Expat Cars - Rent, Lease or Buy?
In this article we’ll compare the different ways of obtaining a car whilst on an assignment in the UK, and the pros and cons of each for different scenarios.
There are a lot of variables which come into play when considering your employee’s options for acquiring a car; how long they need it for, what type of car (SUV, Estate or Hatchback etc), the make and model of car they want and how many miles they plan to drive it.
If your employee is only planning to be in the UK for a period of a few months, then it doesn’t make any practical sense to consider buying a car, in many cases it can take several months to find a buyer when it comes to selling a used car; this option certainly isn’t worth the hassle. Generally, the minimum length for leasing a car is 12 months; however there are some specialised outlets who offer leases for 3 to 6 months. The most common solution for a short term of several months is to rent one. Most large national car rental companies will offer a discount on the daily rate when booking for such a long period, for example for a premium 4-door saloon Mercedes Benz C-Class (or similar) the daily rate can be as low as £58 (£5220 total for 3 months) or a 5-door hatchback Vauxhall Corsa (or similar) the daily rate can be as low as just £17 (£1530 total for 3 months).
The advantages of renting a car include access to loyalty point schemes (which often have tie-ins with various airline frequent flier schemes), generous mileage allowances (sometimes double what a standard leasing agreement allows), rental offices across the country and in some cases the long term rental qualifies you for pickup and drop-off, as well as not having to worry about depreciation and monthly payments.
If their assignment is for a year, then they could consider the option of leasing a car. There are two general types of leasing, Personal Contract Purchase (PCP) and Contract Hire (CH). The latter is more useful for our comparison here, as we don’t intend to keep the vehicle beyond the length of the assignment. The principle behind leasing is that the monthly payments cover the cost of the vehicle’s depreciation and the profit of the lease company. This is where the make and model have an effect, as each one holds their value differently over time. An upmarket sedan like an Audi A4 will depreciate less over a given time period than a popular fleet car like the Vauxhall Insignia according to research done by the AA – this is how you’re able to find surprisingly low monthly rates for top end vehicles.
As a general rule, if a vehicle has a good resale value, then they’re probably better off buying it, however if the vehicle’s value plummets, then it would almost certainly make more sense to lease the vehicle.
If looking at a model which is likely to keep a strong resale value, they might consider buying it. Only really advisable if your employee is looking to have a car for a period of at least 3 years, otherwise the time involved with selling it can make it seem more hassle than it’s worth. Alternatively, if they’re not interested in a brand new or nearly new vehicle, then occasionally it is possible to find very good deals on older and more worn specimens, but always be very careful and have them get the car checked by a competent and knowledgeable third party to make sure they’re buying a car that isn’t about to fall apart! Buying a used vehicle from a mainstream franchise dealer can also be an attractive solution, as many will give all used vehicles a thorough check over and ensure any faults are found and fixed before putting them in the showroom for sale, guaranteeing their roadworthiness for a year or more.
One other avenue for consideration is specialist outfits like expatcar who describe themselves as a “one-stop car shop” aimed specifically for expats. They work on your employee’s behalf to find the car they want for the price they want. Your employee simply gets to use the car for the length of the assignment, and then the company buys the car back off them. They also offer a range of extra services including arranging financing, insurance, servicing, and repairs after minor accidents. If you’re looking for a solution for your employee that removes the hassle of finding the car and arranging everything, using a service like expatcar could well be worth it.
The final option we’ll consider is the car buying service, an increasingly popular method of finding a vehicle to purchase. The premise is simple, instead of your employee or someone in HR doing the legwork; companies like Carspring, MyCarCoach and Palmdale will do it for you. Obviously these companies will charge a fee for their services, but the experience they have in negotiating and inspecting cars can certainly save you time and money both upfront and in the long run. They scour dealers nationwide to find vehicles matching the specification and trim desired, they’ll dispatch someone to physically inspect each car and provide an in-depth report and they’ll negotiate the best possible price. You pay the dealer directly, send the car buying service their fee and as soon as the next day the car can be delivered direct to your door. It is most definitely a hassle free method of buying a car!
When it comes to the end of your employee’s assignment, and they want to get rid of their car, there are a few options. If the car was leased, then the company will expect the vehicle to be returned at the end of the lease anyway, which is normally effortless, except if there is any damage to the car, then it can take a while to negotiate on dilapidations. If your employee bought a car, it can be a little more time consuming to get rid of, particularly if you want the best possible price for it. Classified sites like Autotrader are extremely popular methods of listing vehicles for sale, but as mentioned previously, it can take several months or longer to find a buyer. Alternative services include WeBuyAnyCar, who will give you an online quotation which they promise to match, providing there is no damage to the car. There are local branches across the country, simply turn up in your vehicle and have it inspected, they will agree the price for it and transfer the money to your bank account then and there.
In summary, for a general assignment of two to three years, the majority of the best deals will be found in the leasing sector, with a wide selection of lessors fighting to get you to sign on with them, they’ll do their best to out-do each other and offer the best deal.