Contract Hire vs Finance Lease

Contract Hire vs Finance Lease
16 March 2021

Contract hire vs finance lease... two options we hear many customers debating. A van is an essential item for many businesses so you might be wondering if you should go for contract hire or finance lease, or even buy it outright. If you haven't decided yet and could do with a bit of help, please read our "To buy or lease a van" guide where we talk about the advantages and disadvantages of both. And if you opt for leasing your next van, you will come across overwhelming information about business contract hire or finance lease options. This might seem confusing but don't worry, we've got you.

Contract Hire or Finance Lease: the difference between the two most popular leasing options

Many people don't understand the difference between Contract Hire (CH) and Finance Lease (FL) and therefore opt for the CH simply because it's more popular. With business contract hire or finance lease being a popular option for business, its essential to know the difference for your company. These two forms of vehicle leasing are very similar but still have some differences.

Contract Hire

The most popular form of a lease is Contract Hire, available as both Personal Contract Hire (PCH) and Business Contract Hire (BCH). When comparing business contract hire or finance lease, you'll see that contract hire is where you pay a set monthly rental for the van for the duration of the agreement. This covers the use of the van up to an agreed mileage allowance, road tax and, if you opted for a maintained agreement, also routine servicing, repairs, tyres, battery, exhaust and breakdown recovery, leaving you with peace of mind when driving your van. 

Providing that you return the vehicle in an expected condition (damage-free) at the end of the lease, there will be nothing else to pay.  If the van has been damaged during the lease (anything on top of usual with wear and tear is considered as damage), the funder will charge you as the re-sale value will be less than expected when you signed the contract. Also, if you went above the agreed mileage allowance, the funder will charge you for the excess mileage as per your contract. 

We have excellent Contract Hire deals, including this Citroen Dispatch offer.

Citroen Dispatch contract hire deal

Or perhaps you're interested in a pick-up truck and still deciding between contract hire vs finance lease? Our Nissan Navara contract hire deals are some of the best around!

Check out the Navara Pick Up Double Cab TT Tekna on business contract hire.

Nissan Navara Double Cab business contract hire

Finance lease

When looking at contract hire or finance lease, remember that finance lease is designed for those who work in occupations that involve more practical use of the van and where there is a chance of causing damage. However, if you look after the vehicle well and at the end of the contract it's in a good condition, you could actually make some money!

Finance lease is similar to business contract hire.  You pay an agreed monthly fee with the same benefits that the Contract Hire agreement offers. The primary difference between these two forms of vehicle leasing is what happens with the vehicle at the end of the agreement. With Contract Hire, you simply hand the van back to the funder and that's it. With Finance Lease the funder sets a fixed amount that you owe at the end of the contract - this is how much the funder assumes the vehicle will be worth considering your declared mileage and the age at the end of the contract. You can then sell the van yourself or nominate the funder to sell it on your behalf. If the condition of the vehicle is better than expected (i.e you haven't used your mileage allowance) and it sells for more than assumed at the beginning of the agreement, you will keep the difference. If you went above your agreed mileage or damaged the van, it will most likely sell for less and you will then have to pay the difference to the funder. 

So if choosing contract hire or finance lease, and you decide finance lease is the best option for you, take a look at this steal of a deal - Citroen Berlingo Enterprise.

Or looking for something bigger? Then our Peugeot Boxer finance lease deals are for you! The Peugeot Boxer L3H2 van is available at the cheapest prices.

Peugeot Boxer finance lease

Contract Hire or Finance Lease - which is better?

Both personal and business contract hire or finance lease options are good, but especially so if you're a business customer. Business contract hire and finance lease both also offer great tax benefits.  If we had to choose one, we would have to say that we see more benefits from Finance Lease. With Finance Lease you have far more control over how you manage your vehicle and if you look after it well, you can reap the financial reward in the end. Although, if looking for hassle-free leasing with the option to hand the vehicle back and lease a modern, newer vehicle in your renewal, then Contract Hire is the option for you. So, now you know the difference, will you choose contract hire or finance lease?

Don't forget to check out Top Van Deals and Top Car Deals to see our hottest offers on both contract hire and finance lease.

Spotted a great deal? Contact us for your free quote. 



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We work in partnership with many of the UK’s leading van leasing, car leasing, contract hire and finance leasing funding companies in order to provide the most competitive rates and offer you the best leasing deals possible. Our guide to eligibility will help you understand the various requirements for establishing a vehicle finance agreement.

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