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Fleet Car Leasing Guide

Last Updated: 27th Sep 2018
Fleet Car Leasing Guide

5th September 2018

What is fleet car leasing?

Fleet car leasing is a means of companies or corporations providing vehicles to employees for carrying out their responsibilities and/or as a benefit for working for your employer. A company fleet could require any number of cars or vans, with small businesses operating fleets as few as 2 vehicles, while larger organisations such as police departments may require hundreds.

A business fleet lease is a vehicle agreement between a finance company and an established business. Like with a personal lease, you choose your cars, pay the deposit if you have one, agree on a monthly payment and drive away your fleet.

Fleet car leasing options

Business leasing and finance options are the same for a single car or a fleet.  The four main types are explained below.

Business Contract Hire (BCH): Business Contract Hire is where you pay set monthly payments over an agreed period of time in return for a fleet. Your BCH payments are for depreciation of the vehicles. We will work out how much the car will be worth at the end of the agreement (guaranteed minimum future value),taking depreciation into account. Monthly payments are determined by the difference between the future value and initial value of the car being split over your lease length. When the contract ends, the individual car or fleet is simply returned. There will be no further charges, given the vehicle is returned within the agreed mileage and wear and tear guidelines. You will not be the registered keeper of the vehicles at any point.

Benefits of BCH:

  • Fixed monthly costs will allow the company to budget
  • No worries about depreciation and reselling
  • The vehicles or fleet size and value can be changed at the end of the contract according to the business’ needs

Business Contract Purchase (BCP): Business Contract Purchase is like BCH, monthly payments cover the depreciation of the vehicles over the lease length. However, at the end of a BCP agreement, you also have the option to keep the cars.

The options at the end of the BCP agreement are:

  • Return cars
  • Buy cars - you will have to make a final payment known as a balloon payment (future value figure) then the car is legally yours
  • Part exchange for a new fleet - if the cars are worth more than the guaranteed minimum future values, the difference can go towards a deposit for a new fleet.

Benefits of BCP:

  • You have several options at the end of the contract
  • Fixed payments mean no fluctuations in monthly costs
  • You can return the car without worrying about reselling

Hire Purchase (HP): Hire Purchase is paying off the value of the cars in monthly instalments. Any deposit amount and monthly instalments go towards paying off the entire cost of the car. You do not own the cars until the lease ends. At the end of the Hire Purchase agreement, you are the registered owner of the vehicles.

Benefits of HP:

  • There are no additional charges for excess mileage or damage to the vehicle
  • Plan your outgoings in advance
  • Final payment is smaller than on a BCP agreement

Lease Purchase (LP): A Lease Purchase agreement is similar to BCP. The difference is, you will own the cars at the end of the deal, once the balloon payment is made. There is no option to return.

The options when the LP ends are:

  • Keep the vehicles - the balloon payment is made and the cars belong to you
  • Part exchange - trade in cars, make balloon payment then lease new cars

Benefits of LP:

  • Lower monthly payments than HP
  • Early settlement - you can settle your finances early by paying off outstanding payments
  • Flexible contract length of 24-60 months

Business fleet car leasing at Hippo: You can view all the latest Hippo Leasing business car lease deals here. We offer a range of leasing agreements, including small or no deposit options.

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