Contract hire vehicles can be subject to damage charges at the end of a contract (EOC), but by choosing R.E.D from Pendragon Vehicle Management these charges go away.
R.E.D or Reduced End of Contract Damages as it’s known, can make budgeting easy and PVM guarantee that for hard-working fleets, there will be no end of contract damage charges - in fact, you might even see a rebate.
EOC charges are additional fees or charges issued by the finance provider at the end of your lease agreement. If the vehicle is returned in a different condition than originally estimated (and contracted for), then its value may be lower. These charges reflect any discrepancy in the estimated and actual value of the vehicle.
Commercial vehicles tend to see higher end of contract charges compared to cars due to the nature of how they’re used and are more likely to attract bumps and scrapes throughout their contract. To try and mitigate these charges and weigh up the most cost-effective options many try to review damage before the vehicle reaches the end of it’s contract. Hoping to determine whether it falls outside EOC guidelines or whether it may be more appropriate for the damage to be repaired by a repairer.
R.E.D - the benefits
R.E.D. is ideal for fleets where damage outside of the BVRLA’s fair wear and tear guidelines is expected. With R.E.D we simply take the expected cost of damage and build it into the monthly rental, spreading the cost over the length of the contract so there’s no large outlay of capital at the end of the lease. If the vehicle is returned with less damage than expected, you will get a rebate.
RED - A Testimonial from Lewis Civil Engineering Ltd
"Lewis Civil Engineering Ltd specialise in civils for the water industry. It runs a fleet of around 40 Transit/Sprinter converted van's for transport of the workforce & tools to various sites in Wales and the south west of England. We had never previously considered contract hire due to the nature of the business. With nearly all our van's getting worn and sometimes ruined very quickly, any end of contract (EOC) damage charges would not have been viable.
Having read about the R.E.D option available from Pendragon Vehicle Management (PVM). I met with our Account Manager following our initial enquiry. We agreed that she would supply 6 new vans every 6 months and we refinanced our existing fleet with PVM and the R.E.D scheme. The new vans were supplied completely fitted out and with livery exactly to our requirements. I have to say this was a very painless transition thanks to PVM.
When the first vans came to the end of their contract PVM made contact to arrange an agreeable collection date. Very quickly after collection a residual value (RV) would be confirmed, with 50% of this paid back to Lewis Civil Engineering. We used to spend a lot of time and money on our fleet when preparing the vans for sale and we rarely got their value due to condition and high mileage. So, we never expected any return from PVM and are always surprised at the value we receive back.
I have to recommend PVM’s Contract Hire with R.E.D as it has been and is a great benefit to the business financially and the ease of bringing new vehicles in has helped enormously with vehicle changeovers and the management of our fleet."
Mark Henson, Fleet Manager Lewis Civil Engineering Ltd