Leasing firm numbers will contract sharply

Leasing firms numbers will reduce.

Over the next 12 months we are likely to see some contraction of the leasing providers.

Traditionally the larger fish have swallowed up the minnows when a recession starts to bite but like the housing market many of the small operators carry a high level of toxic debt. Some small leasing companies have provided unrealistic rental rates in order to buy business based on unachievable and overstated resale values of their vehicles.

These are companies that were offering very cheap rates compared to other, more substantial, lenders over the last couple of years. This irresponsible lending will lead to these companies getting into difficulties as they lose substantial amounts of money as their end of lease cars are sold through auction. This will mean that whilst the larger players will have an appetite to make acquisitions during this recession the more savvy big players will avoid these small leasing companies with vastly overvalued vehicles on their books, leaving them to go under.

What does this mean to those customers who have leased cars from these suppliers? Well it probably won’t be good news. Those few pounds per month that you may have saved at the time you took out the lease may result in your car being collected without notice. You don’t own the car, it is rented and when the administrator is called in he may well decide to simply wind the business up as he won’t find a buyer which means selling off the company assets including the cars that are on lease.

This will mean that the car is simply collected from you and sold to realise some cash with which to pay creditors. So as I keep warning, be very careful who you lease your car from and don’t just go for the cheapest you can find as you may end up without a car.

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