The major difference between the two is when you hire a vehicle for a relatively short period; you are hiring a vehicle that the hire company has in stock. When you take a vehicle on either Contract Hire or Personal Contract Hire a new vehicle is purchased specifically for your use. It is therefore easy to see why the company would like to ensure as best that they can that a two or three year contract is capable of running it's full term, otherwise it would be impossible for them to plan.
So why are applications declined? If it is Contract Hire, it is usually something the finance company sees when they search the company; it can be the net worth of the company, profitability or something that is recorded against the company, such as a county court judgement. On occasions a finance company will find the company unacceptable but will agree to accept the proposal if the director or directors provide a personal guarantee. This means that if the company should go into liquidation or fail to meet the payments the director or directors become liable.
Some directors do have a policy of never providing directors guarantees. It is however interesting, in general the number of directors that are unwilling to do this, suggesting that the doubts that the finance company has with regard to the company's stability are possibly shared by the directors. There are occasions that a proposal is declined simply because a lender has a policy of not accepting companies that have been in business less than two years, or that are not Vat registered. If this is the case then normally a contract hire broker can find another funder that will accept the company.
If a Personal Contract Hire agreement has been declined, or the finance house has declined the director as guarantor it will almost certainly be as a result of something adverse recorded against his or her name. This could be a County Court judgement or perhaps a record of slow payment. Bankruptcies and IVA's remain on file for six years. It does make a difference if a judgement has been satisfied. Sometimes it can simply be because they cannot see you recorded on the electoral register for the past three or four years.
If you have been declined it can be worth checking with Equifax or Experian, which are the main credit checking agencies to see why you have been declined. It can be an error, for example where a county court judgement that should have been removed from the record has remained on file. If you are using a broker for your Contract Hire or Personal Contract Hire application and you are declined, they may be able to suggest another finance company that may view your application more favourably. Should you have any queries or questions with regard to Fleet Management, Contract Hire, Personal Contract Hire, Lease Purchase or vehicle Hire Purchase, please do not hesitate to contact us. Bowater Price plc 01494 536 536. www.bowaterprice.com.
