Vehicle Hire or Lease Purchase? What’s the best choice?

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Companies have a choice whether or not to hire vans or purchase them. Many will be surprised that some choose to hire but this allows companies to harness a few benefits that you might not have considered before.

Anyone who has ever worked for a large organisation will already know the answer to this one.  Most large companies will have vans on hire rather than purchase their own. To most people this will seem a little strange but there are many reasons why most companies see this as a better option.

So what happens for those who choose to purchase a van? For small businesses it can seem like a good investment. If a van is owned outright then it can cut down on the outgoings for the business.  Budgeting therefore becomes easier and new vans will also have a warranty that will deal with any issues that the van has. There are also few restrictions. Some lease vehicles will have mileage restrictions which could cause a problem for those who are covering large distances each year. There are also some tax benefits to owning the vehicle too. However, there are also disadvantages and for larger businesses these can outweigh the advantages.

Here are a few reasons why companies will hire rather than buy: 

A set period for a contract hire agreement means that the vehicle will be replaced when it reaches the end of that period. This can be as little as two years and as many as five. Usually at that point the mileage on the vehicle will mean that a change is advised.

Budgeting for hire is also easy as the cost is usually fixed each month. To begin with only a small amount of money will need to be paid out, unlike those who purchase outright who have to pay a large amount to begin with.

There are fewer fleet management issues with vehicles that are not purchased. Hire companies will usually deal with that side of things. So, the number of vehicles can be added to or reduced as needed with no hassle.

When it comes to hiring a van, customers will find that they do not have to worry about what should be done with the van when it is no longer needed. The van hire company will take it back and all the customer has to do is decide whether or not another vehicle is needed. The final value of the vehicle is also not going to be an issue, as it still belongs to the hire company.

Those who want the best of both worlds can negotiate a contract purchase agreement.  These are similar to hire but include an agreement for an option to purchase at the end of the original hire term. The final price to be paid will be included in the agreement and will be fixed for the term of the hire.

Larger companies often take advantage of finance lease agreements where the vehicle has to be removed at the end of the hire term and be sold on to another party. These agreements are often not available to smaller companies. Watch out for variable rates of interest on these deals as the payments can change. It is also viewed as a debt by the taxman, so careful consideration will need to be given to this type of agreement.

A concern with any vehicle is keeping it on the road but when using van rental companies in Birmingham, a city with a growing number of competitive vehicle hire solutions, customers will find that this is usually included in the costs. Standard services and maintenance are all part of the deal so this can also help to save money in the long term. Watch out for features in the lease agreement that may limit the mileage on the vehicle and the condition in which it should be returned. Some hire companies may penalise drivers who do not adhere to these.

So there is plenty to think about if you run a larger company in need of vans. Figure out the company’s needs first then take a look at what is available – the right van hire solution is out there!

By Catherine Wright

This article was provided by Catherine, She is an auto enthusiast and a part time blogger. She always writes compelling articles on automotive industry.

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