direct replacement and won’t charge a higher rate for the better car. Let’s say your car is a 3 Series BMW but because the Credit Hire company has no 3 Series available they suggest they provide a 5 Series. Check that they will still charge the 3 Series rate and don’t fall for the supplier saying that you don’t have to worry if the rate is higher as the other party’s insurance company will be paying.

They probably won’t. In summary only take a Credit Hire car if you are absolutely confident that it won’t result in you paying all or part of the bill. For your information you can check Nationwide Credit Hire Rates by clicking here. Incidentally to put this into perspective Zamir’s Credit Hire charge was over £6,000!!! By Graham Hill

All discussions about cars at the moment seem to revolve around either connected cars, driverless cars or both. But as I mentioned in an earlier blog I hope that in the rush to get this new technology out into the market place they don’t compromise security.

Problems already exist with hackers able to clone your remote keycode and access your car with a laptop, made even easier with keyless entry allowing the crooks to start the car once inside by pushing a button. Dealers are also being warned about open access to the Internet via their free WiFi in their showrooms.

Customers who access the Internet, whilst waiting for their car to be serviced, could have their data held on their laptop compromised by a hacker sitting inside or just outside the showroom. Not only that hackers have been known to set up dummy hotspots that you connect to again giving access to the contents of your computer.

However, worst of all are the hackers who hack into the records of the dealership providing free Internet access. They can then extract personal details including credit card information from the dealers data base. This can also apply to anywhere else you can pick up free and unprotected WiFi such as shops, hotels, restaurants etc.

Moving on to the driverless cars, there have been industry warnings that insurance for driverless cars needs to be very carefully considered with so much depending upon computerised systems making hacking potentially the biggest threat. In a report by AXA Insurance they warn about potential claims where vehicles have been broken into and the car or items stolen remotely.

Researchers have already shown how a Mitsubishi Outlander PHEV could be hacked and stolen using a laptop. I have read of cases in America and similar warnings have been issued here about situations where cars’ computer systems have been hacked then drivers held to ‘ransom’ only releasing the car once a sum of money has been paid. According to AXA these and others are whole new risks associated with highly computerised and autonomous cars that need to be considered and assessed as a matter of urgency. By Graham Hill

A few years back a very good friend of mine asked me to help him with his night club which was still making money but over a period of 2 years had dropped away in popularity and income had suffered as a result. So with my vast knowledge of night clubs and my business expertise I started to investigate the reasons why it was less popular.

A few years previous they consistently had queues of over 100 people outside, waiting to get into the club, but at the time of my investigation it was rare to see a queue at all. We addressed many of the problems, changed the DJ, improved the sound system, re-organised the bar and increased the staff and other things that started to get the club buzzing again but one thing caused a serious fallout between us. Air conditioning.

He, like many bar and club owners, felt that if you kept the customers hot they would drink more and increase bar takings so he preferred to retain the ceiling fans planted around the place. How wrong can you be? The club was open till 2.30am but by 11.30pm punters started to leave and when asked why they were leaving they said it was simply too hot and uncomfortable.

Sadly, about 2 years later, the place closed. Brought about, in my opinion, by the fact that he refused to install air conditioning because of his assumption that when people get hot in a club they drink more. So what has this ramble got to do with cars? Well it’s to do with wheels. Let me explain. We now have a huge raft of options available on new cars, all aimed at making more money out of the customer.

One of the options frequently taken up by customers is wheels. Different styles and sizes can be added at an additional cost but very few clients actually see the chosen wheels on the car before it is delivered or drive it with the bigger wheels fitted. What may have looked pleasing to the eye online may make your new 4WD look like it is perched on stilts in real life.

And as many have found in the past, having larger chunkier wheels fitted to your new car may look tough but they can often make the ride much more uncomfortable, make handling harder and affect adversely the CO2 emissions and fuel consumption. So whilst the assumptions are generally the opposite, better road holding, more comfortable ride etc. you will not know unless you can test drive the car fitted with the upgraded wheels.

And make sure you see the wheels actually fitted on the car in real life, they may look great on line but in the cold light of day they could also look terrible. Just because you are paying more doesn’t mean the car will look or drive better and as with the air conditioning, base your decision on fact, not perception. By Graham Hill