One of the most regular questions we receive is – what is the difference between van rental and van leasing?
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Customers who are new to the contract hire arrangements are often confused by the volume of products which are available to them and with there being a number of misnomers/poor information, it is often quite difficult for a customer to understand what decision they should make.
Van rental is very much a short-term and flexible form of vehicle usership; this is not necessarily something you should consider for long-term vehicle usership/ownership. A van rental agreement is good for those individuals and businesses who need a daily/weekly or even monthly requirement for a vehicle.
A good example for a company would be if they have a new starter on probationary period and they wish that driver to receive a van for 2-3 months to use while they fulfil this time period. When you rent a vehicle, you can hand the vehicle back at any time, often without any real cost consequences. Many of the agreements allow you to include insurance and maintenance, so you effectively pay an all-encompassing amount to include everything on a weekly basis. When the vehicle hits a specific mileage, the rental company may collect and replace this with a newer equivalent model free of charge. So surely van rental is more flexible, more comprehensive and therefore for the right way to go? Not exactly. van rental is much more expensive than longer-term products and the price you pay far outweighs what would you would for a contract hire agreement.
With contract hire, the price would lead many customers to say that this must be the route forwards for most individuals and businesses; in many cases this would be the correct assumption.
However, contract hire is a fixed term contract, which means you cannot just return the van when you wish; to do so you have to “early terminate” the agreement, which will involve a payment roughly half of the remaining rentals.
If you are a business with a 3 year contract for a new employee and they leave 3 months into the employment, you are looking at a large bill to return the vehicle.
This would be much more expensive than placing them in a rental van for a short period. Contract hire is, at present, a longer-term commitment. Many contracts have a 2-year minimum and for some drivers, they want to change every 6-12 months.
Other companies offer “flexi-lease” solutions, which enables 6 – 12 month type arrangements.
Contract hire is also credit based; which means you MUST have a credit check to ascertain if you are eligible for the finance product. If you have poor or bad credit, contract hire and leasing is not the right product for you. van rental and flexi-lease are often “non-status” and so they can use your proof of address, proof of earnings and higher payments to accommodate for your situation. This is only so relevant for contract hire and leasing.
In addition, leasing a van does NOT include motor insurance; you can include a funder-maintenance package so to cover servicing and tyres but the cost element of insurance cannot be included in almost all cases. If you need insurance, then van hire and flexi-lease may be your route moving forwards.
To hire a van or lease a van is an element which arises within the van hire and van lease industry and with van rental businesses like those online…