Private lease of a car: The pros and cons
Leasing a car is often associated with work. A company car is now a concept that is known to most people. What fewer people are aware of is that you can also lease a car as a private individual. Private lease, as it is also called, has several advantages over purchasing a private car. There are also drawbacks to this concept. In order to determine whether private leasing is an interesting option for you, it is advisable to weigh all the pros and cons in your personal situation.
- What is leasing?
- The benefits of a private lease
- The cons of private leasing
What is leasing?
Leasing is a form of renting. An agreement is concluded between a customer and a leasing company, stating that a specific good is made available by the leasing company at a specific price for a specific period. When leasing you enter into an agreement for a longer period of time. This is in contrast to renting, where the character is very temporary. You could only rent a car for a day.
The benefits of a private lease
In some situations, it may be more beneficial to lease a car than to buy a new car. Take a good look at your own situation to determine whether this is the case for you. Private leasing has various advantages.
Your costs are transparent
You know exactly what you have to pay monthly for the car. The maintenance costs and the costs for necessary repairs to the vehicle are included in the lease price. So you cannot be faced with unpleasant surprises if the car unexpectedly starts to show defects. Matters such as motor vehicle tax, insurance and breakdown assistance are also included. The insurance is usually all-risk and in many cases a co-driver insurance is also arranged. Fuel and any fines are for your own account.
No tax addition
When hearing the term “lease car”, most people will think of addition. This is not the case when you lease a private lease. This only applies to drivers who have a company car at their disposal.
You don’t need equity
When you want to buy a new car, you need a lot of savings. You could also take out a loan to pay for the purchase of the car, but it is not an ideal scenario to get into debt. When you lease a car, you don’t need any savings. However, a fixed income is a requirement to qualify for a private lease.
The cons of private leasing
As attractive as the benefits may seem, keep in mind that there are also some drawbacks to this concept.
When you lease a car, you must state in advance how many kilometers you intend to drive. The monthly amount to be paid is adjusted accordingly. If you eventually drove more kilometers than you initially reported to the lease company, these will be settled. You usually pay per kilometer driven too much and these costs can add up considerably. If you drive less than your bundle, the kilometers not driven will not be reimbursed.
A financial obligation for a longer period of time
Breach of contract is very pricey. You enter into an obligation for several years. If due to circumstances you are no longer able to raise the lease amount, you are obliged to pay a lump sum. Think of unforeseen events such as dismissal or death.
A lower mortgage amount
If you have a private lease contract and you want to take out a mortgage, the mortgage amount can be considerably lower. If you have the desire to buy a house and want a mortgage for this, this is an important point. Do you already have a mortgage and do you want to lease a car? Then there is nothing wrong.
You do not accrue claim-free years
A lease car is not your property. You therefore do not accrue claim-free years. If you do not have your own car for three years, you will lose the number of claim-free years that you have accrued. This is certainly something to take into account if you have driven damage-free in your own car for many years now.