Leasing - the actual costs quickly reach 3 times the monthly rate

Leasing - the actual costs quickly reach 3 times the monthly rate

All the existing financing models for your own car have their advantages and disadvantages. Which solution is best for you depends on your needs. We have examined the leasing for you.

A simple principle first - "For the effective monthly costs you have to reckon with three times the monthly leasing rate", says Stephan Müller, media spokesman of the Touring Club Switzerland (TCS).

At first glance, this basic rule seems completely exaggerated. Out of curiosity we researched and came to the conclusion that three, calculated by thumb, seems to be the right multiplier to determine the effective costs. Of course, it varies from case to case, since insurance alone depends not only on the person but also on the vehicle. The costs can also be greatly increased by services at brand garages or penalties as a result of an early exit. Compared to a purchased car, the TCS estimates that a leased car costs up to 15% more.

Although leasing is increasingly being promoted as a cheap and flexible option, the facts are different. Leasing always bears various contractual restrictions. Since in most cases one enters into a long-term obligation with leasing. Although there is a long-term commitment, you can quit at any time. However, this option is to be taken with a certain caution, as it quickly ends up costly due to expensive sanctions. In addition to the duration, leasing also restricts services. In most cases, leasing and the provisions laid down in it oblige you to carry out services and repairs in a branded garage designated by the leasing company. Regardless of whether another provider would offer the same service, perhaps even better quality, for a better price. These restrictions go hand in hand with the next point, the ownership relationship.

The car is not yours when leasing, so you can't do what you want with the car. Leasing means renting. The car belongs to the leasing company for the entire term of the contract. The return of a leased vehicle can be compared with the return of a rented apartment. Damages and excessive wear and tear cause costs for the return. Caution is also advised when using the vehicle, although the terms of use vary from leasing contract to leasing contract. In some cases, trips abroad are excluded, which can become cumbersome, especially in areas close to the border or on holiday trips.

The advantages of leasing vary from person to person. While for some people it reduces their immediate capital requirements, for others it means driving a car you couldn't afford without leasing. All in all, it is possible to calculate one's own budget through the fixed leasing rate. At this point, it is important to remember the basic rule mentioned at the beginning: the leasing rate alone is far from being enough. In addition to the rate, there are many other costs - insurance, tyres, repairs, service and taxes.

At Carvolution, we do not generally advise against leasing; under certain circumstances leasing can be useful and recommendable. For example, if you can say with certainty that (a) you can guarantee payment of the leasing instalments for the entire leasing period and (b) you are convinced that you will be satisfied with the vehicle of your choice for the entire leasing period.

The 3 statements that you must answer clearly with "Yes":

1) I am sure that I can pay the leasing installments and the additional costs (actually about three times the leasing installment) during the term.

2) I am sure that I can pay the leasing installment even if my life circumstances change, such as an increase in the family or a change of job.

3) I am aware of the financial and administrative implications of an earlier exit and can cope with them.

If you can answer these 3 questions with "Yes", then leasing can be the right thing for you.

If this is not the case and you are especially insecure about the long-term commitment, a car subscription can be of help. In contrast to leasing, there are no predefined terms for car subscriptions. So you drive in your "own" car without tying yourself to it. As you know it from subscriptions like Spotify or Netflix, a car subscription can also be canceled on a monthly basis. Despite this flexibility, you can still enjoy all the advantages of driving your own car. The popularity of subscription solutions is not only based on their flexibility, but also on the 100% cost transparency and the resulting cost control. You always know what you will have to pay and you can be sure that you can cancel at any time. Because we are convinced that the previous models such as purchase or leasing lack flexibility and complete cost transparency, we offer cars on a subscription basis. Who knows, maybe you will find your dream car in our new fleet?