What’s the Difference Between Contract Hire and Leasing?
When you’re looking to get a vehicle for your business, “contract hire” and “finance lease” might seem like the same thing, but they are different. Each one has its own pros and cons, and knowing these differences can help you choose what’s best for you.
Vehicle rental contract hire
Contract hire is a long-term rental agreement where you pay a fixed monthly fee to use a vehicle over a specified period, typically ranging from 3-5 years. At the end of the contract, you simply return the vehicle without any obligation to purchase it.
Pros of contract hire
- Fixed costs: You pay a consistent monthly fee, making budgeting easier and more predictable.
- No depreciation worries: Since you don’t own the vehicle, you don’t have to worry about its depreciation value.
- Maintenance included: Many contract hire agreements include maintenance and servicing, reducing your overall costs and hassle. At Trott Rentals, our contract hire agreements include all service and maintenance, tyres, road fund licence, 24-hour breakdown assistance, replacement vehicle where necessary and unlimited mileage.
- Customer support and service: You have continuous access to support, with a dedicated team ready to assist with whatever you may need.
Cons of contract hire
- No ownership: You never own the vehicle, so you don’t build equity in it.
- Early termination fees: Ending the contract early can result in fees.
Vehicle finance lease
A finance lease is an agreement where you essentially rent the vehicle with the option to purchase it at the end of the term. Or you can sell it on behalf of the leasing company which typically covers any remaining balance.
Pros of finance lease
- Vehicle ownership: You have the option to own the vehicle at the end of the lease term, which can be beneficial if you want to keep it long-term.
- Flexible terms: Finance leases can offer more flexibility in terms of lease length and payment structures.
- Lower cost: Leasing a vehicle can be more affordable if you opt for a longer term length, lower mileage and exclude maintenance.
Cons of finance lease
- No replacement vehicle: If anything goes wrong with your vehicle or you break down, there is no replacement ready and waiting. It is up to you to sort this.
- Lack of support: You don’t receive dedicated support or customer service, meaning you are responsible for handling any issues on your own.
- Maintenance responsibility: If you choose not to include maintenance in the lease, you’ll be responsible for any maintenance and repairs needed for the vehicle.
Contract hire vs finance lease at a glance
| Feature | Contract hire | Finance lease |
|---|---|---|
| Type of agreement | Long term vehicle rental | Lease with option to keep or sell |
| Typical contract length | 3 to 5 years | Flexible term length |
| Monthly costs | Fixed and predictable | Can vary depending on terms |
| Ownership at end | Vehicle is returned | Option to keep or sell the vehicle |
| Maintenance and servicing | Often included | Usually not included |
| Breakdown cover | Often included | Not included |
| Replacement vehicle | Usually provided if needed | Not provided |
| Responsibility for repairs | Hire company | You |
| Depreciation risk | Hire company | You |
| Best suited for | Businesses wanting simplicity and fixed costs | Businesses wanting more control or long term use |
Contract hire with Trott Rentals
At Trott Rentals, we specialise in providing tailored contract hire solutions to meet your specific needs. Whether you’re a business looking to maintain a fleet of reliable vans or an individual needing a vehicle for personal use, we offer competitive rates and comprehensive service packages.
Our contract hire agreements are designed to offer you peace of mind with fixed costs, maintenance included, and assurance that your vehicle will stay on the road without any hassle.
If you’re interested in learning more about our contract hire agreements, call us on 01603 426487 or email info@trott-rentals.com.
