Private leasing is becoming increasingly popular with motorists. However, it is important to take the time to understand a few basics to avoid any unpleasant surprises.
Operational leasing is an ‘all-inclusive’ rental contract. Reserved for people residing in Luxembourg, it allows you to use a car for a predefined period and mileage. Depending on the contract, it may include insurance, maintenance, tyre replacement and sometimes roadside assistance. Leasing is offered either by a lessor (specialised company), the manufacturer or the dealer. The car remains the property of the leasing company, but the driver is liable for traffic offences and must pay any fines. Here are a few things to keep in mind.
‘All-inclusive’: pay attention to the details
‘All-inclusive’ slogans are appealing, but it is essential to check what they cover. Some services may be excluded or charged as extras. For example:
- Are winter and summer tyres included?
- What does the included insurance cover? Is there driver protection? Coverage in case of theft of personal items from the vehicle? An excess?
Duration and mileage: two key factors
Monthly payments depend mainly on:
- The duration of the contract (often between 2 and 5 years)
- The annual mileage (generally between 10,000 and 25,000 km)
The higher these parameters, the higher the monthly leasing cost. Most leasing companies offer online simulators to estimate the cost.
Be sure to check:
- Excess mileage: each additional kilometre is charged (e.g. €0.15 per km). Exceeding the limit by 1,000 km can cost €200. Some companies refund unused kilometres, but this must be specified in the contract. Tip: if you are unsure, choose a slightly lower mileage. The cost of additional kilometres is often moderate.
- Early termination: read the clauses on extensions or early returns. Fees may apply, but some companies deduct the insurance for unused months.
Early return: pay attention to the mileage calculation
Returning the vehicle before the end of the contract can be expensive. That’s why you need to be sure about how mileage is calculated. Example:
- Contract: 24 months, 10,000 km/year (20,000 km in total)
- Return: 2 months before the end of the contract, with 21,000 km on the odometer
- Rate: €0.20/additional km
You might think you owe €200, i.e. 1,000 additional km x €0.20, but that is not necessarily the case.
If the lessor prorates, the ceiling increases to 18,333 km for 22 months. Result: an excess of 2,667 km, or €533!
Don’t overlook the deposit
Leasing rates are sometimes very attractive, with prices starting at €150/month. In your calculation, you must also take into account the possible deposit to be paid at the outset, often between €2,000 and €5,000. In addition, the lessor may require a payment of 2 to 3 months’ lease as a guarantee (recoverable at the end of the contract). Our advice is to carefully calculate the total cost before committing yourself.
Damage and return: the sensitive issue
When you return the vehicle, an inventory is carried out. Scratches, damaged rims, stained seats… any damage can be charged for, sometimes at a high cost, as the lessor has to repair the vehicle to re-lease or sell it afterwards.
Our advice: ask if the leasing company applies an assessment scale (e.g. Renta standard). This standard defines acceptable damage (e.g. scratches < 8.5 cm or dents < 25 mm without damaged paintwork). Sometimes, it is better to repair minor damage yourself before returning the vehicle.
Can you buy the car at the end of the lease?
It depends on the initial contract. However, in practice, many leasing companies accept a buy-back option even if it was not originally planned. It costs nothing to ask for a buy-back offer afterwards. It is up to you to decide whether the offer is attractive.
Take your time!
Cars are an emotional purchase. However, as with any purchase, take the time to read the terms and conditions carefully and ask any questions you may have before signing. There are no ‘stupid’ questions when it comes to a financial commitment! Talk to your friends and family. Above all, carefully assess your financial capacity.
What is the role of private leasing in Luxembourg?
According to the House of Automobile, which conducted a survey with more than 13,000 respondents, 100% electric vehicles (BEVs) are particularly prevalent in the financing method known as ‘private leasing’. Thus, 44.4% of respondents who own a 100% electric car acquired it through this type of financing.
Company leasing comes in second place with 27.4%. In comparison, only 3.9% of respondents said they had a plug-in hybrid electric vehicle (PHEV) on private lease, and 6.4% had a mild hybrid vehicle. Private leasing and company leasing therefore have a significantly higher density of electric vehicles.
According to the survey, the motivations for switching to electric are primarily non-financial: environmental protection is the main factor, followed by driving pleasure. While the price plays a lesser role, concerns about range continue to fuel the debate. However, loyalty to all-electric vehicles is confirmed: almost no one wants to return to combustion engines. In detail, 94.8% of respondents who drive electric vehicles through private leasing say they are convinced they will stick with this technology for their next vehicle.
Finally, the study reveals that private leasing plays an important role in future purchase intentions. Thus, 44.8% of people already in private leasing wish to continue with this option for their next vehicle, 9.2% do not, while 46% remain undecided.
