If Google searches are to go by, we tend to look for car lease, but in reality the most popular type of leasing a vehicle is contract hire. There was a time when hiring products was common practise such as TVs, Washing Machines and even Hoovers. This was not that long ago, when people just did not have the cash to buy modern appliances, and of course they were far more expensive compared to income than they are now.
But as hiring out home appliances has just about gone away, contract hire for cars has not, especially for business owners and often for employees also. There can be good reasons for this, for example keeping money in the business. If you add up the total cost of a car used through contract hire or one bought outright, in most cases it would be cheaper to buy. But this is not the end of the story because a business has to decide what it can do with that money should it stay in the business and choose to hire instead.
A £25000 purchase of a BMW for instance may cost a few grand more by opting for contract hire, but that 25 grand could produce a lot more money or left in the right business to grow or invest. For other business owners this money could be the cash flow that keeps the business turning over. So contract hire can have a greater value than just simple monthly payments.
A main factor of contract hire is its value after the contract hire period is up. Certain cars obviously have less depreciation and in theory these should be the cheapest cars for a contract hire deal. But it is also worth comparing the interest payments on the contract as this can make the biggest difference in month payments.
Another factor is buying power, there are some contract hire firms that buy so many cars that they get huge discounts only to pass these on to customers, in fact some claim their monthly premiums are based on the cost price of a car, as they can make their profits through the bonuses paid out from car manufacturers.