When it comes to acquiring vehicles for your business needs, two popular options are often considered: contract hire and leasing. While these terms might seem interchangeable at first glance, they represent distinct approaches to vehicle acquisition with varying benefits and considerations. Read below or speak to one of our team members to understand the key differences between contract hire and lease, helping you make an informed decision based on your business requirements.
Contract Hire: The Basics
Contract hire, often referred to as vehicle contract hire (VCH), is a solution that allows businesses to access vehicles for a fixed period, typically ranging from 24 to 48 months. With contract hire, you’re essentially renting the vehicle for an agreed-upon term and mileage allowance. The monthly payments cover the cost of the vehicle’s depreciation and usage, along with additional services like maintenance, road tax, and breakdown assistance.
Lease: The Basics
Leasing, on the other hand, is a broader term that can encompass different types of leases, including finance leases and operating leases. In the context of vehicle acquisition, leasing generally refers to finance leasing. In a finance lease, your business effectively becomes the lessee and takes on the responsibility of the vehicle’s residual value at the end of the lease term. Unlike contract hire, leasing payments often exclude maintenance and other services, which the lessee handles separately.
In the choice between contract hire and lease, your decision ultimately depends on your business’s unique circumstances and priorities. Contract hire offers a comprehensive package with inclusive services, ideal for businesses seeking simplicity and predictable expenses. On the other hand, leasing might be a better fit for those interested in eventual ownership and greater flexibility.
Before making a decision, it’s crucial to assess your budget, long-term goals, and fleet management requirements. Consulting with financial advisors and experts at Centurion can help you determine which option aligns best with your business strategy. Whether you opt for contract hire or leasing, understanding the differences will empower you to make a choice that optimally serves your organisation’s needs.