Is your vehicle lease coming to an end?

May 10, 2019


Which image does your business portray?

‘Shall I continue leasing, upgrade or buy my vehicle?’

A question all business owners face when they reach the end of their current vehicle lease agreement.

Knowing your options from the outset can save you time, money and stress.

So, what are your options and how do they compare to each other?

Leasing VS hire purchase (commercial purchase agreement)


Here’s a simple summary of how vehicle leasing via a pure leasing company or car dealership works (note we’re a commercial finance lender not pure leasing company).

Leasing a vehicle involves an initial monthly payment. The customer then makes monthly payments to the lease company until the end of the term. At the end of the agreement, the customer does not own the vehicle.

The customer will then be given options on how they would like to proceed.

These options could include:
• extending the lease on the existing vehicle or updating to a new vehicle
• ending the lease and returning the vehicle
• buying the vehicle as a used vehicle from the lease company

Pros / Cons of Leasing


• Lower monthly payment compared to buying a vehicle
• Good if customer wants to upgrade vehicle every few years
• Major components covered under new car warranty


• Risk of high charges at the end of the lease for any damages that decrease the resale value
• Customer may have to pay for repairs that fall outside of ‘fair wear and tear’
• You will be charged for additional kilometres over the agreed amount

Hire Purchase (commercial purchase agreement)

The option that allows you to treat your ute like a ute. The customer owns and depreciates the vehicle whilst making monthly repayments over the agreed term.

Pros / Cons of a Hire Purchase Agreement (CPA)


• Spread the purchase price of the vehicle across a longer period
• Ownership of the vehicle from the start
• No additional cost or payment required at the end of the term
• No additional or over charges for high kilometre usage


• Monthly repayments can be slightly higher
• All repair costs covered insurance / the owner

What next?

Commercial Finance Manager, Clive Murden works closely with clients to establish the plan best suited to their needs.

He explains: “We recently had an existing client wanting to buy the ute they already had on lease via another company. We worked together to set up a new agreement under a traditional hire purchase model which means the client now owns the vehicle rather than using it under a pure lease only agreement.

“I have this happen quite often; companies want to own the vehicle they already have on lease. When they hand it back, they normally receive a large bill to pay for additional damage and extra kilometres.

“We keep the monthly payments similar but now they own the vehicle as part of their own fleet.”

Get in touch

For more information about financing your next ute or vehicle call Clive on 021 870 527.