Auto24team new car leasing tips
Is it better to lease a new car privately or buy it with financing??
Lease or buy a car privately? More and more Germans decide to lease. It is true that they do not save taxes like self-employed people do. Nevertheless, car leasing can also make sense privately. We show you when and what to look out for in private leasing.
How private leasing works?
Car leasing, whether private or business, works the same way: instead of buying a car, you "rent" it – usually after a down payment – from a lessor and pay monthly installments for it. After the agreed contract period, you return the car with the usual signs of use to the owner, the lessor. The leasing company usually sells the car to a third party or to you, depending on what you agree. Until a few years ago, car leasing was considered a pure loss-making business for private customers. Only tradespeople, freelancers or companies can claim the leasing fees as operating expenses and thus reduce their tax burden. If you lease (or buy) a car privately, on the other hand, you do not benefit from this profitable effect, because you cannot deduct a private car as a business car. Other factors make private leasing attractive, as we will show you in the next paragraph.
What are the advantages of private leasing over buying a car??
When it comes to the question "lease or buy a private car", private leasing can be a real alternative. In the following, we will show you the arguments in favor:
No capital commitment:
With private leasing, you do not pay a high purchase price, but rather manageable installments. If you don't want to own a car, but only drive it, you can afford a higher-priced model than you might be able to buy.
Monthly vehicle costs can be planned over the long term with car leasing for private customers, unlike buying a used car, for example. In the case of "full-service leasing", all repairs, inspections and maintenance are included.
No borrowing is necessary. The lessor alone takes care of all the finances.
Leasing terms are usually between 2-4 years. Then you simply return your car. It saves you the trouble of reselling the car.
If you are not yet sure whether you want to buy a certain car, private leasing is an opportunity to test your favorite car in detail. Always drive a new car: As a rule, leased cars come fresh off the production line and with the latest technology. This can also help save operating costs because new cars are usually more energy efficient.
Types of leasing:
Mileage leasing or residual value leasing – which is more favorable?
Car leasing as a private person has advantages and disadvantages. The disadvantages often include factors related to choosing the right type of leasing and some of the finer points of contract drafting. In the following, we will show you which types of leasing there are and which is the most favorable in private leasing.
Residual value leasing:
Be careful when returning the car!
With residual value leasing, the lessor estimates before the contract is signed how much the vehicle will be worth at the end of the lease term. Normal wear and tear is taken into account, as is a forecast of the future situation on the used car market. When you return the leased car, an appraiser then checks whether the residual value is correct or whether you have to pay any difference. This is often the subject of dispute. For example, when it comes to paint scratches, upholstery stains or dents. The market situation is also difficult to calculate, see the diesel scandal and the discussion about diesel driving bans. Even if you are not responsible for such politically induced reductions in value, you still bear the so-called "residual value risk" in the end.
It's better not to get involved in residual value leasing when leasing privately! Although the rates are often relatively low, the cost risk at the end of the term is very high. If you still decide to go for it, make sure you have a say in the appointment of the appraiser and secure the option to buy the vehicle at the end of the contract. You can find out more about this in our article on car leasing.
Only drive as much as agreed!
With mileage leasing, the number of miles you are allowed to drive each year during the term of the lease is determined before the contract is signed. This is how wear and tear can be. So that the depreciation of the car more accurately quantify. Your leasing rate will be calculated accordingly. As a rule, the annual mileage limit is 10.000 to 20.000 km. There are also tariffs for frequent drivers, then the rates are more expensive. With mileage leasing you do not have to fear high final payments as with residual value leasing. The only catch is that you have to pay extra for every extra kilometer you drive. If you drive fewer kilometers than agreed, your final installment may even be lower.
With mileage leasing you drive better in car leasing as a private person. If you're worried about exceeding your mileage limit in a year, it's worth comparing offers from rental car companies for longer distances. Already from 100 € you get a car for the weekend trip.
Car leasing for private individuals without a down payment – what do I have to consider??
Normally, with private leasing, a down payment is due at the conclusion of the contract. More and more often, however, lessors are making special offers to private customers for car leasing without a down payment. As private new car purchases have been declining for years, car manufacturers and dealers want to win you back this way. At first glance, such offers seem cheap. However, we advise you to take a close look at the fine print: Where no down payment is due, it has usually been priced into higher monthly installments. Under certain circumstances you will also pay extra. Other offers include excessive final payments when you return the car or extortionate prices if you buy the car at the end of the term.
Why is private leasing more expensive than business leasing??
Car leasing for private customers is generally considered to be more expensive. This does not mean that the rates are more expensive for private customers, but that the tax effects do not apply to them, from which business customers benefit. As is well known, these can deduct the leasing fees as operating expenses from the profit. How the taxman collects less tax. If you offset these tax savings against the leasing costs, private leasing is actually more expensive than business leasing.
Private leasing or prefer to finance the car?
With which financing model you drive the cheapest – leasing or financing? Here you can see sample calculations for two different vehicle models. Interest rates can vary, of course, which affects the monthly payments. You will quickly realize that the total cost of leasing is lower than financing. But keep in mind: In the end, the car does not belong to you. Calculate for each individual case, which is more worthwhile for you. And try to estimate what depreciation you expect for a specific car if you buy or finance it.