When buying a car, of course, sooner or later the question is how the car should be financed. Consumers are always interested in vehicle leasing, which the dealers offer in addition to the hire purchase or the usual dealer financing. But what is cheaper for the buyer – leasing or loan to finance a car?
Leasing has clear advantages – but not for private individuals, but primarily for the self-employed, since a leasing vehicle or the leased asset is not included in the balance sheet and therefore does not reduce the entrepreneur’s liquidity. In addition, there are possible tax advantages, which in turn are primarily considered for self-employed persons.
The extent to which leasing is cheap depends heavily on the negotiated terms of the leasing contract. The problem is that the leasing installments are not calculated as transparently as with a conventional loan. There are also a wide variety of options for structuring the leasing contract – however, a mileage contract is generally recommended.
Car finance loan
A loan is a bit more understandable for most consumers, because the credit rate is made up of interest and principal, and the other ancillary loan costs are also manageable. If you choose dealer financing, it is usually difficult to negotiate a discount on the purchase price at the same time.
Accordingly, one should certainly obtain the conditions for dealer financing, but talk to the house bank before making a decision and find out about the interest or conditions for an installment loan or personal loan. If the bank’s personal loan in connection with a dealer discount on the purchase price of the car is cheaper than dealer financing without a discount, the customer should of course resort to the bank loan.
Leasing or loan?
Basically, you can actually say it this way: leasing is not very attractive for private individuals, the focus should be on dealer financing or, as mentioned, on the loan from the bank or savings bank.