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When signing a leasing contract, people often only consider the monthly lease fee. But many people don't realise this: The actual costs are often much higher. A simple rule of thumb says that the effective monthly cost should be three times the lease fee. In this article, we take a closer look at this rule and show you alternatives that offer you more transparency and flexibility.

Basic rule: leasing fee times 3

"For the effective monthly costs, you have to calculate with three times the monthly leasing fee," says Stephan Müller, media spokesman for the Touring Club Switzerland (TCS). At first glance, this rule of thumb seems very high, which is why we did some more detailed research. Let's start by saying that three, calculated over the thumb, seems to be the right multiplier.

How is the rule of thumb calculated?

The rule of thumb "leasing fee times 3" for the effective monthly cost of a leased vehicle is derived from the many additional costs that are incurred over and above the leasing fee. In addition to the monthly fee for using the car, there are other high costs. These include compulsory comprehensive insurance, regular maintenance and servicing costs, repair and tyre costs, and annual road tax. There are also registration and administration fees. Compared to a purchased car, the TCS therefore estimates that a leased car costs up to 15 % more overall.

Vehicle use and services

In addition to general maintenance and repair costs, leasing often requires work to be carried out at a branded garage specified by the leasing company. This can lead to higher costs as you may not be able to choose the cheapest provider. You must also ensure that the service is always carried out on time to avoid additional costs.

Another important point is that the lessor may impose restrictions on the use of the vehicle. For example, many leases include an annual kilometre limit. If the lessee exceeds the limit, he will have to pay additional charges for each extra kilometre driven. As the limit is set at the beginning and cannot be changed during the term, it is very inflexible. Trips abroad may also be prohibited by the lessor or only allowed with prior permission.

The advantages of leasing

Despite the disadvantages mentioned above, leasing does have some advantages, especially when compared to financing a car. For many people, it reduces the immediate capital requirement, as it does not require a large sum of money outright. It also provides access to a new vehicle. The fixed monthly fee makes it easier to budget and avoids major financial surprises, although the additional cost of the leasing fee is difficult to calculate.

The three essential questions to ask before leasing

At Carvolution we do not advise against leasing in general. However, there are a few key questions that you should answer in the affirmative:

  1. Can you pay the leasing fee during the term?

  2. Have you taken into account the costs incurred on top of the leasing fee (insurance, registration, taxes) and are you aware that these will be spread over the year?

  3. Are you aware that you cannot change the kilometre limit during the term and that you run the risk of exceeding the number of kilometres?

If you can't answer 'yes' to all of these questions, a car subscription may be a more flexible option for you.

Carvolution car subscription: the flexible leasing alternative

Fortunately, there are newer mobility solutions that promise a fair and transparent offer with no hidden costs. The car subscription, for example, offers clear pricing and the flexibility that customers want today. Carvolution's All-in-One subscription not only offers a wide choice of vehicles. Insurance, registration, taxes, service, maintenance and tyres are also included, while the duration and kilometres can be flexibly adjusted.

With the individual cost comparison, you can also compare the cost of a car subscription with the total cost of leasing without obligation. This way you know exactly how much the different options will cost you. If you are interested in a car subscription but not sure if it is right for you, our experts will be happy to advise you without obligation.

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