Moving to Germany or new in Germany? Check out our Resources Page for all the help you need!
Want to drive a car in Germany but cannot afford to buy one? Leasing a car in Germany can be an option for you. In this article, you will find all you need to know about leasing a car in Germany. This includes the pros and cons of leasing, how to find the best car leasing deal, who should lease a car, and the requirement.
We have also included different factors for you to decide if you should lease or buy a car in Germany. Last but not least, we will talk about car subscriptions – an alternative to leasing for those who prefer flexibility.
A summary for the busy people
Check out these websites if you want to find the best deal when leasing a car in Germany:
Null-leasing.com: No down payment is needed. Only mileage leasing. Both new and used cars. Electric cars and Jahreswagen are also available. As cheap as below 100 EUR per month.
Leasingmarkt.de: Both new and used cars. Electric cars are also available. As cheap as below 100 EUR per month.
If you only need a car for a short period and prefer flexibility, use a car subscription.
Finn: Fixed monthly price includes all costs except fuels. No down payment is needed. Subscription starts from one month. 100% online process. Deliver the car to your home for free.
Leasing a car in Germany – How does it work?
A long-term car rental
Leasing a car in Germany is like renting a car for the long term. When you lease a car, you can enjoy driving a new car for a specified period without buying it. So, you do not need to have a lot of cash for the car purchase or take out a big car loan.
How does it work?
To lease a car, you will have to sign the lease contract and make a down payment. The contract usually lasts for two to four years.
During this time, you will need to pay a monthly fee. The fee amount is based on different factors such as your car’s model, brand, features, age, mileage, etc. This monthly fee is usually cheaper compared to paying a car credit.
During the lease period, you can keep the car and drive it. Even though you are not the legal owner of the car, you are responsible for the maintenance, repairs, tax, insurance, etc. Sometimes, your lease contract may include these costs. But it means that your monthly leasing rate will be higher.
- Driving in Germany – German driving license and driving rules
- Car Insurance in Germany – 13 Ways to Save Money
What are the two types of leasing?
There are two types of leasing: mileage leasing and residual value leasing.
Mileage leasing (Kilometerleasing)
With mileage leasing, your monthly leasing rate will be calculated based on your mileage. When you sign the lease contract, you will have to estimate the mileage you need. The amount of mileage will be stated in your contract. The more mileage you need, the higher your monthly leasing rate is. The average yearly mileage is about 10,000 kilometers.
At the end of the contract, the leasing company will look at how much mileage you have used. If you used more mileage than what is stated in the contract, you will have to pay extra. On the other hand, if you used less mileage, you will get some money back.
When you sign the lease contract at the beginning, the contract should specify the price you have to pay extra in case you use more mileage. Make sure that your lease contract also states that you can get your money back in case you drive less. Without this clause in the contract, the leasing company may refuse to pay you back even if you use less mileage.
A tip from ADAC: the price you have to pay extra if you drive more, and the refund you can get if you drive less should be at the same rate. The rate should be specified in your lease contract. Don’t sign the contract if that is not the case!
Residual value leasing (Restwertleasing)
With residual value leasing, your monthly leasing rate will be based on how much your car is worth at the end of the lease period. Your monthly leasing rate will be lower if the residual value of your car is higher.
When you sign the lease contract at the beginning, the leasing company will estimate the residual value of your car at the end of the lease period. This value will be stated in your contract.
At the end of the lease period, if your car is worth less than what is stated in your contract, you will have to pay the difference. On the other hand, if your car is worth more, you can get some money back.
Your car may be worth less in the end if there are any damages. It may also be worth less if there is a change in the market situation that is out of your control. For example, if there is a new legal requirement on cars relating to environmental protection. So, with residual value leasing, you will have to bear the risk in case the residual value of your car decreases.
A tip from ADAC: some leasing companies may estimate a very high residual value on purpose. This is so that the monthly leasing rate appears to be cheaper. At the end of the contract, the leasing company may tell you that your car is not worth that much and you will have to pay a high fee. Therefore, make sure you know what is the realistic residual value of your car before signing your contract!
What happens at the end of the lease period?
At the end of the lease period, you will usually have to return the car. In this case, the leasing company will check the car to see if there are any damages. If so, you will have to pay for it.
With mileage leasing, the leasing companies will look at the mileage. You will need to pay extra if you exceed the mileage stated in your contract. With residual value leasing, you will have to pay the difference if the residual value is less than what is stated in the contract.
After returning the car, you can lease another new car if you want. Some lease contracts have a purchase option in the end. In that case, you may choose to buy the car at the end of the lease period. You will have to pay the agreed price to buy the car.
How to find the best car leasing deal in Germany?
You will find many different companies offering car leasing in Germany. You can lease a new car as well as an old car. However, I recommend sticking to large, well-known companies with good reputations.
Why? Even if the monthly leasing rate is cheap, there may be hidden costs and you may have to pay a lot when you return the car. So, choosing a reputable company can help to avoid any bad surprises in the future.
If you want to find the best car leasing deal in Germany, check out the below websites.
- The monthly fee is as low as under 100 EUR
- No down payment needed
- No hidden costs
- Over 10,000 different car offers
- New or used cars are available
- One-year-old used cars (Jahreswagen) are available
- Electric cars are available
- Offers come exclusively from reputable contract dealerships
- Direct contact with the dealers
- Only mileage leasing
- The monthly fee is as low as under 100 EUR
- Thousands of leasing offers
- Direct contact with the dealers
- Different brands and manufactures
- Both new and used cars
- Electric cars are available
How much does leasing a car cost in Germany?
To lease a car, you will usually have to pay a down payment at the beginning. The amount is usually up to 10 percent of the car price. You can also choose not to pay the down payment. In that case, your monthly leasing rate will be higher.
Besides the amount of your down payment, your monthly leasing rate is based on many different factors. For example, the car you choose, the services and features included, the mileage, etc. In 2021, the average monthly leasing rate in Germany was 243 EUR per month.
On top of the down payment and the monthly leasing rate, you also have to pay for any maintenance, repairs, taxes, and insurance. Some lease contracts may include these costs with a higher monthly lease rate.
Besides, if there are any damages to the car or if you drive more mileage, you will also have to pay extra when you return your car.
The pros of leasing a car in Germany
Below are some advantages of leasing a car in Germany:
Drive a new car without buying one
New cars depreciate a lot in the early years. And they are expensive to buy. When you lease a car in Germany, you can drive a new car without paying a large investment. Once your lease end, you can lease another new car. So, you can keep driving new cars at a relatively low cost.
If you are self-employed and you need a car for business use, the monthly leasing rate is tax deductible. This makes it more financially attractive for self-employed people to lease a car.
Relatively low monthly leasing rate
If you take a loan to buy a car, the monthly loan repayment is likely higher than the monthly leasing rate. So, leasing a car can be more affordable and better for your cash flow.
No big investment or car loan
Unlike buying a car, you don’t need to make a big investment at the beginning. This is good for people who want to drive a car but don’t have a big sum of money or don’t want to commit to a big loan.
Easy financial planning
When you sign the lease contract, you will know the lease period and the fixed monthly leasing rate. So, you can plan your expenses accordingly.
You may get your money back
Depending on your lease contract, you may get money back in the end if you drive less mileage.
The cons of leasing a car in Germany
Below are some disadvantages of leasing a car in Germany:
Your credit rating matters
If you have a negative credit rating (SCHUFA) in Germany, it will be difficult for your to lease a car. For ways to check and improve your credit rating, read this: What is SCHUFA – How to get SCHUFA in Germany?
With mileage leasing, you have limited kilometers to drive during your lease period. If you drive more, you will have to pay extra when you return your car.
Extra payment at the end of the contract
If you cause any damage to the car, it can be very expensive. I accidentally damaged the door of my car in the car park. And I had to pay a thousand EUR extra when I returned the car to the lessor.
Cannot quit early
We once leased a car for 3 years. By the end of the second year, we planned to move to another country. So, we called the leasing company and asked if we can quit our lease contract earlier.
There is almost no way to quit the contract earlier, no matter what. We were asked to pay the monthly leasing rate for the rest of the 12 months even if we returned the car 1 year earlier.
Even though you can keep and use the car, you are not the legal owner of the car. It means that you cannot sell the car. Unlike a loan repayment, the monthly leasing rate is a pure expense and not an investment.
Repair and maintenance
When you lease a car in Germany, you will be responsible for regular maintenance and repairs. Usually, you cannot freely choose your repair shops. You will have to go to specific shops authorized by the leasing company.
Your lease contract may have other restrictions. For example, you may not let other people drive the car depending on your lease contract.
Who will find leasing a car in Germany interesting?
Leasing a car in Germany can be interesting for the below people:
- People who do not have enough money for the down payment for buying a car
- People who are not able to get a car loan
- People who want to change cars frequently
- People who want to drive new cars without putting a lot of investment
- Self-employed people can claim the monthly leasing rate as tax-deductible expenses
- People who need to drive a lot. Buying their own cars means heavy depreciation in the car’s value.
- Company cars for the employees are usually offered via leasing.
What is the requirement for leasing a car in Germany?
The requirement for leasing a car in Germany
To lease a car in Germany, you need to prove that you are financially stable. It means that you should have a regular income. Besides, your work contract should at least cover the whole lease period.
Besides a stable income, your income should also be high enough to cover your regular expenses plus the monthly leasing rate. The leasing company will evaluate your financial situation based on your family status.
It is also important to have a good credit score in Germany. The leasing company wants to make sure you can afford to pay the monthly leasing rate for the whole period.
The document needed for leasing a car in Germany
One good thing about leasing a car from a leasing company is that it will usually take care of the paperwork and registration of the car. So, it will be more convenient for you.
The documents required to lease a car in Germany can differ depending on the leasing company. In general, you will have to fill in an application form from the leasing company. You will have to provide your personal and financial data in the form. Besides, you will also need the following documents:
- Your ID or passport
- Your driving license
- Your residence permit
- Your registration certificate to prove your address (Anmeldung)
- Your salary slips in the last 3 months
- An eVB number
If you are leasing a car for your business, you will also need to provide additional documents such as your company’s registration paper and financial reports of your business.
If you cannot meet the requirement from the leasing company, there are also ways to get around it. For example, you can have a guarantor who guarantees to pay the leasing company in case you fail to pay.
If you don’t have a stable income but have sufficient savings, you can also choose to pay a higher down payment at the beginning. This can reduce the monthly leasing rate during the lease period. And you will have a higher chance to get a lease contract successfully.
Leasing vs financing your car in Germany
According to DAT, most private car buyers finance their cars (62%) vs leasing (22%) in 2020. The rest of the 16% buy their cars with their own resources.
So, is it better to lease or finance your car in Germany?
The answer is: it depends.
It depends on your situation. You should ask yourself the following questions.
Lease your car
Finance your car
How long do you need your car?
Temporarily (e.g. 2-3 years)
Restrictions when using the car, e.g. modification
Big initial money for a down payment
Proceed from selling your car
In case of damages
Pay penalty and follow the rules of the leasing company
You can decide how to deal with the damages.
Get rid of your car earlier
Still need to pay for the rest of the lease period.
Sell your car any time.
Tax advantages for self-employed people
The monthly leasing rate and operating costs are tax deductible.
Only the car loan’s interest and operating costs are tax deductible. But you can claim depreciation expenses.
Change your car and drive new cars frequently
Now, let’s explain a bit more.
1. How long do you need the car?
If you just need a car temporarily (e.g. for 2-3 years), you may want to lease a car. If you need a car for a very short term (e.g. 6 or 12 months), you can consider a short-term car subscription. If you plan to have a car for the long term, you may want to buy one.
2. How much freedom do you want?
If you own your car, you can pretty much do anything with it. If you lease a car, you don’t have that freedom. Even though you can use the car, you are subjected to the leasing terms.
For example, you cannot modify your car. There may also be restrictions on who can drive the car and where you can drive the car (e.g. within the EU).
3. Do you have enough money for the down payment?
If you want to get a reasonable car loan, you may have to pay a big down payment. If you lease a car, you may choose to pay a smaller down payment and compensate for it by paying a higher monthly leasing rate.
4. What is your monthly budget?
The monthly leasing rate is usually lower than the monthly loan repayment. So, if you don’t have much money to spare per month, you may choose to lease a car.
5. Do you want to sell your car later?
Even though you may pay less per month if you lease a car, don’t forget that the car is not yours. It means that everything you pay per month is pure expenses that you will never get back.
On the other hand, if you buy a car, even though you may pay more at the beginning and per month, you may sell your car and get a big sum of money in the end.
Personally, I prefer buying a car if I have enough money. It is because in the long run, when I look back at all the costs that I have paid, it is cheaper to buy than to lease. Of course, this is only the case if I maintain my car well and sell it later at a good price.
6. What do you want to do in case of damages?
I once leased a car and damaged its door in a car park. There was a dent at the door. I had to report it to my leasing company. And the leasing company required me to change the whole door! That cost me a lot of money.
If it was my own car, I wouldn’t have done that because the car was still functioning. So, I can decide what to do with the damages if I have my own car. Any damages will affect the resale price of my car.
But if I lease a car, I will have to follow the rules of the leasing company. There can be a big penalty when I return the car in the end in case of any damages.
7. How much do you need to drive?
There are usually restrictions on the mileage if you lease a car. So, in case you need to drive a lot, it may be better to buy a car.
8. What if you don’t need the car anymore?
In my opinion, this is a big disadvantage when leasing a car in Germany. Let’s say you decide to move back to your home country. So, you don’t need your car anymore.
If you lease your car and the lease period is not over, you may still have to pay for the rest of the lease period, even though you return the car earlier.
If you own your car, you can just sell the car any time you want. You are not committed to any fixed period.
9. Are you self-employed?
Leasing a car can be more attractive to self-employed people. It is because they may be able to claim the monthly leasing rate as tax-deductible expenses.
If you buy a car, only the car loan’s interest is tax-deductible. But you can claim depreciation expenses on your car.
If you are self-employed, the operating costs of the car such as fuels are tax-deductible. This doesn’t matter if you buy or lease your car.
But you won’t have all these tax advantages if you are using your car privately.
10. Do you want to change your car frequently?
If you do, leasing is a better option. You can drive new cars all the time and change your car frequently. This is a big advantage over having your own car.
5 Tips for leasing a car in Germany
1. Know your right
For residual value leasing, you have 14 days by law to quit your lease contract after signing it. However, this law doesn’t apply to mileage leasing. But many leasing companies do offer the 14-day cancellation voluntarily.
2. Take super good care of your leased car
The leasing company will check the car thoroughly when you return it at the end of the lease term. Your car should have a good condition like when you lease it at the beginning. If not, the penalty can be high.
3. Read the details in your lease contract
Different lease contracts can have different restrictions on how you can use the car. For example, if you can let someone else drive it, or if you can drive it abroad. It may also state what repairs are needed and how often you should do them. It is also important to do the repairs at the authorized repair shops specified in the contract.
Not following these rules means a violation of your lease contract. The leasing company can take back your car earlier and you may need to pay a heavy penalty.
4. Cancellation before the lease period
In general, it is not possible to cancel your lease contract before the end of the lease period. It doesn’t matter if you move to another country. Or even if you have completely crashed your car and it is no long repairable. You will still have to pay the rest of the monthly leasing rate until the end of the lease period.
The only possible way to cancel earlier is to find someone else to take over your lease until the end of the lease period. But this may not be easy to do.
5. Best way to transfer money internationally
Sometimes, you need to make a down payment for leasing a car in Germany. If you have to transfer money from your home country to finance this down payment, use a P2P transfer service such as Currencyfair or Wise. They use the real exchange rate (from Google) when you convert your home currency into Euros. You can save loads of money by doing so.
Currencyfair is also offering 10 free transfers to our readers now if you want to try it out for free.
For more details and different options to transfer money to Germany, check out this post: Transfer Money Internationally – Best Ways To Send Money To Or From Germany
Alternative to leasing – What is a car subscription?
Let’s say you want to have a car but you don’t want to sign a lease contract that ties you up for a few years. On the other hand, buying a car is not an option for you as you don’t have enough money for the down payment. So, what option do you have now?
In this case, you can consider a car subscription (“Auto Abo” in German). A car subscription works like a long-term car rental. You pay a monthly fee. And everything is included except your fuel. The car subscription period is much shorter than the lease period, meaning that you are much more flexible.
The advantages of car subscription
- The monthly subscription fee includes everything except fuels, e.g. registration, inspection, maintenance, insurance, tax, seasonal tire change, etc.
- No paperwork hassles
- Short subscription period: usually 6 months to 1 year. But some providers offer even 1 month or 3-month minimum subscription period.
- Flexible: some providers allow you to cancel your subscription with one month’s notice.
- You can change your car regularly
- You can drive new and fancy models at a relatively cheap price
- No need to worry about the depreciation of your car
The disadvantages of car subscription
- The monthly car subscription fee is usually more expensive than your monthly payment from leasing or financing
- You have no ownership of the car
- It can get expensive if you use a car subscription for the long term
- You cannot customize the car as you can only choose cars that are already configured, e.g. features and color
- Some providers may charge a starting fee when you sign up for a car subscription. So, it can get expensive if you change your car too frequently.
- There may be restrictions, e.g. mileage limit
- If you cause any damage to the car, you will have to pay for it when you return the car
- Young drivers may need to pay a higher price
- You may need to drive the car to a specific city to return it or pay a fee for someone to pick it up at your place.
Car subscription vs long-term car rental
So, what is the difference between a car subscription to long term car rental? You may ask.
In fact, there are only very subtle differences between the two. Car subscription providers usually offer a fully digital order process. You can order a car online without going anywhere. And the car will be delivered to your house door.
Another difference is that car subscription is usually very flexible in terms of the subscription period. As long as you take the car for the minimum subscription period (e.g. 3 months), you can cancel your subscription later quite easily. Or you can change to another car.
On the other hand, the car rental period can be less flexible. The rental period is stated in the contract and it is fixed. But note that this may not be always the case depending on the rental car providers. Some may offer contracts that are more flexible in terms of the contract period.
Besides, the car subscription price is usually cheaper than the monthly charge for long-term car rental.
Who should choose a car subscription?
A car subscription can be suitable for you in the below situation:
- You only want to drive during certain months of the year, e.g. biking in the summer and only driving in the winter.
- You don’t want to take care of other costs (e.g. insurance, tax, etc.) and paperwork
- You want to try out different cars before you decide which one to buy
- You only need a car temporarily, e.g. for several months or up to 2 years
- You want to test a different car technology, e.g. E cars
- You don’t know how long you need the car and want to stay flexible with the contract period
A car subscription is not for you if you need a car for many years. It can get very expensive in the long run. So, if that is the case, you should consider buying a car in Germany.
On the other hand, if you need a car for a very short time (e.g. several weeks), you may want to rent a car instead. You can find a rental provider in your area. So, it is easier for you to return the car. Note that if you return a car from a car subscription, you may need to drive your car to a specific city or pay a fee for someone to pick it up at your place.
How to get a car from a car subscription in Germany?
Finn is a car subscription provider in Germany that wants to make car driving as easy as online shopping. With Finn, you can just choose your car online and order it in less than 5 minutes. The car will then be delivered to your house door and you can start driving.
- All-inclusive fixed monthly price (except fuels)
- Price includes maintenance, insurance, tax, depreciation, etc.
- No down payment needed
- No hidden costs
- Short subscription period starting from one month
- Deliver the car to your home for free
- Support different climate projects
Using a car subscription from Finn gives you more flexibility compared to leasing or car purchase. Depending on the car model, some subscriptions run for 6 months, 12 months, or 24 months. But you can also find subscriptions as short as one month.
Leasing a car in Germany – Some useful German vocabulary
I have summarized some useful German words you should know when leasing a car in Germany.
Residual value leasing
Erstattung von Minderkilometern
Refund if you drive less kilometers
Purchase option (at the end of the lease contract)
Return (of the car)
I hope now you know more about leasing a car in Germany. Depending on your situation, you can choose between buying a car in Germany, leasing a car, or car subscription. Each of these options has its pros and cons. Make sure you understand the contract before you sign it.
Pin it for later:
Are you leasing a car in Germany? Or did you buy your car? Leave a comment below and share your experience!
Moving to Germany or new in Germany? Check out our Resources Page for all the help you need!