Car loan or lease for a used car? Real numbers

When bought with a consumer credit the car becomes your property from day one, while under financial leasing it belongs to the leasing company until the final instalment. Everything else grows out of that small detail: different insurance requirements, different freedom and a different total price. The same 12,000-euro car can end up costing 13,900 or 14,000 euros depending on the contract, so run the numbers before signing.

What belongs to you straight away, and what to the company

Ownership decides all the remaining differences. With a consumer credit the money is transferred to you, you buy the car and use it freely. Under financial leasing the car is formally controlled by the company until the last payment, so the company sets the conditions.

In practice this means leasing almost always requires CASCO insurance, which runs to several hundred euros a year. Modifications and subletting are often forbidden, and missed payments can end with the car being taken away. Buying on credit means the risk is entirely yours, but so is the freedom.

The same car: 13,900 or 14,000 euros

Take a typical situation. The car costs 12,000 euros, you put down a 2,000-euro down payment, and the remaining 10,000 euros are financed over five years at roughly 7 percent annual interest.

The monthly payment comes to about 198 euros. Over the whole term interest adds up to about 1,880 euros, so the car really costs you about 13,900 euros. Now stretch the same contract to seven years: the monthly drops to some 166 euros, but the total grows to about 14,000 euros. Delaying payment quietly costs hundreds extra, before even counting the mandatory CASCO.

From here follows the main homework rule: find the total amount payable in the contract and compare exactly that. The monthly payment is marketing; the total sum is reality.

Three mistakes that cost the most

The first mistake is too small a down payment. The less you pay upfront, the larger the financed amount and the longer you keep paying interest. If you can set aside 20 percent, set it aside.

The second mistake is a term longer than the car's age. A five-year contract on a fifteen-year-old car means that in the final years you are paying for a machine whose market value has already fallen below the remaining debt. This is called negative equity, and it usually ends with a fresh loan on an even older car.

The third mistake is skipping the fine print. From the contract you should see three things clearly: what early repayment costs, whether larger instalments are allowed without penalties, and what administration fees apply. Individual tens of euros listed there never disappear.

Used cars play by different rules

For new cars leasing companies happily offer residual-value schemes where one large final payment is postponed to the end. On used cars such schemes are riskier because the residual value is unpredictable. A few years later you can face the choice "pay 4,000 euros or hand back a car worth 3,000".

For cars older than ten years, leasing terms are often stricter and the term shorter. Sometimes plain consumer credit for an older car comes out both cheaper and simpler, so compare the two options.

We suggest this order when buying: first decide what kind of car you want; the family cars under 15,000-euro review and the running-cost comparison help you picture it. Then calculate the monthly payment you could carry without strain, remembering that insurance, fuel and upkeep share the same budget. Finally, inspect the car itself before signing any contract, because a financed car with hidden problems charges you twice.

Cars with prices and possible financing options wait in our search: the terms are visible immediately, with no hidden fees.