Finance lease rates compared to HP
Finance lease rates are broadly similar to HP rates and are determined by the same factors (GVW, new/used, credit quality). The key difference is in ownership structure and accounting treatment - not necessarily in the monthly payment amount.
Finance Lease - Key Differences vs HP
- No automatic ownership transfer - lender retains title throughout
- Usually lower monthly payments than HP due to residual value in structure
- Haulier benefits from any sale proceeds above the residual value
- More flexible end-of-term options than HP
- Can be more tax-efficient in some business structures (consult your accountant)
- Popular for fleet operators who rotate trucks regularly
Finance Lease vs Operating Lease
Finance lease: the haulier carries the residual value risk - if the truck is worth less than expected, the difference may fall on the haulier. Benefits from uplift if values exceed expectation.
Operating lease (contract hire): the lender carries the residual value risk. Fixed monthly cost. No residual exposure for the haulier. Usually more expensive per month than finance lease.