Contract Hire vs Finance Lease vs Hire Purchase: What's the Difference?

Van finance mostly comes down to three products, and the right one depends on a single question: do you want to own the van at the end, or hand it back?

Contract hire - you never own it

A fixed monthly rental over an agreed term and mileage, with the van handed back at the end. No ownership, no resale hassle, predictable cost. Best for businesses that see vans as a running cost, not an asset.

Finance lease - a middle ground

You pay monthly rentals similar to contract hire, but at the end of the agreement you either continue renting at a much lower "peppercorn" rent, sell the van on behalf of the finance company and keep a share of the proceeds, or return it. You carry more of the risk on the van's resale value than with contract hire, but rentals can work out lower.

Hire purchase - you end up owning it

You pay a deposit, then fixed monthly instalments, and a final option-to-purchase fee transfers ownership to you. It's the closest to a traditional loan: you're buying the van over time, and it eventually becomes an asset on your books. Monthly payments are usually higher than contract hire since you're paying off the full value of the van, not just the depreciation over the term.

Quick comparison

• Contract hire: lowest monthly cost, no ownership, mileage-capped
• Finance lease: mid-range cost, shares resale risk/reward, no direct ownership
• Hire purchase: highest monthly cost, ends in outright ownership, no mileage cap

Whichever suits your business, the actual application and credit decision is handled by Vanaways, our finance partner - see our commission disclosure for how that relationship works.