Car leasing – an alternative to credit?


Although many drivers dream of a new car straight from the salon, most of them, after verifying their financial capabilities, decide to buy a used vehicle. Poland is still at the forefront of countries with the largest number of cars whose age exceeds 10 years. Such a result does not mean that we show far-reaching disregard for the technical condition of the vehicle and safe driving. On the contrary – it indicates a significant economic problem. Poles simply can’t afford to buy a new car, but is that a reason to give up this means of transport at all? An interesting solution in this situation seems to be car leasing for both companies and individuals. Let’s check how it works.

Leasing – what is it?

Those who buy a new car at least once thought about what leasing is for a car. We explain to others that this type of financing resembles installment sales to some extent. Until now, it was an option available mainly to entrepreneurs. However, currently natural persons can also use it. There are three forms of leasing to choose from: operational leasing – operating on the basis of a vehicle lease or rental, financial leasing – similar to installment sale, and consumer leasing – dedicated to private individuals. The procedure is very simple: we go to the salon of the brand, choose the car we are interested in, and then sign the leasing contract. Under it, the lessor (salon) buys a car and makes it available to us in exchange for the fees specified in the contract, i.e. leasing installments. It is also permissible to lease a car that has already been in it before, but the lessee has not decided to buy the vehicle.

Lease costs

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The leasing installment consists of two elements: a capital installment (repayment of the initial value of the car) and an interest installment on financing (interest calculated by the lessor). When deciding on a leased car, we must also remember about any initial fees – it can be e.g. 10-20% of the car’s value – as well as the final fee. How to calculate how much it will cost us to lease a car? The leasing calculator will be an invaluable tool here. It works exactly the same way as calculators calculating the cost of loans – bank or payday loans. We choose the car model at a specific price, determine the duration of the leasing contract, and the calculator calculates the amount of the monthly leasing installment. This will give us a preliminary view of the cost of such a solution – the others, such as initial and final fees, depend on the lessor’s offer.

Car leasing – how to choose an offer?

Let’s go back to different types of leasing for a moment. Their knowledge will be crucial when choosing, because not every offer will be suitable and profitable for us. In some cases, a cash loan or a car loan may be a better option. Financial leasing is an option for those who want the vehicle to automatically take possession of them upon payment of the last installment. In this case, another solution is also possible, i.e. completing the contract clause, assuming the obligation to buy a car for a certain amount after the contract expires.

Operational leasing is a financing method in which we have a choice to buy a car: we can, but we don’t have to. If we choose the first option, we have at our disposal leasing with high or low purchase. Leasing for a car with a high buyout assumes low monthly installments for using the vehicle, but a higher amount during the purchase transaction (from 25 to 60% of the vehicle value). When it comes to low-priced leasing, it’s the opposite. The monthly installments are such that the car is paid back during the term of the leasing contract. As a consequence, a payment of 1% of the vehicle value is enough for us to officially become its owners.

What is leaseback?

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Reverse lease combines both operational and financial characteristics. Thanks to this offer, an entrepreneur can maintain financial liquidity or improve a company’s budget. It is about selling the car by the entrepreneur to the company, but retaining the right to use it. Detailed conditions of use will be included in the leasing contract. It is worth remembering that it covers cars not older than three years.

Is it possible to lease used cars?

Leasing of used cars is possible. However, it is worth knowing that the specific conditions in this situation depend on the lessor’s arrangements. One of the restrictions in such situations may be the age of the vehicle. Please note that the vehicle age and financing period should not exceed 8 years. An example would be the ToyotaBank offer, in which the vehicle age and lease term is a maximum of 7 years.

What is consumer leasing for private individuals? What will be needed?

How to lease a car? Consumer leasing is a great alternative to a cash loan or car loan, if only because of the simpler procedures. At the same time, this does not mean that we will sign the leasing contract immediately. Just like in a bank, we have to prove our creditworthiness, so in the case of leasing we have to prove that we have leasing capacity. The conditions are not as strict as in the offer for entrepreneurs. Usually, it is enough to provide documents confirming our identity, income certificate and confirmation of payment of the so-called Initial rent, which is a percentage of the value of the selected car. The lessor will also ask us about the age, preferred duration of the leasing contract, model of the selected vehicle and its condition as well as the amount of the initial payment that we will be able to pay.

To go through the entire procedure of applying for a car lease, you must have a few basic documents. Among them are: two photo IDs, for example driving license and ID card. Then remember about the document confirming the source of income. It can be an employment certificate or an account statement. In addition, we will be required to insure the car throughout the entire procedure.

Car leasing – disadvantages

Regardless of whether we have our own business and sign a contract for leasing a company car, or whether we decide to take such a step as a private individual, let’s consider all aspects of such a move. We have to reckon with the fact that the value of the leased car will unfortunately be higher than if we wanted to buy the same model in the showroom. The difference can be up to several percent. Another shortcoming is really severe penalties for those lessees who are in arrears with repayments of subsequent installments. In this respect, the consequences can be much more severe than in the case of the most expensive payday loans. Not only that – the whole thing may end with the termination of the leasing contract. Then we will be without a car, and without the money we have previously invested, and “richer” for additional financial penalties.

Here, another important note – the repayments of subsequent installments apply even if, for example, due to an accident, the vehicle is lost. This is a risk that you need to take if you want to drive a newer, better and safer car. Let’s not forget that the costs of repairing the car, those that are not the fault of the lessor, are on our side. Let’s include them in the monthly expenses along with the leasing installments.

Car leasing – advantages

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On the other side of the barricade there are undoubted advantages of leasing as sometimes the only way to finance a car. It is especially felt by individuals. Due to the fact that even for the duration of the contract, the car will belong to the lessor, the requirements for customers will not be particularly high. Not only that – you can usually count on preferential insurance conditions.

It is also tempting that after termination of the contract, the funds paid will make the car our property. In the meantime, if we want to use some banking products, it will not prevent us. The leasing contract does not affect creditworthiness in any way – banks do not treat it as a financial liability. Despite this, late installments can be recorded in the debtors database, which raises problems when applying for a loan. Considering all these issues, can it be clearly judged whether leasing a car is a good solution? We answer diplomatically – it depends on our financial situation. A leasing contract, without the cost of repairs and fuel, is a burden of at least PLN 300-400 per month if we choose an economical mid-range car. We know best if we can afford it.

Delay in leasing repayment and consequences

Delay in leasing repayment and consequences


Pursuant to the provisions of the Civil Code, the lessor has the right to terminate the contract with his client, if he is in arrears with the settlement of at least one installment or after setting a second repayment date he still has not fulfilled his obligation. It is worth remembering that if the contract does not specify other conditions, the termination should be provided in documentary form. What does the termination of the car leasing agreement involve? This means for the customer to return all outstanding installments and those that have not yet become effective. We will simply be required to settle all payments contained in the contract. You will probably find the details in the contract we signed. In addition, we should also remember about any fees for debt collection proceedings or requests for payment.

Termination of the leasing contract for the car by the lessee

When the contract is terminated by the customer, we also have to reckon with the necessity to pay all planned installments. Therefore, if we expect to avoid paying the debt in this way, we can forget about it. The repayment rules will be the same as in the case of termination made by the lessor. In addition, we must know that we may be exposed to additional charges to the Tax Office. The leasing contract must last at least 40% of the depreciation period for entrepreneurs to avoid additional costs. So for passenger cars it will be about 2 years. Otherwise, it will be necessary to refund the entire transaction tax, as the termination of the contract will prevent the inclusion of these fees in the costs of the enterprise.