Contract Hire or Finance Lease?
Many people assume that lease contracts are the same and only concern themselves with the bottom line. However, there are two different types of lease options.
The two options are Contract Hire and Finance Lease. Both types seem to mean not a lot on paper but upon delving a little further into the options, there are financial implications that could affect you.
By far the most common form of lease agreement is Contract Hire. This is where you pay a set monthly fee for the van and this covers use of the van up to an agreed mileage allowance, tax and often maintenance and breakdown cover leaving you with peace of mind when driving your van.
Providing the van is returned without damage at the end of the contract and within the set mileage there should be no problems or further charges.
It is easy to think you have spotted a great deal and signed up without knowing about a lesser well known option that could actually reward you financially.
Finance Lease is designed for those who work in occupations which involves more practical use of the van where there is a chance damage could be caused. However, demonstrate good use of the van and you could be quids in.
Finance Lease is similar to Contract Hire in that you pay an agreed monthly rental and have all the benefits you would expect in a Contract Hire arrangement.
The difference is what happens at the end when the van is sold. If the company is able to sell for a higher price due to a better condition or lower mileage then you receive the difference. Another option is to purchase the vehicle at a bargain purchase price – so it could be used as an economic way to acquire a vehicle if you didn't want to commit to years of leasing a van.
What is the best option for you?
Not everyone is going to run their van into the ground. With Finance Lease you have far more control over how you manage your van and will reap the benefits over the longer term. With the more common Contract Hire, you are simply paying for the privilege of looking after your van for which you will receive no reward at the end of the lease.
If you need further information or require comparative quotes on both finance options please call on 02392 299 557 or ENQUIRE HERE