Car leasing only makes sense for freelancers or businesses

Car leasing isn't cost-effective for private individuals

The question was direct: "So I'll switch to leasing for my next vehicle." The majority response was a near-unanimous no. Car leasing—renting a new car with insurance, maintenance, and inspection included in exchange for a monthly fee—has been sold as the smart way to drive a new car every few years. However, the numbers tell a different story when the signer is an individual rather than a company.

The most persistent argument is fiscal: the fee is only profitable if you are self-employed or own a business, because then it can be deducted as an expense and VAT recovered. For an employee, this advantage disappears instantly. That is where the problem begins.

Why doesn't car leasing make financial sense for individuals?

The key lies in what you pay versus what you own. With leasing, you never own the car: you pay to use it and return it at the end of the contract. Those who buy outright, however, keep an asset they can sell or use for fifteen years. A well-maintained car without aggressive driving pays for itself after fifteen years, according to critics of long-term rentals.

There is more fine print. Contracts usually include a mileage limit—10,000 km per year in one cited offer—and penalties for exceeding it. Bodywork damage upon return is also penalized. Low mileage limits make leasing a product suitable only for those who drive little.

The calculation regarding the €20,000 not invested

Leasing advocates propose a different scenario: instead of paying €20,000 upfront for a car, leave that money invested and pay the monthly fee with other income. With an average annual return of 9% over fifteen years, compound interest would theoretically make the car free. The full breakdown reveals a surprising difference.

The objection is immediate: that 9% is not guaranteed. It represents historical average returns from investment funds, not assured performance. A negative return scenario over several years invalidates the entire exercise. Comparing lump-sum payment options with monthly payments requires careful accounting to avoid double-counting the same money.

The residual value trap

At the end of many contracts, lessees can purchase the car by paying a residual value. Critics argue this price is often above the vehicle's actual market value. A car loses about 20% of its value as soon as it is registered, and depreciation continues thereafter.

One driver's experience buying on installments illustrates this: €10,000 down payment, €12,000 paid over four years, and a car now worth €8,000. Total spent in six years: €14,000, hoping to keep it until ten years to recover some value. His conclusion: leasing only works with a good deal and under 15,000 km per year.

Comfort comes at a price

No one disputes the convenience. Leasing eliminates searching for insurance, dealing with insurers, workshops, inspections, and maintenance. Everything is included in the fee. For those who value time over savings, this is a real argument.

But comfort is not economy. Here the analysis stalls: no closed comparison with specific offers and final prices has proven that individuals save money by renting instead of buying. Until such calculations appear, the dominant conclusion remains: leasing is a product designed for companies and freelancers, and for individuals, it is primarily a comfortable way to pay more.