Car leasing in Germany: pros and cons for private individuals

This article is dated as shown. Laws, fees and prices have changed since then. Check the figures before you rely on them.

In this article we look at how car leasing works for private individuals in Germany, and at its advantages and drawbacks compared with buying a car.

Advantages of leasing in Germany

Earlier in our blog we touched on the options of buying a car on credit or by leasing in Germany ( How to get a car loan in Germany ). The topic caught your interest, so today we would like to talk in more detail about car leasing, its advantages and possible problems.

Leasing in Germany is already commonplace. As we mentioned earlier, roughly half of all cars are bought on credit, and about 20 percent of those are leasing contracts. In other words, around 10 percent of all new cars in Germany are leased by private individuals. What is behind the growing popularity of leasing?

Despite the clearly improved reliability of cars, nobody drives the same car forever. And having bought one car, we immediately start thinking about the next one. Statistically, the younger the driver, the more often they change cars. On average, people in Germany change cars every 5-6 years. Leasing offers a real opportunity to always drive new cars without putting down a large sum at the start.

A leasing contract lets you see the regular payment in advance, but the total cost also includes other terms: the down payment, the mileage limit, servicing and the settlement on return. Warranty cover is checked separately.

From the article of 12.03.2019: “Leasing offers: they are an integral part of any dealer's service, so you need to look for the best possible deals. Official dealers are straightforward, but besides them there are several large online services, such as https://www.sixt-leasing.de/ or https://www.meinauto.de/ , which offer special discounts on cars and a wide range of leasing deals”

Which cars are worth leasing

From the article of 12.03.2019: “Which cars are worth leasing rather than buying on credit or for cash? If we look at the offers of official dealers, French manufacturers offer very good leasing terms. And that is despite the fact that French cars lose value faster than German ones and are harder to sell. Incidentally, that is exactly why French cars are better leased than bought. Let us look at the current Peugeot offers:”

249 euros a month for a Peugeot 308 was an example of an offer from March 2019; its availability and the full breakdown of payments are not confirmed today. From the article of 12.03.2019: “A well-equipped Peugeot 308 diesel estate costs 249 euros a month on a two-year leasing contract with 15 thousand kilometres a year. In total, two years of owning a new car will cost you just under 6 thousand euros. The same new car would lose no less than that in resale value over those two years. And given the low resale demand for this brand and how unaccommodating dealers are when buying a car back, your losses would be considerably higher.”

From the article of 12.03.2019: “As for leasing German cars, it appeals to better-off people who, on the one hand, want a new, well-equipped car configured to their needs and, on the other hand, do not want to pay a large sum up front (and we know that new German cars are far from cheap). Unlike with French cars, in this case it is better to use the third-party services we mentioned above (and not only those; in fact there are a great many offers), because their terms are better than those of official dealers, as they usually exclude the dealer margin.”

Problems with leasing

So what are the problems with leasing, and what should you be prepared for? First, you have to accept from the outset that this is not your car and you will have to return it. Second, the period of use is fixed in advance, and changing the car before the end of the leasing term is not the best decision financially. So we advise you to choose the car carefully when leasing and to allow for possible changes in what you need from it. Third, you will have to treat the car with care, because at the end of the leasing term you may be charged additional amounts if the car is damaged.

The amount due on return depends on the contract, the mileage and the condition of the car. Before signing, check how damage and wear are assessed, and record the condition on collection and on return.

So what can we recommend? To lease a car or not? Unfortunately, we cannot give a definite answer to this question.

If you change cars every 2-3 years, prefer new cars, do not want to pay out large sums up front and plan your expenses in advance, then leasing is worth a try. Who knows, you might like it.

If, however, you change cars often (once a year or more) and do not want to overpay, we would recommend 1-3 year old cars with low mileage bought for cash.

From the article of 12.03.2019: “If you are taking a car for the long term, you can look at both new cars with a discount and 1-5 year old cars with low mileage, and buy them on credit as well, as interest rates in Germany currently make that possible.”

In all these cases you can always count on our help and advice.