Today, more and more people and companies are faced with a dilemma: leasing or long-term rental? Both forms of car financing are gaining popularity, but which one is more profitable? In this article, we will take a closer look at both solutions, compare their advantages and disadvantages, and suggest who will be better suited to which financing model.
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What is car leasing?
Leasing is a form of financing in which a lessor (e.g. a bank or leasing company) buys a car and gives it to the lessee for use for a specified period of time and for agreed installments. After the end of the contract, the lessee has the right to buy the car for a predetermined value (usually symbolic).
There are two types of leasing:
- Operating lease:
- Leasing installments are tax deductible.
- VAT on leasing installments can be deducted.
- The car is depreciated by the lessor.
- After the end of the contract, the car returns to the lessor or the lessee can buy it.
- Financial leasing:
- The lessee depreciates the car.
- The leased object is entered into the lessee’s fixed asset register.
- VAT is paid once when concluding the contract.
What is long-term rental?
Long-term rental is a service under which the renter (CFM company) makes the car available to the renter for a certain period of time in exchange for a monthly fee. Long-term rental often also includes additional services, such as:
- Servicing and repairs.
- Insurance.
- Replacement car.
- Winter tires.
- Assistance.
Leasing vs. long-term rental – the most important differences
| Feature | Leasing | Long-term rental |
|---|---|---|
| Vehicle ownership | Lessor | Landlord |
| Vehicle log-on | Possible, usually at a low price | Usually impossible or at a high price |
| Depreciation | Lessor (operating) or lessee (financial) | Landlord |
| Tax deductions | Possible deduction of VAT and leasing installments (operating) | Limited deductions |
| Additional services | They are usually not included in the installment | Often included in the installment (service, insurance, tires) |
| Mileage limit | Lack | Usually mileage limit |
| Initial fee | Usually required | Usually none or low |
| Flexibility | Less | Greater |
Leasing or renting – which is more profitable?
There is no clear answer to the question of which is more profitable – leasing or long-term rental. The choice of the optimal solution depends on individual needs and preferences.
Leasing will be a better choice for people who:
- They want to buy the car after the end of the contract.
- They need a car for business purposes and want to take advantage of tax deductions.
- They have no mileage limit.
- They prefer freedom in choosing service and insurance.
Long-term rental will work for people who:
- They value convenience and comprehensive service.
- They do not want to commit their own funds to the purchase of a car.
- They do not need to buy the car after the end of the contract.
- They drive a predictable number of kilometers.
Additional factors influencing the choice
When choosing between leasing and long-term rental, it is also worth considering:
- Financial situation: Leasing usually requires a down payment, while long-term rental does not.
- Type of Car: Some cars are more available for leasing, others for rent.
- Contract length: Long-term rental offers more flexibility in terms of contract length.
- Promotional offers: Both leasing companies and CFM offer promotions that can affect the final cost of financing.
Summary
Both leasing and long-term rental have their advantages and disadvantages. Before making a decision, it is worth carefully analyzing your situation, needs and preferences. It is also a good idea to compare offers from different leasing and CFM companies to choose the best option.
