Van Contract Hire and Leasing: Which Is Best for Your Company?

There are several different ways to finance a new van. Some of these include personal contract purchase, van lease, lease purchase, van loans, and van contract hire. It can be rather confusing, so here is some information about van contract hire and leasing to show you the differences and the similarities between the two. 

Depreciation Issues 

One of the most common issues with leasing is depreciation. This is especially true if it is a brand new vehicle. As soon as you get the keys and drive away, the value of your vehicle can fall sharply. When you lease your van, the residual value is calculated. Residual value is the estimated value of the van at the end of the lease period. However, it is based upon the expected mileage during the lease period. The higher the residual value in proportion to the current value, the lower your monthly payments will be. 

Contract Hire Benefits 

In terms of van contract hire and leasing, contract hire is a finance method that offers the maximum benefits for those customers who are VAT registered. It is most often chosen by those who are self-employed or for businesses. If you use the van only for business purposes, you can reclaim 100% of the VAT. However, even if you use the van for personal use, you can still reclaim 50% of the VAT. 

In most case with van contract hire and leasing, a contract hire agreement will show that you have hired the van for an agreed upon period of time. It is usually between one and five years. You will pay the rental amount, which was determined before you took possession of the van. 

At the end of this timeframe, you will return the van, the same as you would if you leased it. However, you will not be surprised by unforeseen depreciation or disposal costs.  

Another advantage to contract hire is that it will also include full vehicle maintenance in most cases. This might include routine maintenance and service or even replacement tyres you can offset up to 100% of the rental charges against your taxable profits without having to put up a lot of money up front. 

There really is no surprise that when it comes to van contract hire and leasing that contract hire is the preferred finance option for most self-employed people and many businesses. 

Finding a Van Contract Hire and Leasing Company 

There are several different companies that offer van contract hire and leasing. It is important to choose one that is reputable and will stand behind the vehicles they provide. The internet is a good place to start your search, but so is speaking with friends, family members, and co-workers to see whom they recommend.  

Final Thoughts 

Another thing to remember is to read the van contract hire and leasing paperwork closely. Know exactly what the costs will entail, the length of the contact, and what possible additional charges you might incur. Read the fine print, even if you have had business dealing with the same company before. It is always best to protect your interests, even when you are dealing with a reputable company.