Leasing a Car in Germany: An Extensive Guide for MotoristsLeasing a Car in Germany: An Extensive Guide for Motorists
Overview
Considering the constantly evolving nature of the automotive industry and the implementation of more stringent environmental regulations, many drivers in Germany are turning towards vehicle leasing options. To the point where, leasing accounted for 42% of new car sales in 2019. In the following paragraphs, we look into the drivers behind this trend, the various leasing contract options available to drivers, and tips on what to consider to get the best leasing deal possible when Auto Leasing.
Why Car Leasing is Becoming More Popular
The Future Ban on Combustion Engines
One reason behind the trend of car leasing in Germany is the impending ban on combustion engine vehicles being sold as new cars in the EU from 2035. As a result, more drivers are considering leasing as an option to explore alternative powertrains without committing to a long-term purchase.
Flexibility in Financing
Leasing allows drivers to enjoy the benefits and features of a new car while avoiding the high initial costs and long-term commitment associated with buying a car outright. With leasing, drivers can often upgrade their vehicle every few years, affording them the chance to experience the latest models, technologies, and performance enhancements as they are introduced to the market.
Getting the Best Lease Deal
Comparison Shopping for the Best Offer
To secure the best lease deal, drivers should shop around and compare offers from dealerships, banks, and leasing companies. By comparing offers, lessees can identify the most competitive rates and terms available and potentially save a considerable amount over the course of the lease term.
Leasing Calculators
Utilizing online leasing calculators can help drivers evaluate the financial implications of different lease offers. These calculators help drivers compare different factors such as interest rates, down payments, and contract lengths, thus enabling informed decision-making.
Consider Contract Length
Leasing contracts with longer terms typically translate to more affordable monthly payments. Drivers looking to reduce their ongoing costs should consider leasing contracts with longer durations.
Insurance Considerations
Drivers should evaluate whether a full comprehensive insurance policy is necessary, or if a more cost-effective third-party liability policy would suffice. Factors such as driving habits, car value, and potential repair or accident costs will determine whether a comprehensive or liability policy is more appropriate.
Types of Lease Agreements
Kilometer Leasing
Lease agreements based on mileage is the more commonly used contract model in Germany. In this model, a specific range of kilometers is agreed upon, and if the lessee exceeds the agreed-upon range, an additional payment is required. Conversely, if the driver stays within the range, they may be entitled to a refund.
Agreements Based on Residual Value
In residual value leasing, the agreed-upon range is the car's residual value after the contract ends. If the car's value falls short of the range, an additional payment is required, while a bonus may be offered if the car's value exceeds the estimated residual amount.
Which Model is Better?
Experts suggest that kilometer leasing is the better option, as many factors that influence the car's residual value are not under the lessee's control. By choosing a mileage-based lease agreement, drivers can potentially save money by accurately projecting the number of kilometers they will drive during the lease term and establishing the agreed range accordingly.
Final Thoughts
Car leasing in Germany continues to grow in popularity due to the impending ban on combustion engines and the financial flexibility offered by leasing agreements. Drivers looking to lease cars should familiarize themselves with the car leasing process, explore their options, and compare offers to ensure they secure the best possible lease deal. Additionally, understanding the differences between kilometer leasing and residual value leasing will benefit lessees in selecting the most appropriate contract model to suit their individual needs.