Car leasing vs. Financing: when is leasing better than buying?

The way to the car | for whom leasing really is
is better than buying

Not everyone gets favorable conditions from the dealer or the bank for the purchase of the car

Not everyone gets favorable conditions from the dealer or the bank for the purchase of a vehicle photo: stadtratte – fotolia

Many roads lead to a new car!

If you buy the car in cash, the dealer often gives good discounts. But credit financing with zero percent interest may be even cheaper in comparison than cash payment.

So why should you lease a car, pay installments for years and in the end the car still belongs to the leasing company??

with a leasing contract, private individuals, unlike business people, do not even have tax advantages. But even though it may be more expensive: if you are a private individual with little equity and a bank won’t grant you a loan, leasing a vehicle can be a way out.

even someone with little money, for example a commuting beginner, can use a leased vehicle.

However, you need to know that the contractually agreed ongoing lease payments are always due over the entire term of the lease. There is virtually no way to get out of a leasing contract – not even in the event of a total loss!

Read also

Leasing: Is leasing worthwhile as financing for private individuals as well?

leasing costs a company little or no capital and offers tax advantages. If you want to lease privately, you should consider the following factors.

Technically up-to-date electronics are indispensable for more and more people. If you don’t have the money to buy a car, you can lease a PC or cell phone.

By the way: if a bank refuses a loan, it’s not always because of a bad financial situation.

A freelancer, for example, finds it much harder to get a loan than an employee. Then it can make sense to lease a car.

How leasing works

If you lease something from a leasing company, dealer or manufacturer, you are allowed to use the item for the agreed term of the contract. He is meanwhile, depending on the contract and unlike a renter, also responsible for care, maintenance and repair in a contract workshop and motor vehicle insurance of the leased object.

In addition, there are the ongoing costs for a monthly leasing rate, a possible down payment at the start and for a special payment at the end of the term.

If the contract ends, the lessee can return the object or negotiate its purchase, depending on the agreement. The installments paid are partially deducted from the purchase price.

What leasing variants are there??

Basically, a distinction is made between residual value leasing and mileage leasing differentiated. The residual value option carries the greater risk, because the lessee has to return the car residual value risk The customer has to pay more if the estimated residual value of the car is not achieved in the end.

The mileage leasing specifies a maximum mileage that can be driven free of charge by max. 2500 kilometers per year may be exceeded. If you drive less, you get some money back. If you drive more, you pay more.

Tip: to protect yourself from incalculable residual value risks, such as those that have arisen as a result of the diesel debate, it is advisable to conclude a mileage contract, at least for new cars, if you want to lease a new car.

By making a one-time special rental payment, you can influence the amount of the installments and also the duration of the contract period.

Attention! If the vehicle is returned at the end of the term, any defects found must be paid for by the customer.

If you do not then conclude a follow-up contract for a new car with the dealer, the willingness to accept compensation for the elimination of defects is usually very low. In the end, the customer may have to pay a considerable amount of money for repairing defects.

What is the best leasing offer??

There are many leasing companies, with even more different offers. If you want to get an overview, you should use one of the numerous calculators on the internet.

Enter your desired parameters into a car leasing calculator, such as the installment amount, in order to compare them with each other.

Nevertheless, it is not easy to find the best offer, even with a leasing calculator. Because in addition to financial details such as the rate or the handling of the residual value, the contract design is also important. For example, there can be major differences in the obligations of the lessee.

Tip: before making any leasing decision, you should always compare the things that are important to you and then choose the best offer.

By the way: for offers without down payment and also for those without a credit check, you must expect that the rates are higher.

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