Buying vs Leasing a Car in the Netherlands: Pros and Cons

If a bicycle is no longer enough for your daily transportation in the Netherlands, you might consider buying or leasing a car. Both will offer you the advantages of having a vehicle at your disposal, yet, these two options have their pros and cons. While a car lease is the only solution for some, others would be better off purchasing their own four-wheel.

A car lease is beneficial for anyone with a small budget or who doesn’t qualify for a loan in the Netherlands. Leasing a vehicle also makes sense if you plan to use a car for a short time (under 5 years); for longer periods purchasing a used vehicle is a better and cheaper solution due to the depreciation.

If you need a car in the Netherlands, you have two options: to buy it or lease it. Leasing a car is a popular option among expats. It has many pros over purchasing, including lower monthly rates, no insurance costs, and zero maintenance and repair costs.

Car purchase requires upfront investment and commitment. Hence, car leasing is a great option if you aren’t ready for it. If you are buying a car in the Netherlands, check out the best used car websites.

Is it better to buy or lease a car in the Netherlands?

Leasing is considered to be something in-between financing and car rental. Although car leasing is very popular in the Netherlands, a car purchase offers other advantages and is, in many cases, cheaper. So what should you choose: to purchase a vehicle or lease it?

Depending on your situation, you should consider which is the most advantageous option: to lease a car, purchase it with your own capital or take out a loan.

Before you make a decision, read about the cost of car ownership in the Netherlands.

How does car leasing work in the Netherlands?

Nowadays, people want to stay flexible; as a result, car leasing is becoming increasingly popular in the Netherlands. And rightly so – with a car lease, you don’t have to worry about road tax, car insurance, or maintenance; this is all taken care of by the leasing company.

Currently, there are over 1,15 million leased cars in the Netherlands. Generally, car leasing in the Netherlands works the same way as it’s in other countries. It’s similar to a long-term rental. You can use a vehicle as long as you pay the monthly rent.

The only responsibility, or rather need, you to have as a lessee is to fill up the tank. Besides, a car lease is pretty affordable; you can drive a small car for just 180 EUR per month.

Facts about car leasing in the Netherlands:

  1. With private leasing, you aren’t an owner but a lessee for a fixed period of at least 12 to 60 months.
  2. You pay for the fuel and traffic fines.
  3. You pay a fixed monthly rate which includes lease, road tax, depreciation, insurance, motor vehicle tax, repairs, tires, and maintenance.
  4. When the lease period ends, you give a car back to the leasing company or extend the contract. You also pay for damages if there are any.

A private lease can sound like a great deal, but be aware of the possible disadvantages associated with it.

Also read this article about how to buy a car in the Netherlands as a foreigner.

Scope of a lease contract

What does a lease contract include? With leasing, you are 100% covered and don’t need to worry about car owner’s concerns, e.g., car insurance.

Your leasing agreement in the Netherlands will usually include:

  • Car insurance
  • Road tax
  • Passenger insurance or accident insurance
  • Breakdown assistance in the Netherlands and abroad
  • Replacement car in the Netherlands and abroad
  • Winter tires
  • Mileage limit – the mileage usually starts at 10,000 kilometers per year.

Contract duration

The typical length of a new car lease in the Netherlands is 48 or 60 months (4 or 5 years). Used cars are leased for shorter periods, usually between 24 and 36 months (2 or 3 years). The longer the lease, the lower the monthly payments are.

Shorter lease periods are particularly suitable for expats with limited work contracts. If you cancel your lease agreement, high fees are due. Therefore, consider a shorter contract duration if unsure.

Mileage limit

Leasing agreements include limits on kilometers you can drive per year. The limit usually ranges from 10,000 km to 20,000 km per year. You shouldn’t underestimate the distances and pick the longest possible mileage. Otherwise, be ready to pay fees at the end of the lease for extra mileage.

Depending on the size of the leased car, you will pay between 0.05 EUR and 0.16 EUR per extra kilometer driven.

Leasing companies offer the choice between paying a higher rate for a higher mileage limit or paying extra by the end of the lease. The first option is undoubtedly cheaper. If you travel, let’s say, 12,000 kilometers, it’s always better to agree to a limit of 12,000 km than to take 10,000 km plus an additional 2,000 extra.

Cost of car leasing in the Netherlands

Surprisingly but leasing can, in some cases, be cheaper than buying the car both with cash or a loan. Nonetheless, according to statistics, the most inexpensive option still remains to purchase a used car.

Generally, leasing costs in the Netherlands vary from around 200 EUR per month (incl. VAT) for small used cars to upwards of 400 EUR for a new car. Your monthly rate directly depends on the length of the contract.

Considering a 4-year lease with 200 EUR in monthly payment will set you back 9,600 EUR in total. At the same time, a monthly lease of 400 EUR will add up to 19,200 EUR in the same period, which is quite substantial.

Generally, the amount of your monthly lease rate is calculated based on these factors:

  • Car’s age
  • Model and performance
  • Mileage
  • Contact length
  • Car insurance
  • Possible special services such as a service contract and included insurances

Compare car insurance deals in the Netherlands by using this online calculator. It compares the best and most affordable car insurance policies among the top providers, e.g., Allianz, ASR, HEMA, Avero, National Netherlands, and others.

However, car insurance from ABN AMRO will give you enough coverage at an affordable price.

Buying a car in the Netherlands

All foreigners and expats can also buy a car as an alternative to leasing in the Netherlands.

A cash car purchase especially makes sense if you plan to use a vehicle for more than 5 years. The depreciation of a new car is very high, especially in the first three years.

Moreover, buying a car is cheaper than leasing in the long term; you can sell it later and recoup some of your investments. The main drawback of acquiring a vehicle is the financial burden, whether you take a car loan or purchase it with cash: you need to have some capital to start with.

Car prices in the Netherlands are European average. Here are some statistics on average new car prices:

  • Mini cars: 16,527 EUR
  • Small cars: 27,842 EUR
  • C segment – lower medium cars: 39,354 EUR
  • D segment – medium cars: 57,414 EUR
  • E segment – upper-medium cars: 100,797 EUR

As anywhere, used cars are significantly cheaper; for example, you can get a Ford Focus from 2018 for 12,900 EUR.

Where to buy a car in the Netherlands

Online is the most popular way to purchase a new or used car in the Netherlands, and there are plenty of sources. If you want to go a more traditional way, dealerships can be found across the country.

1. Marktplaats is the Dutch marketplace and the best place to buy used cars.

2. Bynco – company Bynco sells cars online too. All used cars sold on the Bynco platform have undergone independent inspections and automatically come with a minimum 180-day warranty. Furthermore, Bynco offers financing options for buyers.

Other places to buy a car in the Netherlands include:

See the full guide on best car websites in the Netherlands.

Financing a car in the Netherlands

When buying a car in Switzerland, you don’t necessarily need to have it all in cash – there are plenty of financing options available for expats.

More than 60% of Dutch residents don’t have the necessary capital to purchase a car; hence, they use various financing options the country has to offer.

Lease vs Buy

Here we compare the monthly costs of purchasing a new Kia Picanto car with a lease of the same car:

Car purchaseLeasing
Car price15,695 EUR
Residual value7,750 EUR
Depreciation136
Insurance (third-party liability)46 EUR
Taxes25 EUR
Other expenses25 EUR
Repair, maintenance
and tires
27 EUR
Total monthly expenses259 EUR229 EUR
Difference-30 EUR
Source: anwb.nl

As you can see, in some cases car lease can be even cheaper than the purchase of a car. With that said, you can sell your car and recoup some money back, while it’s not possible with the lease.

So how does car financing differ from car leasing in the Netherlands?

Car financingCar leasing
New carsYesYes
Used carsYesYes
OwnershipA customer is an owner from the beginningA bank or car leasing company holds the ownership.
Up-front costsBank will require a down payment.You don’t need a down payment to lease the car. However, the lessee pays the first month’s rent and security deposit.
Mileage limitNoYes, as stated in the contract.
Insurance Can be selected freelyComprehensive insurance is mandatory
Earlier terminationEarly repayment (without cost consequences) or sale of the car is possible at any timeCancelation of the lease is expensive

The definitive pro for car financing is that all those obligations that come with a car lease can be avoided. If you want to hold a car for a more extended period of time, a car purchase is a way to go.

Pros of leasing the car in the Netherlands

1. Convenience

You negotiate lease length and monthly rate upfront. Moreover, car leasing is a relatively simple and hassle-free process in the Netherlands.

2. Affordability – no savings required

Private leasing can be a great solution if you want to drive a new car but don’t have enough budget. Moreover, leasing is often cheaper than financing; the monthly payment is lower with the lease than a purchase (car loan).

Additionally, you avoid large down payments when signing the contract. With some contracts, insurance, service, and even the tire change are included. Your insurance is also paid with the lease rate.

3. Cheaper than a loan

Due to the low or no interest rates, private leasing is cheaper than buying a new car with a loan. Consequently, monthly rates are lower with leasing than with car financing.

4. Fixed monthly rate

With private leasing, you always have a clear overview of the monthly costs you incur from using your car. However, don’t forget to keep track of your gasoline costs. This way, you know exactly what you are spending.

5. No unexpected costs

You don’t have to worry about unexpected maintenance bills or trading in or selling your car.

6. Flexibility

The benefit is obvious – you can drive a newer or nicer car every year by signing for a new lease every time. By the end of the lease, you can choose another car if you want to.

7. Leveraging

You can drive a new car without a significant investment. New vehicles depreciate a lot, and financing a new car leads to a substantial loss in cash.

The main advantages of leasing the car in the Netherlands:

  • Lower monthly cost compared to a long-term rental or car finance (for an equivalent car)
  • Flexibility
  • No additional maintenance costs or unexpected costs such as repairs
  • No insurance costs
  • Drive a new car that might be above your usual buying budget

Cons of leasing the car

The contract terms are often rigorous and can land you with hefty excess charges if you don’t adhere to them.

1. Ownership

With a car lease, you don’t own the car; it’s like a lease of the apartment – you pay to use it for a fixed period of time. In the end, you should return the vehicle.

2. Used cars are cheaper

Leasing, in many ways, costs less than car financing, but buying a used car is always the most affordable option. Moreover, buying a new car with your own money also often proves to be cheaper than a lease.

4. Contractual inflexibility

If your life circumstances change and you need to end the lease, you won’t find a way out without consequences. These often include high fees.

5. Car lease limits your mortgage

If you have plans to buy a house in the Netherlands, leasing might not be a good idea. When getting a mortgage, the bank will deduct 65% of the monthly lease from your maximum monthly housing costs.

This limits your lending opportunities.

Example:

  1. Your lease contract is set to 48 months
  2. The total lending costs are 14,400 EUR (48 x 300 EUR)
  3. 65% of the total costs, or 9,360 EUR (65% of 14,400 EUR)
  4. The lender will add it to your monthly financial burden which comes to 187 EUR per month
  5. As a result, you get about 52,000 EUR less in mortgage

* Interest rate of 1.75% and a mortgage term is 30 years.

6. Leasing is expensive if you don’t use a car

A private lease is less beneficial for drivers who drive only a few kilometers. With most leasing companies, you pay for an annual mileage of at least 10,000 to 12,000 kilometers, and you won’t get your money back if driving less.

7. Limited mileage

Limits in mileages are practiced by all leasing companies, where you get a maximum amount of km that you can drive per year. All kilometers above that limit will be added up to the final payment at the end of the lease, which can be prohibitively expensive.

Main disadvantages of leasing a car in the Netherlands::

  • No car ownership
  • All damages and changes made must be compensated when returning the car
  • Leasing contracts cannot be terminated earlier
  • Negative influence on your mortgage

Pros of buying a car in the Netherlands

1. Ownership

When you buy a car, it immediately becomes your property as soon as you transfer the money and sign the papers. Lessees never become legal owners of the car.

2. No monthly payments

You only pay for fuel, maintenance costs, and insurance. If you are the type of consumer who wants to drive the vehicle until the wheels fall off, leasing is not for you.

3. No distance restrictions

You can drive as much as you want and where you want. The world is open for you. Besides, buying a car is a better option for someone living in the rural Netherlands with long travel distances.

4. Customization

You can customize a purchased car as much as you want. A new color? Different wheels? With your own vehicle, you do exactly what you want with it. Any changes to a leased car will likely cause additional costs at the end of the contract.

Cons of buying a car

1. Financed cars are more expensive

Financing a car with a loan is generally more costly than leasing. Not only are the total costs higher, but if you have a car loan like most consumers, the interest you pay will be based on the total amount borrowed.

Unless you take out a car loan with a large down payment, your monthly installments will likely be higher than lease payments.

In addition, long-term loans have higher interest costs, which can significantly increase your overall vehicle costs.

2. Unpredictable depreciation

The market value of your car is highly unpredictable. Therefore, you never know how much it will be worth when you decide to sell it. Therefore, buying a used car from the start is the best idea.

3. Lack of flexibility

Lastly, buying a car isn’t the most flexible option. Don’t buy a car if you want to stay flexible, change your car frequently, are not sure how long you want to use the car, or don’t plan to use it for a long time.

Car leasing requirements in the Netherlands

There are several requirements expats must meet to lease a car in the Netherlands:

  • Age of 21 years and older
  • Living and be registered in the Netherlands (with a BSN number)
  • Dutch bank account
  • No negative Dutch credit score (BKR)
  • Proof of financials which can be done with:
    • An employment contract, OR
    • Fixed monthly income with proof
    • Details of your monthly spendings
  • A Dutch driving license or a license issued in the EU or recognised by the Netherlands (for British and non-EU expats this means exchanging your license for a Dutch license at the municipality – more on this below)

Be aware that not every lease provider will deal with foreigners, and many of them don’t provide service in English.

When should you choose car leasing in the Netherlands?

There is no fixed answer to who and who shouldn’t choose a car lease while living in the Netherlands. Weigh all pros and cons, get proposals from various leasing companies and dealerships and compare.

Your budget is by far the biggest determinator of whether you should buy or lease a car.

Leasing is best for:

1. Someone with short-term plans in the Netherlands or a limited job contract

You don’t want to commit to a car loan in a country you aren’t sure about or with a fixed work contract. Most car loans are taken for at least 3 to 6 years.

2. Someone with not large enough budget to buy a car or isn’t qualified for a car loan

To get a car loan, you need to prove a good credit score in the Netherlands as well as to put down a sizeable downpayment. Not everyone is capable of doing so. In that situation, a car lease is an excellent solution.

Anna

Anna is an enthusiastic expatriate with experience of living in Germany, Austria and Greece. She shares her passion for living abroad on this website.

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