Leasing is convenient, financing is common, buying outright is usually cheapest. How to compare the three routes, which traps lurk in leasing contracts and when leasing is still the right choice.
In short
- Buying outright wins with a long holding period: no interest, full room to negotiate, free use.
- Financing: rate 3 to 8 percent, avoid balloon payments, a bank car loan is often cheaper than the manufacturer bank.
- Leasing: a leasing factor under 1 percent of list price is good; the return with a damage bill and excess kilometres is the trap.
- For the self-employed and with electric cars carrying high depreciation risk, leasing can make sense.
Buying outright
Whoever pays, owns. No interest, no term, no mileage limit, and at the dealer the strongest negotiating position because cash buyers create no financing surcharge. The downside is tied-up capital: €25,000 in the car is €25,000 not in the portfolio. At 6 percent portfolio return and 4 percent loan rate financing would be better on paper, but only if the money really stays invested and the volatility is endured. For most people buying outright from the goals account is the most disciplined solution.
Financing
A car loan costs between 3 and 8 percent in 2026, often less at manufacturer banks with promotional rates but then without the cash discount. Compare the whole package: price after discount plus interest. Avoid balloon financing with a low instalment and a high final payment; it is leasing without a right of return and often leads into the next financing. Term at most the planned holding period, better shorter. The registration document stays with the bank as security, which lowers the rate.
Leasing
You rent the car for two to four years against an instalment that covers depreciation plus interest plus margin. The leasing factor is the monthly instalment divided by list price times 100: under 1 percent is good, under 0.7 very good, over 1.3 expensive. At a €35,000 list price and €300 instalment it sits at 0.86. Traps: a deposit that flatters the instalment; a mileage limit at 10 to 20 cents per extra kilometre; a return report with a damage bill for every scratch; residual value leasing where you carry the residual value risk; delivery charges; mandatory comprehensive cover. Mileage leasing with a realistic allowance and no deposit is the fair variant.
When leasing makes sense
For the self-employed and companies that deduct the instalment in full and want no balance sheet commitment. For electric cars when depreciation is unpredictable and the manufacturer carries the risk via the instalment. For people who want a new car every three years and see that as consumption. For company cars with salary conversion. Not for people who want to save money; they buy used and drive long.
The comparison in numbers
Compact car, €30,000 list price, three years, 15,000 kilometres a year. Buying with a 15 percent discount: €25,500, residual value after three years €15,000, cost €10,500 plus foregone interest of around €2,300, together €12,800. Financing at 5 percent: €10,500 depreciation plus €2,000 interest, €12,500, but often dearer without the discount. Leasing at factor 0.9: €270 times 36 equals €9,720 plus €900 delivery plus €500 return risk, together €11,100, but without a car afterwards. Over six years the picture turns clearly towards buying.
Financing a used car
The best combination for many: a three-year-old car, half cash, half bank loan over 36 months. Low depreciation, limited interest, negotiable discount, and after three years it is yours and drives another seven.
Try it yourself
Car Cost CalculatorPrice, holding period, mileage, consumption, insurance: what your car costs per month and per kilometre.Loan CalculatorLoan amount, rate, term: monthly instalment, total interest and repayment schedule, also for refinancing.Frequently asked questions
Can I return a leased car early?
Only with the lessor’s consent and usually against a settlement of the remaining instalments. Transferring the lease to a third party is an alternative.
What is leasing with a purchase option?
At the end you may buy at the residual value. Sensible if the residual value is below market value, which happens with sought-after models.
Is leasing worthwhile for private buyers of electric cars?
In 2026 often yes, because manufacturers clear stock with leasing instalments and offer factors under 0.7. Compare against the cash price with discount.
Share
