Difference between Lease and Contract Hire

[JHSameday]

I am thinking that Lease or Contract Hire may be an alternative to buying outright my next van, but what exactly is the difference...?

 

[David Griffiths]

There are so many variations on leases that it's difficult to be specific.

Generally, if you lease a vehicle, it will be sold at the end of the lease to a third party and you as lessee will be credited with a percentage of the sale proceeds - 95% is common - as a refund of lease rentals paid. (The final rental might be quite high and intended to be paid by the sale of the vehicle) You will normally be responsible for maintenance and road tax.

With contract hire, there is normally a fixed hire charge and you don't benefit from any value on sale. The hiring company will normally pay maintenance and sometimes road tax.

In the final analysis, you take some of the risks of ownership with a lease (because you get a cut of the final sale) but not with contact hire.

But as I said there are myriad variations on this

 

[Mattviatura]

The term "leasing" is a fairly catch-all term. Contract Hire is a specific product, put very simply you are hiring the vehicle for a contracted period.

I think the above poster is referring to a product called Finance Lease, again very different.

If you need any specific help feel free to ask, it's my job.

Oh and with Contract Hire you will almost always get road tax thrown in and you always have to pay separately for maintenance, most of our customers have non-maintained contracts and take responsibility for servicing themselves.

 

[roydmoorian]

I am thinking that Lease or Contract Hire may be an alternative to buying outright my next van, but what exactly is the difference...?

Beware mileage restrictions with contract hire, but the vehicle would normally be fully maintained by the hire company.

 

[Mattviatura]

Beware mileage restrictions with contract hire, but the vehicle would normally be fully maintained by the hire company.

I'm sorry but I can't agree with this. Maintenance packages are always an optional extra, I've sold Contract Hire since 1997.

Mileage limits can often incidentally be contractually adjusted mid-term.

 

[roydmoorian]

I'm sorry but I can't agree with this. Maintenance packages are always an optional extra, I've sold Contract Hire since 1997.

Mileage limits can often incidentally be contractually adjusted mid-term.

I suppose the above illustrates the need to check that you are comparing like with like when obtaining quotes for vehicles and plant through different companies.

 

[JHSameday]

Yes its all a mine field, my high mileage is usually the problem...

 

[roydmoorian]

Yes its all a mine field, my high mileage is usually the problem...

I find that it makes sense to keep the vehicle well serviced, even if that involves an engine transplant at some stage, and run it for 300,000 miles +.