For most people a car is the second most expensive thing they will ever buy — and yet the financing decision gets made on the monthly payment, the least informative number in the whole equation. The gap between the cheapest and most expensive route to the same vehicle comes to roughly €1,900 over three years in the model below. What drives it is not the interest rate, as most would assume. It is residual value, VAT, and the return you give up in your portfolio.
Three numbers decide (and the sticker price is not one of them)
When you compare financing routes, the price of the car cancels out — it is identical in every scenario. Three quantities remain, and only one of them appears in the dealer’s offer.
Depreciation
The largest cost of ownership by far — an order of magnitude bigger than interest. The difference between a car losing 10 % and one losing 46 % a year runs into thousands.
Cost of capital
Either you pay interest to a bank, or you forgo the return on your own money. Both are costs — you just never see one of them on a statement.
VAT and local taxes
Lease quotes are often advertised net of VAT because the target audience can reclaim it. A private individual cannot — and depending on the country, registration taxes pile on top.
The interest rate ranks fourth. Which is why it pays to start with the arithmetic rather than the loan application.
How fast cars lose value
Data from Carvago covering Q2 2024 to Q2 2025 shows how wide the spread between models is. The average says 15–30 % in the first year, but the average is useless here — the specific car is what matters.
Source: Carvago, actual asking prices on classified listing sites (not manufacturer price lists).
Take away one sentence: the faster a car loses value, the more expensive it is to own and the better renting looks. On a Mercedes GLS the leasing company carries the residual value risk, and that is the best deal you will ever strike with them. On an Enyaq you carry it yourself, and it pays off.
The residual value estimate is also the one number nobody knows at signing. Which is why it is worth working with scenarios rather than a single guess — vehicle management in Assetli projects value in realistic, optimistic and pessimistic variants, so the width of the range is visible from the start.
Worked example: a €33,000 car over three years
A car costing €33,000 including VAT, a 36-month horizon, 15,000 km a year (45,000 km in total). The loan is calculated with no deposit at 6.0 % — a mid-range figure for Europe in 2026, where advertised rates run from roughly 3.5 % for the strongest credit profiles to well above 10 % at the other end. Lease payment €600 a month including VAT.
Residual value after three years is estimated at €19,800, a 40 % loss.
| Item (3 years) | Cash | Loan 6.0 % | Lease |
|---|---|---|---|
| Upfront payment | −33,000 | 0 | 0 |
| Total instalments | 0 | −36,140 | −21,600 |
| Insurance, servicing, tyres | −4,200 | −4,200 | 0 |
| Resale after 3 years | +19,800 | +19,800 | 0 |
| Net cash flow | −17,400 | −20,540 | −21,600 |
| Forgone portfolio return (2.25 % p.a.) | −2,280 | 0 | 0 |
| Total cost | 19,680 | 20,540 | 21,600 |
| Per month | €547 | €571 | €600 |
| Per kilometre | €0.44 | €0.46 | €0.48 |
← Scroll horizontally to see the full table
Fuel is identical across all scenarios and is left out — at 6.5 l/100 km and €1.75/l, add about €0.11/km. Road tolls are also excluded because they differ enormously: an annual motorway vignette in Slovakia costs €90, Czechia charges CZK 2,570, France bills per stretch of road, and Germany has no passenger-car toll at all.
How the forgone return is calculated. €33,000 leaves the portfolio on day one and only part of it comes back on resale. The full amount is therefore missing for the whole period — so the return is compounded on the full purchase price at 2.25 %, the current ECB deposit facility rate and a reasonable risk-free benchmark for the euro area. For the loan and the lease this line is zero, because the capital stays invested.
Run the numbers for your own car
Enter your vehicle’s parameters and the calculator compares all three scenarios at once — including the break-even point, meaning the return at which borrowing starts to beat paying cash.
* Fuel and tolls are excluded — they depend on your driving, not on the financing route. The forgone return is compounded on the full car price.
The calculator above handles one car and one decision. The moment you are choosing between specific vehicles — petrol against electric, used against new — you need them side by side.
That is exactly what the vehicle cost calculator in Assetli is for. Enter the parameters of each car and get their total costs in columns side by side — including a recommendation for which comes out cheapest and why.
Precisely the break-even calculated above — the tool weighs buying outright against leaving the money invested and leasing instead.
Differences in energy, servicing and residual value all feed into the total, so you can see whether an EV makes financial sense.
A car that wins over three years can lose over ten. Switching the holding period shows whether your ranking is stable.
Calculations can be saved and revisited — and once the car is added to vehicle management, you can see how the estimate held up against real costs.
Where the result flips
The model rests on three sensitive inputs. Move any of them and the ranking changes — which is the whole decision.
1. Residual value
The most sensitive variable by a wide margin. If the car were worth €17,000 after three years instead of €19,800, cash and loan both get €2,800 more expensive and the lease effectively draws level. On a car with the profile of a Mercedes GLS, losing 46 % in a single year, leasing wins without argument — you carry risk only up to the agreed wear allowance, the rest is the lessor’s problem.
Always check how the specific model holds its value, not the brand and not the market average.
2. Loan rate against portfolio return
The difference between cash and a loan is nothing more than the spread between the interest you pay and the return that stays invested because of it. In the worked example the interest comes to roughly €3,140 over three years. For borrowing to pay off, your €33,000 has to earn at least as much — which works out at 3.08 % a year after tax.
And here is where geography quietly rewrites the answer. That 3.08 % is a post-tax hurdle, but what you need to earn before tax depends entirely on where you are resident:
| Country | Tax on securities gains | Gross return needed |
|---|---|---|
| Czechia | Exempt after a 3-year holding period | 3.08 % |
| Slovakia | Exempt after 1 year (regulated market) | 3.08 % |
| Poland | 19 %, no holding period | 3.80 % |
| Germany | 26.375 % incl. solidarity surcharge | 4.18 % |
| France | 31.4 % flat tax (raised in 2026) | 4.49 % |
← Scroll horizontally to see the full table
The identical car, the identical loan, the identical portfolio — and the bar for financing to make sense sits nearly a percentage and a half higher in France than in Czechia. Anyone comparing offers across borders, or moving tax residence, should recalculate rather than reuse a rule of thumb.
One more property of a loan that never shows up in a table: it is reversible. Across the European Union, early repayment of a consumer credit agreement is capped — the lender may charge at most 1 % of the amount repaid early, or 0.5 % if less than a year remains until the agreed end. A lease has no such brake; a 36-month contract commits you for the full term.
3. VAT and the mileage cap
Whether a lease quote includes VAT is the single most common source of confusion, and the stakes vary by country: 19 % in Germany, 20 % in France, 21 % in Czechia, 23 % in Slovakia and Poland. On a €500 net quote that is a difference of €95 to €115 every month — enough to reverse the entire comparison. Businesses that can reclaim it see one price; you see another.
The second trap is mileage. Exceeding the agreed cap is charged per kilometre, and on return, wear beyond normal use is assessed. If you are unsure how far you will drive, plan on the high side — the excess-mileage charge usually costs more than a higher payment from the outset.
The car on your personal balance sheet: three recording mistakes
The decision is half the work. The other half starts when you enter the car into your asset overview — and the same three things go wrong.
A car is a depreciating asset. Holding it on the books at €33,000 for three years inflates your net worth by €13,200 — and every decision derived from that number is skewed. Revalue against real market listings once or twice a year.
The car as an asset and the loan as a liability both need to be recorded. Otherwise you are fooling yourself twice — once with inflated assets, once with unstated debt. In Assetli, loans and mortgages keeps the outstanding principal and repayment schedule right next to the vehicle itself.
Formally it is not debt and it will not appear on a balance sheet. In practice it is a fixed outgoing for 36 months, and your real exposure is the sum of the remaining payments. In the worked example, 600 × 36 = €21,600 — a commitment on the scale of a small mortgage.
For decision-making the most useful metric is €/km, not the monthly payment. Only that lets you compare scenarios against each other — and it exposes something easily forgotten: at low mileage, fixed costs spread across very few kilometres.
Excluding fuel. Fixed costs stay the same; only the number of kilometres they spread across changes.
At 8,000 km a year the kilometre costs €0.82 — and the question is no longer “how to finance” but “whether to own at all”.
That number cannot be calculated once and forgotten, though: it moves with every repair, with fuel prices and with how far you actually drive. The vehicle cost overview therefore computes cost per kilometre continuously from what you genuinely spend and breaks it down by category — fuel, servicing, insurance, instalment.
Checklist before signing
Frequently asked questions
When does leasing make sense for a private individual?+
When the car loses value faster than roughly 15 % a year, when you swap cars every two to three years anyway, or when you would rather not carry the risk of out-of-warranty failures. Otherwise you are paying VAT you cannot reclaim — in the worked example the lease ends up about €1,920 more expensive than cash over three years.
Is a one-year-old used car for cash better than a new car on finance?+
On pure cost, almost always yes — somebody else already absorbed the most expensive 15 to 30 % of the price. What you trade away is the warranty and the risk of hidden defects, which comes back to you.
How do I calculate the break-even between a loan and cash?+
Compare the total interest over the loan term with the return the same money would generate in that period. If the return is higher, borrow and leave the capital working. Crucially, use a post-tax return — the table above shows how much the pre-tax hurdle shifts between countries.
Why are registration and road taxes excluded from the model?+
Because they vary too much to generalise. Germany levies an annual vehicle tax based on engine size and CO₂; Czechia abolished it for passenger cars in 2022; France charges a one-off ecological penalty at registration that can reach tens of thousands of euros. Add whatever applies where you live to the purchase price and running costs.
Who owns the car under each option?+
With cash and with a loan you own it immediately, though a lender will typically hold the registration document as security. Under a finance lease ownership passes only after the final payment and purchase option; under an operating lease it never does. This directly determines what you may record as an asset.
Conclusion
The gap between the three routes to the same car comes to roughly €1,920 over three years in the worked example — a sum most people never see, because they compare monthly payments instead of total costs. The decision rests on three numbers: how fast the car loses value, what your capital costs, and what tax applies where you live.
The calculation is half the job. The other half comes after signing: the car in your asset records at market value, the loan on the liabilities side, and costs tracked as €/km.
Assetli for car owners: Vehicle management keeps everything this article calculated in one place — cost per kilometre, residual value projections in three scenarios, financing, and a built-in TCO calculator. Alongside it you can see your net worth and cash flow analytics.
Where to go next
Cost per kilometre, depreciation forecasts in three scenarios, service events and financing.
Up to ten cars side by side, the invest-or-buy scenario, and electric against combustion.
Outstanding principal and repayment schedule on the liabilities side, not just in your head.
A complete guide to the personal balance sheet — where the car, the loan and everything else belong.
Related glossary terms
Sources and references
- e-Flotila (Carvago data). First-year depreciation by model, Q2 2024 to Q2 2025. e-flotila.cz
- Carvago Blog. Average first-year depreciation of 15–30 %. blog.carvago.com
- European Central Bank. Key ECB interest rates — deposit facility at 2.25 %. ecb.europa.eu
- Financial Administration of the Slovak Republic. Exemption of income from the sale of securities — one-year holding test under § 9(1)(k). podpora.financnasprava.sk
- Portál POHODA. Czech exemption for securities gains from 2026 — three-year holding test, €40m cap removed. portal.pohoda.cz
- Podatki.biz. Poland’s Belka tax — 19 % on shares, ETFs and funds, no holding period. podatki.biz
- Raisin. German Abgeltungsteuer — 25 % plus solidarity surcharge. raisin.com
- Goodvest. French flat tax 2026 — PFU at 31.4 % (12.8 % income tax plus 18.6 % social levies). goodvest.fr
- § 502 German Civil Code (BGB). Early repayment charge capped at 1 %, or 0.5 % within the final year. gesetze-im-internet.de
- Czech Financial Administration. Abolition of road tax for passenger cars (Act No. 142/2022 Coll.). financnisprava.gov.cz
- Assurland. French ecological penalty 2026 — threshold 107 g/km CO₂, from €50 to €80,000. assurland.com
Disclaimer: this article is for educational purposes only and does not constitute investment, tax or legal advice. Always verify the specific terms of any contract before committing to a financing decision.
Assetli is an intelligent platform for managing personal finance, investments and household. Our editorial team combines current market research, authoritative sources (EY Global, Investment Company Institute, Vanguard, Charles Schwab, central-bank and regulator publications) and practical experience building financial tools. We write clearly — no marketing fluff, no unnecessary jargon. Every statistic in our articles is backed by a public source you can verify yourself. Important: our articles are for educational purposes only and do not constitute investment advice.
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