Leasing for beginners: a guide to the car leasing contract!

Leasing for beginners: a guide to the car leasing contract!

Reading an entry-level leasing guide is a good idea for drivers who are considering renting a vehicle for an extended period instead of buying a new car. The fact is that funds used to pay for a new car cannot be used for other purchases. Companies in particular benefit from high liquidity when it comes to leasing. Renting a vehicle is not only interesting for companies, it is also an alternative to buying for private individuals.

What is car leasing?

Car leasing offers several advantages. In particular, car enthusiasts who want to drive up with the latest vehicle model at any time benefit from changing vehicles at contractually agreed intervals. The leasing contract specifies the period for which the car is 'rented out'. As the lessee, you have the option of determining which time frame corresponds to your own wishes and needs. In the forms of the leasing contracts, various modalities with regard to the temporal usability can usually be selected. These range from twelve months to 60 months.

What is the leasing contract like?

The general conditions for paying the leasing installments can generally be designed flexibly. You can get an advantage by paying a one-time deposit before starting the vehicle. The monthly leasing rates can be reduced to a comfortable minimum depending on the amount of the down payment. This is particularly interesting for beginners when leasing.

The bank remains the owner of the car during the entire period of use. The vehicle registration document is also deposited there. If you are in arrears with a leasing rate, the credit company can intervene or renegotiate additional payment methods. As a driver, you are merely the owner of the vehicle.

What else is regulated in a leasing contract?

The leasing contract regulates all details that are important in relation to the vehicle rental. In particular, the brand, model and equipment of the car are mentioned in the regulations. The contract also stipulates the duration of the term and the total mileage. The publication also contains information on further agreements such as the amount of the monthly installment to be paid or a down payment to be paid before the contract begins.
Furthermore, users can read about the contractual consequences of deviating from the contractual terms. One example of this is the mileage. You should note that this often differs from the assessments made previously. If the limit is exceeded, an additional payment is due in most cases.

So the return takes place after the end of the contractually agreed release: leasing for beginners

If the contract expires because the end of the period of use has been reached, the car must be returned to the contractual partner, which is usually the dealership. The advantage of this procedure is the fact that the 'renter' does not have to worry about selling the vehicle. If you get too used to owning the car within the period of use, you can purchase the vehicle.

In the normal case, the contract specifies which remaining payment is due. You then pay the rest of the amount to the bank in one sum. Many credit institutions also offer the option of remaining balance financing. This enables you to purchase the vehicle even if it does not have major financial resources.

Advantages and disadvantages of the leasing contract: leasing for beginners

Many entrepreneurs and freelance users benefit from the advantages of financing compared to buying a vehicle. After all, some costs can be claimed for tax purposes, which minimizes the tax burden. Private individuals cannot take advantage of this.

Advantages of the car leasing contract:

- Tax advantages for entrepreneurs and the self-employed
- always up to date - with the latest car models
- affordable monthly rates
- Lessee remains liquid
- Fixed monthly costs for a simplified calculation
- Individual contractual agreements possible


- The vehicle remains the property of the leasing company
- If the return is not in accordance with the contract - risk of additional payments
- Early termination of the contract is not possible
- high costs and further financing requirements when buying a car after the leasing period has expired

Leasing for beginners: Does the credit rating have an impact on the leasing contract?

As with a loan, the leasing company checks whether the customer is liquid before signing the leasing contract. A credit check is carried out for this. The company usually makes an inquiry to Schufa or another credit agency. If there are no entries there and the score is satisfactory, you have already opened up an important obstacle on the way to the leasing contract.

If the opposite is the case, i.e. a negative entry in the register and a negative score, it may be necessary to provide a guarantor. This ensures that the monthly installments are paid by the guarantor in the event of default. Many companies have begun to request a special payment if their credit rating is bad. The risk of default can be reduced by a correspondingly high down payment.

This is how residual value and mileage leasing differ: a guide to the car leasing contract

When leasing a vehicle, different models are available that differ fundamentally from one another. Residual value and mileage leasing are the most frequently offered variations.

- Leasing for beginners: residual value leasing

In residual value leasing, an amount of money is determined for the residual value at the time the leasing contract is concluded. This indicates what value the vehicle is likely to have after the end of the lease term. However, this alone creates a risk for you. The value determined at the start of the leasing period does in fact rarely match the residual value of the leasing vehicle. The reason is that a lot has changed in the meantime. The value of the vehicle may be reduced if the market situation has changed or the calculation was too optimistic. Furthermore, interim defects due to accidents or other damage may lead to an impairment.

- Leasing for beginners: kilometer leasing

With kilometer leasing, the contract includes how many kilometers the vehicle is expected to drive per year. At the end of the contract period, this figure may have been greatly exceeded or fallen short of. In the event of an overrun, an additional payment is usually contractually stipulated. However, it may also be the case that a corresponding agreement is missing in the event of a shortfall, so that no compensation is made in this case. Therefore, when concluding the leasing contract, pay attention to which passage was included in the contract for this situation.

Are there any other costs besides the monthly rate?

Lessees have to expect some additional costs when taking over the vehicle. When leasing a new car, transfer costs are required in most cases, which can amount to up to 1.000 euros. You also have to pay fees for registering with the road traffic office and the license plates. In addition, vehicle taxes are due as well as contributions to vehicle insurance.

When concluding the insurance contract, you must ensure that you have to take out comprehensive insurance in addition to liability insurance. It is also advisable to arrange a so-called GAP insurance. This occurs in the event of a total loss. Otherwise, you must bear the risk of replacing the difference between the current value and the replacement value in the event of such damage. A corresponding passage can be found in most leasing contracts, since comprehensive insurance only replaces the current value.

Conclusion: A guide to the car leasing contract helps to better understand leasing contracts

Many lessees are not aware of the type of contract at the start of the lease. In most cases, this only becomes apparent in the event of a problem. It is therefore important to read instructions for the car leasing contract before concluding the rules. You are well equipped to understand the many details of the leasing and to have individual agreements included in the contract if necessary. Most leasing companies are flexible in this regard and are happy to respond to customer requests.