Van finance lease versus contract hire

Finance lease is a popular way of funding high mileage commercial vehicles in particular

What are the benefits of finance lease over contract hire?

Finance lease is a popular way to fund high mileage commercial vehicles in particular, as businesses can set their contract to suit their estimated annual mileage.

If your vehicle does more than your initial anticipated mileage, this will not be payable in excess mileage penalties – your vehicle will be worth less, but there will be no official “pence per mile” to pay to the finance company.

If you do less than your anticipated mileage, your vehicle should be worth more than your agreed residual value, meaning that you will have more money due back to you when you have sold the vehicle on.

In addition, if your van is in less-than-perfect condition, you can repair it ready for resale yourself before you sell the vehicle on, which is better than getting an unexpected damage bill.

Finding a van finance lease supplier

Lease4Less offer finance lease packages across their full range of vehicles. Their main van funding speciality is finance lease with residual value, although they do offer a full pay-out option for customers who prefer not to have an end balloon figure.

Simon Wroe, Managing Director of Lease4Less, says: “Finance lease or contract hire? Well, most of our commercial vehicle clients opt for finance lease with a residual over contract hire. Some of our lower mileage customers still opt for contract hire but higher mileage clients find that finance lease offers them more flexibility and there are less worries when it comes to the end of the leasing term.

“If you decide to go down the finance lease route, it is very important to make sure that you choose a reputable company – there are some brokers who are selling unlimited mileage finance lease on the internet.

“Technically, yes, there is no mileage limit as such, but the miles your vehicle drives obviously has an effect on its end value – which you are liable for. So getting the right advice and a properly calculated end value is crucial.”