In brief
Leasing provides a vehicle for a fixed term in return for a monthly payment, without transferring ownership. It is the most common procurement method for corporate fleets in Germany.
What forms of leasing are available?
With mileage-based leasing, an agreed mileage is set, and excess or unused kilometers are settled at the end. The lessor bears the risk of changes in the vehicle's value. With residual-value leasing, a value is set for the end of the contract and guaranteed by the company, which must pay the difference if the value falls short.
Full-service leasing can also be agreed, including maintenance, wear, tires, and sometimes insurance in the payment.
Mileage-based leasing, residual-value leasing, or purchase?
The three options differ mainly in who bears the risk of changes in value.
| Feature | Mileage-based leasing | Residual-value leasing | Purchase |
|---|---|---|---|
| Residual-value risk | Lessor | Company | Company |
| Capital tied up | None | None | Full purchase price |
| Settlement at the end | Excess and unused kilometers | Difference from agreed residual value | Sale proceeds |
| Cost predictability | High | Medium | Low |
| Suitability | Predictable mileage | Vehicles with stable resale values | Long holding period, high mileage |
What are the advantages of leasing?
Predictable monthly costs, no capital tied up, and regular vehicle replacement that keeps the fleet's age and maintenance needs low. For companies with many vehicles, full-service components also allow administrative tasks to be shifted to the lessor.
What matters when drafting the contract?
The terms that take effect at the end of the contract. Agreed mileage should be realistic, because excess kilometers are expensive and unused kilometers are usually reimbursed only to a limited extent. Return conditions define what counts as normal wear and what is charged as damage.
Matching the contract term to the company's needs is equally important. Ending a contract early is generally more expensive than choosing a shorter term from the outset. For electric vehicles, it is also advisable to specify how battery condition will be assessed at the lease return.
Further reading
Fleet Management Without Excel Spreadsheets
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