Difference Between a Lease & Finance
Leasing and finance is a common way of acquiring a new vehicle for your business, whether it be a van, truck, trailer, forklift, coach or bus. Each option involves driving away with a great asset to your business through cost-effective, manageable monthly payments – but there are differences. We offer lease and finance options for businesses large and small so we can tell you exactly what the differences are.
What is a lease?
Leasing a commercial vehicle is effectively a long-term rental set at low-cost monthly payments. Most leases are around three years in length and once the contract period is up, you return the vehicle to the lender.
What is finance?
Similar to a lease, vehicle finance involves monthly payments over the course of a contracted number of years. However, at the end of the lease, you will keep the vehicle rather than give it back to the lease company, as you would have paid off the full cost of the vehicle.
What are the differences between a lease & finance?
The main difference has already been mentioned – you have to return the vehicle after your contract with a lease deal.
The fact that you do not own the car at the end of the contract does have its benefits. For most leases, the monthly payments are cheaper than finance payments as you aren’t paying for the full price of the vehicle. Instead, you are paying for the vehicle’s depreciation cost, which is why some leases have mileage restrictions.
At the end of your finance term when you have paid off the car, the car is yours to keep. Although you have paid more for the vehicle, the vehicle will still have equity in it. You’ll often have the ability to buy the vehicle after the lease, but it will often be more expensive than buying it on finance.
If you are looking for a top-of-the-range vehicle for your business, leasing allows you to achieve this at a cheaper cost to a finance package. After the lease is up, you can trade it in for the latest top-of-the-range vehicle. However, if you like the vehicle you are driving, it’s yours after your finance payments are made – so this is something to consider as well.
Having difficulty choosing?
Struggling to choose between a lease or finance package? We are able to advise you on what is best for your needs, requirements and budget. Find out how we can help you by emailing email@example.com, calling 01425 474070, or using our contact form.
To find out more, please contact us.
Address: 21 Headlands Business Park, Salisbury Road, Ringwood, Hampshire BH24 3PB