Originally Posted by Mike in Hampshire
Sounds very wise Steve. Can such a policy be bought independently, any idea of cost (on say a £28k Merc SLK)?
OK, so let's say I get personal contract hire over two years and I go for a 10,000 miles per annum deal. I'm 100% confident I'll do less than that anyway (I've done 10000 miles in three years in the 335i). All of this includes VAT since I'm not self employed.
So (and apologies if this is a silly question); the up front deposit on, say, a 6 + 23 deal. Have I missed something, or is this not really a deposit in the normal sense of the word? If I go for a 6 + 23 deal @ £270 per month, it just means I pay them 6 x £270 = £1620 on day one, then another 23 payments of £270 (i.e. another £6210, total over two years £7830)? I don't get my "deposit" back, right?
Finally, after two years, I hand back the keys [£7830 poorer], the car is taken away, and I'm a pedestrian again, correct? Or is it less simple than that? I've seen such a deal on a Merc SLK 250 CDi and I'm tempted.
Sorry for the "Alexander Dumb-Ass" questions.
Your financial understanding of how it works is 100% spot on.
A number of things to consider; if you contract hire a car and the finance company is Mercedes Corporate, it's likely the car will be hired under what's known as an operating lease, which will include RFL only for year one. Most other finance companies include RFL for the duration of stewardship - this is something you need to check out. Factoring this in (if it isn't already included) will obviously make a difference to your monthlies.
GAP is also essential
. Again, as per my circumstances (with Merc Corporate supplying the car) in the event of a total loss the lease contract demands that Mercedes are paid MV for the car (which my fleet insurance will cover) and 100%
(yes, 100%) of the remaining monthly payments. So, under these conditions, had I been unlucky enough to have 'my' car written off on day one of 'ownership' my insurance company would have had to pay £50-odd grand and I would have needed to have found 35 * £750+VAT (£31,500) - as such, GAP is utterly essential and I have this sum fully covered (on a diminishing basis). I have mine through ALA and most people on here with GAP will be the same; utterly affordable and an excellent policy.
Final thing - damage on returning cars; Mercedes are notorious hard-asses about inspection of damage to a car being returned. Make sure the car is factory-condition (or better, if possible) to guarantee avoiding charges. Everyone else adheres to BVRLA standards for damage on return, which is a lot more fair in its approach.