Car loan or leasing: compare the full costs

The monthly payment alone is not a fair comparison

When buying a car with a loan, you finance a purchase price and repay the loan. With leasing, you pay for the contractually agreed use of a vehicle; ownership generally remains with the leasing company. A smaller lease payment is therefore not automatically cheaper than a loan instalment. Different assets and commitments may remain at the end.

Compare the same vehicle over the same period with realistic usage. Include the down payment, ongoing payments, insurance, maintenance and the position at the end. Only then can you see which option suits your budget and plans. An advertised low interest rate alone does not answer this question either.

What ownership and usage mean in practice

In an ordinary purchase financed by an unsecured personal loan, you acquire the vehicle under the purchase agreement. Nevertheless, any special security arrangements should be checked. Selling the vehicle later does not automatically make the loan debt disappear. If the proceeds are lower than the outstanding debt, the difference still needs to be financed.

With leasing, the contract may specify usage, mileage, servicing and the vehicle’s condition on return. A residual value stated for the end of the contract is not automatically a guaranteed right to buy the car for that amount. If taking ownership later matters to you, ask for a written explanation of the precise agreement.

These costs belong in both calculations

• Down payment and other one-off payments.
• Loan instalments or lease payments over the same period.
• Insurance and any contractual cover requirements.
• Servicing, tyres, repairs, energy or fuel.
• Taxes, parking and other usage costs.
• Outstanding debt, expected sale proceeds or return costs at the end.

When buying, you may take a cautiously estimated resale value at the end of the comparison period into account in the economic calculation. However, it is not a guaranteed sum of money. With leasing, potential excess mileage and damage must be assessed under the contractual terms. A fair comparison uses realistic assumptions on both sides and explains the remaining uncertainty.

A simple example: if you only compare payments, you may ignore the vehicle you still own after buying and the return due under a lease. Conversely, it is wrong to treat the entire future sale proceeds as a guaranteed gain. What matters is the overall net financial burden over the chosen period.

What happens when your plans change

A change of job, less need to drive or a family change may make an early vehicle change worthwhile. For a cash loan covered by the Consumer Credit Act (KKG), Art. 17 provides a right to early repayment with a corresponding reduction in future interest and costs. Obtain a specific settlement statement for this.

Different rules apply to a leasing contract within the Act’s scope: Art. 17 para. 3 allows termination with at least 30 days’ notice at the end of a three-month leasing period. Compensation is determined by the contractual table under Art. 11. Ending the agreement early can therefore be considerably more expensive than simply paying the next monthly instalment.

Check the consequences before entering into the contract. If you are unsure how long you will use the vehicle, flexibility has an economic value. An attractive offer with a long commitment may become unsuitable if you need a change early on. Ask for a concrete example of termination at the point you consider realistic.

Even an inexpensive car needs a complete budget

Financing must account for more than the instalment. A vehicle generates ongoing costs even when it is rarely driven. Allow for repairs and insurance deductibles instead of using your entire reserve for the down payment. A cheaper used car may require less financing but bring different maintenance risks.

Cash loans within the KKG’s scope are subject to the statutory 36-month assessment. Leasing has its own creditworthiness assessment rules under Art. 29. A blanket statement that both products are assessed identically under the law would therefore be inaccurate. Existing commitments must remain transparent in a new application. The article Existing commitments in your budget explains the connections.

Which option fits your plans?

Buying may be attractive if you intend to use the vehicle for a long time and want to decide for yourself how to use or sell it. Leasing may suit a clearly planned period of use, provided the mileage, commitment and return terms fit. Neither option is inherently better for everyone.

Obtain comparable written offers and look at the total costs as well as the instalment. When financing over several years, do not let the debt outlast the car’s expected usefulness without considering the consequences. Our loan cost examples show how the amount and term change the financial burden.

Frequently asked questions

Do I automatically own the leased car at the end?

No. Any later transfer of ownership must follow from the specific agreement. The residual value alone is not a purchase right.

Is a lower lease payment always cheaper?

No. The down payment, running costs, return and final position must also be compared.

Can I end a car loan by selling the car?

Selling the vehicle alone does not end the loan. The outstanding debt and repayment arrangements must be clarified separately.

Sources and date

As at 13 October 2026. The applicable rules, individual assessment and contractual documents are decisive.

• Consumer Credit Act, Art. 8, 11, 17, 28 and 29

Lending is prohibited if it leads to over-indebtedness. A budget calculation is a non-binding indication and is not a credit offer.