25 Jan What is the Difference Between Leasing and Hire Purchase of A Van?
Typically, we consider purchase or short term rental options when it comes to attaining the use of a commercial van. Yet, two other viable alternatives include leasing and hire purchase. Both options give you relative long term usage of a van, but have very different implications on your firm. In this article, we give a brief breakdown on the differences between these two financing options.
In simple terms, a lease refers to a kind of contract wherein a company owner pays period based rentals to the supplier of the van. While payments may be on a monthly basis, the contract is for a longer period such as a year. The lease locks in the contracting parties into both time and financial terms.
There are some common benefits of choosing a corporate car rental Singapore, such as:
- It is cheaper compared to buying the van. The rental payments need to be paid on a monthly basis, which makes it favorable on your part.
- This method enables you budget expenditures accurately.
- As a lessor, your obligation concerning the vehicle is only during the validity of the lease period.
- Since you do not own the vehicle, you are not required to pay a depreciation expense for it as well as insurance fees.
Based on the name itself, hire purchase still involves some “rental” agreement between two parties. However, the payments made on a monthly basis are considered as installment fees for the purchase of the property. Therefore, at the end of the contract, you will become the owner of the vehicle, subject to the Hire Purchase Contract.
Benefits of hire purchase agreements include:
- This is an easy way to own a van, without spending a large sum upfront for it.
- All you have to do is to ensure that you make the monthly install payments. After the completion of the undertakings in the contract, you become the exclusive owner of the property.
- Similar to leasing, you have the ability to budget expenditures relatively accurately
What is the difference?
The main difference between these two financial contracts lies mainly in the ownership of the property. In commercial van rental Singapore, you do not become the owner of the vehicle that you are renting. You may have right over the use of the vehicle, but at the same time, you must return the van after the expiration of the lease.
On the other hand, in hire purchase, you eventually become the owner of the automobile after completing all the monthly installment payments. When this happens, the title over the car will be transferred under your name.