Is private leasing what’s next for you?

How private lease keeps you on the move, for less

November 27, 2019

When private leasing comes up in social settings, opinions are often divided. ‘Private lease is just an expensive loan’ or ‘too good to be true’ are often heard comments. The fact is that, in many cases, a private lease is cheaper than buying a (new) car. The key lies in ‘efficiencies of scale’. Here are six reasons why leasing can be more cost-effective than buying.

1. Purchase cost

Whereas a consumer buys one car, leasing companies buy hundreds at a time. That brings huge economies of scale—out of reach for private buyers, no matter how good your negotiation skills are.

2. Insurance

When a leasing company takes out car insurance, it does so for hundreds of cars at a time, and therefore at a much lower insurance premium. LeasePlan even has its own insurance branch within the company. These savings are then passed on to the drivers.

3. Maintenance

Leasing companies have national networks in place with maintenance and repair vendors. Due to the high numbers of cars are significant, they can negotiate rates and make agreements with these vendors to ensure drivers have access to the best service and repairs 24/7 at sharper rates.

4. Repairs

When you own a car, you pay for repairs and maintenance as they happen. Often these costs end up higher than you had hoped. Leasing companies use their experience in the leasing market to estimate the chance of repairs and maintenance accurately and subsequently negotiate lower reparation rates from their network of vendors.

5. Motor vehicle tax

Leasing companies generally establish their offices where the motor vehicle or road tax is the lowest. In the Netherlands, this is Noord-Holland. Unless you happen to live in this province yourself, you pay a higher tax when you own your own vehicle.

6. Resale value

When a leasing contract comes to an end, the car has to be sold. This is another area where a leasing company is in a much better position than a private car owner. LeasePlan even has a resale organisation - CarNext - that resells lease cars in bulk. This is a much more efficient system than selling your old car online or through a car dealership.

Conclusion

Thanks to these six factors, leasing a car privately is often cheaper than buying a new car, even when you buy a second-hand car. And yes, a leasing company wants to make a profit too. But as long as it saves you money and hassle, a private lease is a great way to drive a brand new car without using up your savings or taking out a big loan.