The english term "lease" means "rent" or "lease". A leasing contract is nevertheless an atypical rental contract. the lessor creates the particular car exclusively according to the customer’s wishes. No inventory objects are leased.
The leasing contract as a financing variant
In this financing variant, the leasing object, z.B. A new car, from lessee against payment of a monthly leasing rate to the lessor be used. Unlike a normal rental agreement, leasing is more than just a transfer of use. With a normal rental contract, the lessor is responsible for maintenance and repair on. With leasing, the lessee is responsible for these points, unless he has contractually booked this service as well.
Since the leased property must "recoup" the lessor’s investment and profit, the lessee is charged for it a surcharge have to pay. This exceed the actual cost of the vehicle. Nevertheless, leasing is a popular business model, especially among entrepreneurs. Commercial customers are not allowed to use the monthly leasing installments are tax-deductible as vehicle costs.
In the case of a car lease the lessor the owner the vehicle and accounted this. A commercial lessee accounts for the leasing rates. At the end of the lease term, the car can be returned to the lessor returned or be purchased by the lessee.
What forms of car leasing are there?
There are many different types of lease financing, especially since individual offers are set up depending on customer requirements.
We would like to introduce the two most important types of leasing: the "mileage leasing" and the "residual value leasing".
Mileage leasing – what you need to know
mileage leasing is a popular variant of car leasing. Here the lessor and lessee agree how many kilometers may be driven with the vehicle. According to the automobile club ADAC is a contract term of three years and 30.000 kilometers common.
If there is a higher mileage at the end of the lease term, the lessee must pay money for each additional kilometer driven. For a mid-range car, this can mean an additional 10-15 cents per kilometer are. This depends on the contractor’s goodwill. There may be a credit for fewer kilometers driven. Here are the modalities in the offers or. leasing contracts to be considered in the financing.
Mileage leasing is a popular type of car leasing, since the lessee does not have to worry about a depreciation of the vehicle must make. Eventual damage to the car must be compensated however.
Residual value leasing – this is how it works
With this type of leasing, a lease payment is made upon conclusion of the contract residual value of the car at the end of the leasing period calculates. The expected number of kilometers, the expected condition of the vehicle and the situation of the automobile market at the end of the term are included in the calculation. When the expected residual value is determined, the amount of the down payment and the monthly leasing rate are then set.
At the end of the term a comparison carried out: does the calculated residual value correspond to the actual residual value of the vehicle?? For example, if the actual residual value of the car is lower, the difference with the final installment be balanced.
Because of this uncertainty about the final installment, residual value leasing is not considered as financing riskier in contrast to mileage leasing.
Procedure for leasing cars
In order for the leasing application to be positively decided upon, certain requirements must be fulfilled. As with an ordinary bank loan, this type of financing requires first of all a sufficient creditworthiness be available. The lessee must be able to pay the monthly installments for the car without any problems. In addition, there should be no negative entries with the schufa available, which creditworthiness the applicant’s situation. These are the basic requirements that must be met by private individuals and companies alike in order to receive offers.
In addition, there may be further conditions depending on the status (private or commercial).
Conditions for a leasing contract: private individuals
Private individuals must have a regular income. Idealpermanent employment contract over the entire duration of the leasing contract. If the applicant has a fixed-term employment contract has a fixed-term employment contract that ends before the end of the contract term, a positive decision is unlikely.
Also level of income is decisive for financing. The ratio of income, expenses and leasing rate per month must be in a reasonable relationship to each other. This is quite logical, because manufacturers such as BMW, ford or audi naturally want to be sure that the installment can be paid.
prerequisites for a leasing contract: company
As is the case with private individuals, entrepreneurs must creditworthiness prove. Furthermore, leasing companies require a business analysis (BWA), which should demonstrate the company’s earnings position.
the chances are poor for young companies: a company that has just been founded cannot present a BWA with comparative figures for several years. The presentation of positive results of business activity for several consecutive years is necessary for offers though.
Alternative: loan financing?
In addition to lease financing, there is of course also the option of taking out a loan to buy a car. There are also certain conditions for buying a car with a loan.
Requirements for obtaining a loan
Before a loan is taken out, a list of monthly expenses and income should be made. This helps to determine which financing option is best and how much money can be allocated each month to pay off the car.
In addition, the following requirements must be met in order to obtain a loan:
- age: 18 years to 65
- However, some banks still grant a loan to people over 65 years of age. the term is usually short, the interest rate is relatively high and the borrower has special types of collateral (e.g.B. guarantees) must be provided. Some banks also require the applicant to take out residual debt insurance, which protects the bank in the event of the borrower’s death before the debt is paid off.
- Schufa: no negative entries. The bank will obtain the necessary information. The buyer can obtain a free credit report from a credit agency beforehand.
- Residence: permanent residence in germany.
- employment: employed for at least half a year (probationary period is not included) and proof of approximately three salary statements.
Car loan from the house bank
If the calculation is correct, further information can be obtained from the borrower’s bank. The bank first checks carefully whether the requirements are met. In the best case, the loan is then granted. In most cases, the borrower then With the help of the financial support, the entire purchase price of the car can be paid. For the repayment of the loan the house bank often grants only the installment.
Loan from the car bank
If the buyer opts for a loan from the car bank, he has a short path and the possibility to negotiate financing already during the sales talk. On the other hand the old car is credited. Car banks often offer special financing programs that promise low interest rates. The interest expense and the loan amount are thus kept low.
Mostly a down payment between 10 and 20 % of the purchase price requires. The balance becomes in installments paid. Financing can usually save up to 15%. Particularly in the case of cash payment, special cash discounts could be negotiated with the dealer.
This method of settling invoices is preferable to financing through the car dealership.
Car leasing and financing at a glance
In the end, it is up to each individual to decide which type of financing to choose. There are also combinations of different financing models possible. If, for example, a portion is paid in cash and the rest is paid in the form of a loan, the repayment installment is reduced accordingly. Caution is advised in any case when financing is advertised with zero-percent interest rates. The cost of the loan is often already included in the purchase price.
- Car is only borrowed
- monthly installments are low
- The contract cannot be terminated early
- Not the purchase price, but the loss in value is financed
- Term between two and five years
- car is the property of the buyer after the expiration of the term
- Monthly installments are higher than for a leasing contract
- Down payment and final installment
- The contract can be terminated in the meantime
- Term of the classic loan: about 12 to 84 months
Leasing or credit? A calculation
the following example illustrates the decision-making process between leasing and purchasing.
- Investment for a new car in the amount of 50.000 €
- useful life of the car 5 years
- interest on the loan for financing 10
- Repayment in five equal installments at the end of the year
|year||debt||interest||repayment||sum repayment + interest|
- Annual installment 25 % of the list price
- acquisition fee 8%
|year||annual leasing rate||closing fee||total leasing expenses|
|1||12.500 €||4.000 €||16.500 €|
|2||12.500 €||12.500 €|
|3||12.500 €||12.500 €|
|4||12.500 €||12.500 €|
|5||12.500 €||12.500 €|
|62.500 €||4.000 €||66.500 €|
In this calculation the purchase of the car is the cheaper variant. However, leasing may be a better alternative. Different offers should always be compared, not only in the case of new car financing.
For the cash purchase the company must have sufficient funds available. In addition, when financing the lost profit from a possibly better alternative investment can be taken into account.
In additiontax advantages from a commercial lease transaction, which can change the calculation. Because then leasing may be more worthwhile than buying a car outright.
Cancel car leasing contract
The term of a leasing contract extends over several years. During this time, a lot can change for the lessee: income level, family size or taste. When leasing, there may also be dissatisfaction with the car or the thought of buying another car. Then the desire may arise to cancel the contract.
One termination of the car leasing contract is possible in principle, but with high additional costs linked. In the event of termination, the customer must pay the contractual partner damages for the loss of revenue.
Instead of cancellation: revocation!
A better option would be to contract to be revoked. Often the revocation instructions incomplete or incorrect. If such a case exists, you may still revoke long after the deadline has expired. This option applies equally to private individuals and companies and also has an impact on the rate. In such a fortunate case, the customer would not be charged any damage claims or other handling fees.
In this case, one speaks of the "revocation joker": the customer receives all leasing installments and the final fee back in the case of revocation. Only one target interest must be paid to the lessor for the period from handover of the vehicle until revocation. It is currently still unclear whether the lessor may demand compensation for the kilometers already driven. Corresponding proceedings are still pending here.
End of contract for car leasing
Many customers are tempted by the comparatively low leasing rates for luxury cars. But you should calculate carefully. For private individuals in particular, there may be a risk at the end of the leasing period to unpleasant surprises come.
Every clause in the contract must be checked. As a rule insurance already included in the leasing contract. If the customer does not make an accurate comparison between the insurances here, it can be expensive:
- At mileage leasing at the end of the lease term, there may be additional payment for excess kilometers driven give.
- At residual value leasing if the vehicle is to be sold to third parties or customers at the end of the leasing contract. Thereby the expected residual value as selling price can be achieved. If this does not occur, depending on the contract, the previous customer may have to pay for the difference amount surcharge.
Even if the scratches and marks on the vehicle identified by the appraiser pass as "normal signs of use," some leasing companies then attempt to pass on repair costs to the lessee.
Commercial use: tax deduction for car leasing
In the case of a commercial lease, the leasing rates as business expenses can be claimed for tax purposes. this rule does not only apply to companies, but also self-employed persons and freelancers can deduct car leasing from their taxes.
It is important to determine whether the car really belongs to the business assets. For this the vehicle must be more than 50 % of the vehicle is used for business purposes become. If the vehicle is part of the business assets but is also used privately, not all of the costs of the car lease can be deducted for tax purposes.
Tax law offers two options for calculating the deduction:
- With the 1 percent rule 1% of the manufacturer’s list price is booked monthly as operating income, which often makes up a large part of the leasing rate.
- In many cases, it makes more sense to carry out an exact comparison logbook in which each trip is accounted for. Attention should be paid to the following, contradictions between fuel receipts, mileage invoices or workshop invoices with the driver’s logbook to be avoided scrupulously.
Example: tax deduction for leasing
The tax advantages of a company car are as follows Advantages in the determination of profits. The expenditure volume that comes about with leasing is higher than that of a depreciation of the same vehicle over several years. Without going into the complexity of leasing contracts, the tax advantage of leasing over buying can be clearly illustrated.
The audi A6 is one of the most popular vehicles for young, dynamic entrepreneurs. Its purchase price, on the other hand, is poison for a company’s financial books. Just under 52.The A6 costs € 000 with the usual equipment and engine for a company car.
tax law stipulates that companies may use the purchase of a new car as a business vehicle over a period of depreciated over six years if. This means that in a year about 8.666 € can be written off.
The leasing rates are much more variable. Shorter terms or higher mileage can move the monthly payments upwards. This postpones the payments that a company can deduct from its taxes when leasing a car. The most common terms are 36 months and an annual mileage of 20 kilometers.000 kilometers. This corresponds to monthly leasing rates of about € 799.
Calculated over the year, 9.588 € can be sold. In addition, as with a normal new purchase, there are the costs of operating the vehicle. In the case of business use, these are also reported in the tax return.
Car leasing: tax deduction with extra services
In addition to the tax advantages, many companies rely on leasing, as the purchase price of the vehicle is not deducted "in one fell swoop". It is gradually reimbursed for tax purposes and thus has an effect on not negative on the balance sheet from.
In addition, many leasing packages include additional services such as maintenance or technical service include. The entrepreneur does not have to take care of it himself.
Customers should definitely make sure to take out GAP coverage. This insurance protects him from residual payments in the event of a total loss or theft. This protection can also be deducted as a business expense by the tax office.
Conclusion 1: advantages of car leasing
Of course, car leasing has even more positive aspects than just the tax advantage. It preserves the liquidity of the enterprise, secures the mint condition of the car and can with a noblemarke the image of a managing director or a director increase. it has become an attractive alternative to the typical bank loan for the car for years.
Since the full purchase price does not have to be paid when acquiring a car, the company’s financial flexibility is preserved. Once the monthly lease payments have been calculated, the investment can be better planned than the purchase of a company car. Since the equity capital remains in the company, there is a positive effect on the creditworthiness of the company. It is a off-balance sheet transaction for the lessee: equity ratio and debt ratio remain unaffected. This is positive for the rating of the company. Thus, leasing for a company car is quite positive.
Conclusion 2: disadvantages of car leasing
The biggest disadvantage is that you don’t own the leased object. D. H. the contract continues even if the object is no longer needed or money is urgently needed. It is not possible to sell the car as in the case of private ownership.
The situation is different with leasing for private individuals: the numerous clauses in the leasing contract can hide many nasty surprises for the end of the leasing period. We have already listed these. If you know all these pitfalls, then the low leasing rates are no longer very tempting.
Before signing a contract, you need to think carefully about car leasing and compare different offers. leasing is often not worthwhile for private individuals, because in contrast to self-employed persons, the tax advantages do not apply. If you can’t or don’t want to buy a new car, you should buy a leasing return car. So it is cheaper for the non-businessman to drive.
loan interest: interest on a loan loan interest is the amount of interest that a borrower must pay to the lender over the entire term of the money loan. ‘ read more