Business contract hire vs finance lease
Updated August 2026 · 3 min read
Business contract hire means you rent the van for a fixed term and hand it back at the end, with no resale and no depreciation risk. A finance lease puts the vehicle on your balance sheet and leaves you carrying its end value. For most small businesses that just want a van on the road without a long tie-in, a flexible short-term hire is the simpler middle ground.
What business contract hire actually is
Business contract hire (BCH) is the usual way companies run a van without buying it. You agree a term and an annual mileage, pay a fixed monthly amount, and hand the van back at the end. You never own it, and that's the point: the leasing company carries the risk of what it's worth later, not you. No selling it on, no depreciation headache, and the cost sits in your accounts as one predictable monthly bill.
What a finance lease is, and how it differs
A finance lease looks similar on the surface, in that you pay monthly to use the vehicle. But the risk sits with you. The van usually appears on your balance sheet, and at the end there's a final value to settle, often by selling it and squaring up the difference. It can suit a business that wants the asset on the books or plans to keep the vehicle for years, but there's more to manage and you're exposed to what the van actually fetches later.
The differences that matter in practice
Three things separate them. First, risk: contract hire keeps it with the leasing company, a finance lease pushes it onto you. Second, the end of the term: with contract hire you hand back the keys and walk away, with a finance lease there's a value to settle. Third, admin: contract hire is close to set-and-forget, a finance lease needs more accounting attention. On VAT, both let a VAT-registered business reclaim on business use, and a van is far more generous than a car (100% vs 50%).
Which one suits your business?
If you want a fixed cost, no resale hassle and the freedom to swap the van at the end, contract hire wins for most small businesses. If you specifically want the vehicle as an asset, or you'll run it for years, a finance lease can make sense. Talk to your accountant, because the balance-sheet treatment is usually the real deciding factor rather than the monthly figure.
Where flexible short-term hire fits
Both of those tie you in for years and both lean on a few years of accounts. If your business is new, your plans might change, or you've been turned down elsewhere, a shorter business hire is the middle ground: a van on the road now, terms from around six months, and a partner who looks at what you can afford today rather than filed accounts. That's the route we introduce you to. All credit welcome, and getting a quote involves no credit check. See what your business can drive.
FAQs
What's the main difference between contract hire and a finance lease?
Who carries the risk. With contract hire you hand the van back at the end and the leasing company owns the value question. With a finance lease the vehicle is effectively yours to settle up on at the end.
Which is cheaper?
Contract hire is usually the cleaner monthly cost with no end-of-term surprises. A finance lease can look cheaper month to month, but you're exposed to the van's final value. Your accountant can model both.
Can a new business get either?
Both usually want a few years of accounts and a director's guarantee. If you're a new company, or your credit's had a rough patch, a flexible short-term business hire is often the more realistic route, and it's what we help with.
Do I own the van at the end?
Not with contract hire. With a finance lease you typically settle a final value. Short-term hire is a rental, so you hand it back and can change it.
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