Is long-term rental worth it?
Car rental comes in two flavours, long-term and short-term. When you need a car for everyday use that will serve you for a long time, the first option is obviously the better one. And that raises the key question: is long-term rental more cost-effective than buying a car?
What exactly is car rental?
By definition, long-term car rental means leasing a car for a fee over a period set out in the contract. The renter pays the vehicle's owner a fixed sum (usually monthly) and in return can use the car as if it were their own. Car leasing works on a similar principle. You'll read more about that later in the article.
It's worth noting, however, that there is a set of rules governing what you cannot do with a rented car. The most important of these restrictions are:
an annual mileage limit,
a ban on modifying the vehicle's structure,
a fixed number of people allowed to drive the car.
How does long-term rental work?
As we mentioned, car rental is a contract concluded between the renter and the vehicle's owner. The process itself is more complex, though, so it deserves a closer look. Car rental is currently one of the more popular forms of vehicle financing. Its main advantage is that it usually requires no down payment. The contract length usually ranges from 12 to 60 months. A car rental contract often also includes servicing and a warranty.
Is long-term rental popular among drivers?
Absolutely! According to data published by the Polish Vehicle Rental and Leasing Association, long-term rental accounted for 28.1% of all new passenger cars sold to businesses in 2022. Considering that the number of cars bought by companies that same year was more than twice as high as the number of vehicles bought by private individuals, we can clearly conclude that long-term rental is a popular choice among drivers*.
Why is car rental so popular?
Long-term rental means a lot of flexibility, the renter doesn't need a down payment and isn't obliged to buy the car out at the end of the contract. Car rental also means big savings for business owners, because it lets them deduct its value from tax.
Can this expense always be counted as a tax-deductible cost? Generally yes, but when the car is also used for private purposes, you can only deduct 50% of the VAT.
Which is better, leasing or long-term rental?
Both car rental and leasing are cost-effective forms of financing, so it all comes down to your needs. The main difference is that with leasing, the contract sets out from the very start what you can do with the car once it ends. In addition, the sum of all payments made by the renter must be equal to or greater than the price of the contract's subject, i.e. the car. That doesn't mean, however, that long-term rental has to be cheaper than leasing.
Is long-term rental more cost-effective than leasing for business owners?
When it comes to deducting costs from tax and counting them as tax-deductible expenses, leasing and car rental work essentially the same way. The difference appears when it comes to buying out the car after the contract ends, with long-term rental, the renter has no option to take ownership of the vehicle. Meanwhile, with leasing from Car&More you have complete freedom! Once the contract ends, you decide whether you want to buy the car out, swap it for a newer model, or simply extend the agreement.
How much does car leasing cost?
The total cost of leasing depends above all on the price of the car. It's usually expressed as a percentage, where 100% leasing means a contract in which the renter pays off only the value of the vehicle. Every percentage point above that figure (101%, 102%, 103%…) is an additional cost borne by the renter. How much a leased car costs can also be affected by other factors, such as:
the length of the contract,
the size of the down payment,
additional services (e.g. comprehensive insurance or servicing).
It's also worth noting that only business owners can take advantage of the cheapest long-term rental and leasing, because, unlike private individuals, they can count them as tax-deductible expenses and reclaim VAT.An added benefit for companies is that such forms of financing spread expenses over time, which makes it easier to maintain optimal financial liquidity.
How do you calculate the total cost of leasing?
As we noted, the cost of leasing is made up of several elements, the initial payment, monthly instalments and the buyout price. Their combined value depends on the car's value, it has to be at least equal to it. It's worth noting, though, that the ratio between them can vary widely. How much a car's leasing instalment costs depends onhow high the initial payment, the buyout cost and the contract term are. Thanks to this, leasing offers extra flexibility, you decide for yourself whether you want to pay more upfront and less monthly, or the other way around.
Looking for a used car on lease? Choose Car&More!
If you want to take advantage of an attractive form of financing, go for the highest quality of service. With Car&More you have access to a wide range of used cars, so you can drive a vehicle tailored to your needs without overpaying. How much does car leasing cost? Car&More cares about the transparency of every offer, which is why the car's value, the amount of the monthly instalments and the buyout cost are easy to check online. Want to tailor each cost to your needs? Use the interactive Car&More website to adjust the financing to your plan.
*https://pzwlp.pl/aktualnosci/dwucyfrowy-wzrost-10-3-r-r-wynajmu-dlugoterminowego-aut-w-2022-r