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04 May, 2012

Hi Andy, can you please tell me the main differences between Finance Lease and Contract Hire? Cheers Ian

Hi Ian The main difference is that with Finance Lease you are responsible for disposal of the vehicle and the risk and rewards that go with it (any profit or loss). With Contract Hire this lies with the Finance Company, they dispose of the vehicle and take any loss or profit. However, as it’s their vehicle they will charge you ‘damage recharge’ if applicable. By this I mean they will charge you for any damage to the vehicle. We abide by the BVRLA’s (British Vehicle Rental and Leasing Association) Fair Wear and Tear Guide. This sets out what is acceptable and what is not. This, I believe, is very fair, however, be aware that some funders do not adhere to this and can impose punitive charges at the end of the contract. If these charges are imposed, you would really struggle to argue against them since there is no legislation to support your argument. With Finance Lease, you are responsible for disposal. Some people prefer this as they believe there is no damage recharge. However, look at it this way. Imagine you have a balloon payment of £7,000 (this is an amount of money offset to the end of the agreement for which the vehicle is expected to sell). If it’s in good condition, it may well sell for £7,000. However, if it’s damaged it may only fetch say £5,000 in which case you will have to pay the difference (in my view damage recharge by another name). Finally, one accounting difference: Finance Lease is accounted for on your balance sheet, whilst typically Contract Hire is accounted for off balance sheet. However, this is due to change in the next few years, when both will be on balance sheet. Andy

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About Andy

Andy has worked in the motor trade and more specifically been involved in supplying finance for vehicles, coming up to 20 years. He started his own business www.autorama.co.uk in 2004 selling used vehicles before expanding the company via its comercial vehcle leasing business in 2006. Back then the leasing business was pretty much just him, a laptop and a portakabin. Now just six years later Autorama through it's online brands vanarama.co.uk and pickuptrucksdirect.co.uk is recognised as the largest independant commercial vehicle leasing broker in the UK.

The last six years have seen continued growth and resulted in the company now employing 32 staff. Being able to offer some of the most competative rates in the country as well as industry leading levels of customer service have played a big part in our growth. However it is our ability and moreover our expert knowledge in this sector that has allowed us to best advise and therefor better serve our customers.

Every customers needs are different and there are so many options available that it's easy to see why people get confused by either inaccurate or simply poor advice. We are here to help and advise you so whatever your query, no matter how big or small your business or how complicated your situation seems. let us answer your van leasing questions.

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