Sometimes you need a new minibus but your business can’t afford to purchase one. Minibus leasing might be a good solution for you if you want full use of a minibus, but don't want to commit to buying it. Here’s everything you need to know about minibus leasing, and which funding options could work for you.
With two different types of minibus finance — minibus leasing and minibus hire purchase — you need to decide which one suits your needs best. Since there are different terms and conditions for these two funding options, it can be difficult to figure out which one is right for you. Let’s see how both types of minibus finance work and how you could benefit from them.
Sometimes, minibus leasing is also known as contract hire. Contract hire means you’ll sign a contract to hire a minibus for a certain amount of time (usually between 12 and 60 months).
Essentially, this type of minibus finance is equipment leasing. It can also be called an operating lease but either way, all these terms represent the same concept — you rent an asset for a specific period of time.
The crucial thing you need to know about contract hire is that although you’re in possession of the vehicle, you actually don’t own it. You’ll make monthly payments for the rental, and as soon as the contract is up you’ll have to return the minibus.
Minibus hire purchase
Your other option to get a new or used minibus is called hire purchase. With this kind of minibus finance you’ll buy the asset by paying monthly installments.
Usually, the lender would also ask you to pay a deposit upfront. They will secure a loan against the minibus, which you’ll then have to pay off in monthly installments. Minibus hire purchase means you don’t own the vehicle until the last payment is made.
Minibus leasing or minibus hire purchase: What do I choose?
Before you choose, you need to think of the main distinction between these two funding options: If you want to lease the vehicle, you have to return it eventually, whereas hire purchase allows you to actually buy the minibus. With your business’s future in mind, do you need to own the minibus, or do you only want it for a couple of years?
It’s important to think of the period of time you would use the minibus and how your business could change during that time. Once, the leasing contract has ended, you could sign a new contract and even upgrade to a newer model of minibus. Additionally, the lessee doesn’t have to worry about maintenance or insurance, for example, because the lender will carry those costs.
However, minibus hire purchase is a good solution for the long-term. You may have to bear in mind that in certain agreements the asset will appear on your balance sheet from the outset, although you legally don’t own the minibus yet.