Should I buy my ex lease car?

When a contract hire vehicle reaches the end of its term, the normal procedure is for the finance company to arrange to collect the vehicle. If you are interested in the car, you would need to approach the finance company for a price but will the purchase price they offer you represent a bargain?

Probably not, what they will usually do is make an assessment as what they think they will get in the trade, which is usually on the optimistic side and then take a price between that and the retail price of the car. They presumably work on the basis that as you are not a trade buyer, they have no reason to offer it to you at trade price.

So is it a good deal to buy your contract hire car, perhaps for you wife or one of the children to use? Well of course one of the advantages you have is that you know the car, you know how it has been driven and also its history, for example if there has been any damage you will presumably know it has been repaired properly.

Although they should not, it is not unheard of for the hirers of contract hire vehicles to have damaged bodywork repaired at a local garage rather than the main agent. Sometimes this can affect the anti corrosion warranty. If the finance company becomes aware of this on the vehicles return, it can be costly for the hirer.

So how do finance companies dispose of cars when they come to the end of their term? The auctions is where most are sold, some finance companies have their own sites where traders can go and bid on vehicles, even EBay is used by some companies nowadays.

It would be nice to buy your car at a lower price than it was offered to you by the finance company and if you were sure it was going to be sold at auction and you knew which one, you probably could.

Although it doesn’t have the same advantages of buying the car you know, you could just go to the auctions with a view to buying an ex lease car. Of course by the time you bought it, it would probably be outside its warranty so you would have lost the opportunity of extending the warranty and you would have no idea how the car has been driven or treated over the previous three years or so.

Furthermore auctions are really for trade buyers. Trade buyers will spot things that a private buyer may not. Whilst some companies will put their ex contract hire cars through the auctions with “no major mechanical defects” others will sell them, “bought as seen”. This doesn’t mean that they think there is anything wrong with the car but there could be. If a vehicle is sold with no major faults it can be rejected if it proves to have something major wrong with it but only within a limited time frame.

Private buyers are easily spotted at an auction usually identified by their inability to stop bidding, even when they have gone far outside their budget, some unscrupulous auctioneers do take advantage of this. Trade buyers usually have a fairly clear idea as to how much they want to bid for a vehicle, which may vary depending on whether they are buying a vehicle on spec or whether they already have a customer for it.

You can do a lot worse than to buy an ex lease car; you can as a general rule expect it to have been regularly serviced, the mileage to be correct and for any faults it has incurred to have been rectified under the warranty. If you can find a car that is being sold at the end of a 24 month term, it is ideal because with the majority of vehicles will still have one year’s warranty remaining.

It is worth checking the service history of the car, to make sure that it has been serviced at the correct intervals. You would normally expect the leasing company to check this on the vehicles return but they do sometimes overlook it and failure to service the vehicle at the correct intervals, will generally invalidate the manufacturers’ warranty. One of the problems of buying a vehicle without a warranty or where the warranty has expired is the risk of an electronic fault, which nowadays is very common and often very difficult to cure. All in all buying your own car when it comes to the end of its term is a much better bet.

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