Overview
With the ever-changing landscape of the automotive industry and stricter environmental regulations, many drivers in Germany are turning towards car leasing options. To the point where, leasing accounted for 42% of new car sales in 2019. Here in this post, we delve into what is driving this trend, the various leasing contract options available to drivers, and tips on what to consider to get the best leasing deal possible when Leasing.
The Growing Popularity of Car Leasing
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 without the upfront costs and long-term commitment typically associated with purchasing. 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.
Tips for Securing the Best Lease Deal
Comparison Shopping for the Best Offer
To secure the best lease deal, drivers should compare various 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 lease 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.
Factors to Consider Regarding Insurance
Drivers should evaluate whether a full comprehensive insurance policy is necessary, or if a more cost-effective third-party liability policy would suffice. This decision will depend on factors such as the lessee's driving habits, the car's value, and potential costs associated with repairs or accidents.
Types of Lease Agreements
Mileage-Based Lease Agreements
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 opting for kilometer leasing, drivers can save money by accurately estimating the number of kilometers they expect to drive over the leasing period and setting the agreed-upon range accordingly.
Conclusion
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. Lessees seeking to lease a car should gain familiarity with the leasing process, research their options, and compare offers to ensure they secure the best possible agreement for their individual needs. 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.