What is business car leasing?

Business leasing is a vehicle agreement between a finance company and an established business. Like a personal lease, you choose a car (or more than one if you’re leasing a fleet), pay the deposit if you have one, agree on a monthly payment and drive away.

There are four main types, all of which are available for a single car or a fleet.

The business leasing and finance options are available for a single car or more than one car (fleet).

1 Business Contract Hire (BCH)

Business contract hire is where a business pays set monthly payments over an agreed period in return for an individual car or fleet.With a BCH, your monthly payments cover the depreciation costs of your vehicle. The monthly payments are calculated by the contract hire company who use the value of the vehicle now and how much the car will be worth at the end of the agreement, or its guaranteed minimum future value (GMFV).When your contract ends, the individual car or fleet is simply returned. There will be no further charges, as long as the vehicle is returned within the agreed mileage and wear and tear guidelines.
Benefits of BCH:
  • Fixed monthly costs will allow you to budget accurately
  • No worries about depreciation and reselling
  • The vehicle or fleet size and value can be changed at the end of the contract according to your business’ needs
What should you consider?
  • If your vehicle exceeds the pre-agreed mileage or is returned with damage greater than accepted in the wear and tear guidelines, you’ll face additional charges

2 Business Contract Purchase (BCP)

A business contract purchase agreement is similar to that of a BCH. You pay monthly payments which cover the depreciation of your vehicle over the agreement. However, at the end of a BCP term, you also have the option to keep the car. Your options at the end of your term:
  • Return your car/cars
  • Buy the car or fleet
  • Part exchange for a new car or fleet
If you decide to buy the car or fleet outright, you’ll have to make a final payment known as a balloon payment. That’s determined by the vehicle’s GMFV. However, if you choose to part exchange the vehicle or fleet and it’s worth more than the GMFV, the difference can go towards a deposit on a new lease.
Benefits of BCP:
  • You have several options at the end of the contract 
  • Fixed payments mean no fluctuations in monthly costs
  • You can own the car outright
  • Plan your outgoings in advance
What should you consider? 
  • If you return the vehicle and it’s exceeded the pre-agreed mileage or has damage greater than accepted in the wear and tear guidelines, you’ll face additional charge

3 Hire Purchase (HP)

Hire purchase involves paying off the value of your car or fleet in monthly instalments. The money you pay, including any initial deposit you make, contributes towards paying off the entire cost of your vehicle or fleet. And at the end of your HP agreement, you’re the registered owner of the vehicle(s).
Benefits of HP:
  • There are no additional charges for excess mileage or damage to the vehicle
  • Plan your outgoings in advance
  • The vehicle or fleet is yours at the end of your agreement
What should you consider? 
  • You don’t own the car until the lease ends
  • Monthly payments are often higher than BCH and BCP

4 Lease Purchase (LP)

A lease purchase agreement is similar to BCP. The difference being instead of having several options at the end of your agreement, you’re obliged to pay a final balloon payment, unless you part exchange the vehicle or fleet. Your options at the end of your term:
  • Keep the vehicle: Make the balloon payment and the car belongs to you
  • Part exchange: Trade in your car or fleet
Benefits of LP:
  • Lower monthly payments than HP
  • You can settle your finance early by paying off outstanding payments
  • Flexible contract length
What should you consider? 
  • Unless you decide to part exchange the vehicle, you’re obliged to pay the final balloon payment
  • You don’t own the car until the lease ends

Find your business lease deals with Hippo Leasing

We offer a huge range of business leasing agreements, including small or no deposit options. You can view them all here.

Business Leasing Deals