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Car leasing: operating lease or finance lease

A good way to buy a new or used car is to use leasing. Leasing companies and banks offer two main types of leasing for buying a car: operating lease and finance lease. Let’s take a closer look at the differences and similarities between these types of leasing and give you advice on how to choose the best deal for you.

Operating lease

Operating lease is a type of lease where you pay for the use of your car. Operating lease is suitable if you don’t want to become the owner of the car when the lease expires. The lessee has to make monthly lease payments and, at the end of the lease period, the car dealer will have to buy back the leased vehicle for the residual value, but you also have the option to buy out the car yourself or exchange it for a new one.

The down payments may vary from one lessor to another. In Coop Bank leasing, the down payment starts from 0%. The higher the down payment, the lower the monthly payment.

When you return the car, it must be in good condition, taking into account the natural wear and tear of the vehicle. The seller of the vehicle may set a kilometrage limit as a condition of operating lease, which may not be exceeded during the lease period. The kilometrage limit is determined on the basis of the specific make and model of the car and its potential residual value at maximum kilometrage.

Finance lease

In the case of finance lease, you become the owner of the car at the end of the leasing period. During the leasing period, the lessee pays the cost of the vehicle and interest in instalments.

The car belongs to the lessor until all the lease payments have been paid. Once all the conditions of the contract have been met and the lease payments have been made, ownership is transferred from the lessor to the lessee at the end of the leasing period.

It’s up to the lessee to choose the size of the monthly instalment – either to pay a larger amount each month, or to pay in smaller instalments and leave a larger final lease payment. The latter is finance lease with residual value.

In general, the monthly instalment for finance lease is higher than for operating lease (unless you have opted for finance lease with residual value).

Operating lease vs finance lease – which one to choose?

When choosing the type of lease, you should consider whether or not you want to become the owner of the car at the end of the leasing period – operating lease gives you the option to buy the car back, while finance lease means that the car will be transferred into your name at the end of the lease and after all the obligations have been paid.

You should also review your financial capacity to pay monthly instalments and the residual value. Do you want to pay larger or smaller amounts every month? What is the residual value at the end of the leasing period? Where will you get the amount needed to pay the residual value, which may be several thousand euros? .

You can find cars with particularly good leasing conditions in our car store. Once you have selected a suitable vehicle, you can fill in a leasing application online. Once we’ve received your application, we’ll make you a personal offer. Ask one of our lease administrators for more information.


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