Car Leasing Greece vs the UK – Crazy Expensive?
Car leasing Greece, are the deals expensive? At first blush, car leasing in Greece seems super pricey vs the UK but why?
First. The mileage allowance in high. UK car leasing websites typically default to 8,000 miles per annum whereas in Greece the default is usually around 12,000 miles.
Second. Maintenance, almost without fail the default price for car leasing in Greece includes all maintenance costs, insurance and road tax, in the UK they doesn’t.
So that is two reasons but there is something else and this is depreciation.
Used car prices in the UK could well be the cheapest in the world. Greek used car prices on the other hand is, how shall we say, not the cheapest. Are the higher residuals in Greece reflected in the price of the lease?
The table below compares car leasing prices in the UK and Greece. I have tried to make the comparison as close as possible ie choosing similar mileage allowances, deposits etc
Prices have been converted from pounds to Euro using a 1.16 conversion rate & exclude VAT
Car Leasing Greece – The Numbers
|Deposit ex VAT||950||0|
|New Price (Base) ex VAT||26318||22568||22568|
|Lease vs Depreciation||1.24||3.56|
The Tail of the Tape
When we bolt in the same options (maintenance, mileage allowance), Greek car leasing prices don’t look too bad at all, in fact, the Greek prices are almost identical to those in the UK (at least in this example).
The Elephant in the Room
Although maintenance and mileage allowances level the playing field there is still issue number three. Depreciation (here is an article dealing with used car prices in Greece) is much less in Greece.
The depreciation for a 116d over 4 years is around 13000 Euro in the UK, whereas in Greece it is only 4500 Euro.
Even assuming our new car prices are a couple of thousand out when we take into consideration Greek registration taxes, the depreciation numbers are still miles from each other.
And this is the crux of the matter.
Because depreciation is so much less in Greece, the leasing costs should make leasing in Greece cheaper the car leasing UK.
Fundamentally leasing is simply charging the user for the depreciation of the vehicle plus some expenses that allow the leasing company to make money.
Even if we assume the new car price OTR is the same in the UK as Greece, we still have a difference in depreciation of almost four thousand euro.
Four thousand Euro spread over 48 months equates to a healthy chunk of money every month, 83 euro.
While the prices on the face appear to be equivalent we can see that there is a significantly higher profit margin available for car leasing businesses in Greece.
Wait! – Insurance & Road Tax
Car leasing Greece also includes insurance and road tax.
In the UK, for this car the BMW 116d, road tax would be 20GBP a year and insurance, for a 35 year old would be around 300 GBP. Converting that to euro and adding it to our total we get a 1280 Euro over four years.
Even with these expenses included in the UK leasing price, we are still 3000 euro apart.
Does this mean car leasing Greece is overpriced?
On a total cost of 16272 euro (over four years) we have an 18% discount in the UK versus the price in Greece.
At the end of the day the price difference is not as big as I had imagined but 18% is a lot.
How does it compare to actually buying the car?
Using this calculator here we can compare the cost of buying the car over 4 years at 4.5% interest.
New car price on the road of 26318 euro.
16272 euro is the total cost of the lease.
Total Cost of loan at 4.5%
At 4.5%, total cost is 35123 euro. Average monthly payment around 540 euro.
Minus 18,000 euro for selling the car at the end of 4 years we get a cost of 17123 euro. 1000 Euro more than the cost of the leasing and this is excluding maintenance, road tax and insurance costs and without counting the bigger monthly payments and the hassles of selling the car after.
Leasing would definitely seem to be the way to go.
Buying the same car used
If we bought the same car but 4 years old.
Cost is 18000 euro, loan interest 4.5% paid over 4 years.
Total cost 21092 euro. Average monthly payment 370 euro (still more than the monthly lease cost).
Value at 8 years, 13000 euro. Total cost of loan minus the resale value of the car equals 8000 euro. Add the cost of insurance, maintenance, road tax difference will be around 4000 euro versus leasing. If we invested the difference in the monthly payment (30 euro) at 5% interest we would have 1500 euro at the end of 4 years making the difference 2500 euro.
Is the saving worth it?
Is paying an extra 2500 euro over 4 years worth it to drive a new car instead of a 4 year old car?
Car Leasing Greece – Summary
The biggest problem with Greek car leasing is that the residual value of the car is not reflected fully in the cost of the lease. In this specific example it means leasing the same car in Greece costs around 750 euro more per year than in the UK.
Can you get around this by actually buying the car? No.
Can you get a better deal by buying a 4 year old car? Depends if you think saving around 18% (of the total cost of the lease) is worth it to you.
The depreciation issue is a problem but hopefully competition in the leasing industry will see the price dropping.
As things stand at the moment, to get into a new car, leasing would appear not to be a bad deal.
Assessing a Greek car leasing deal
Its possible that the specific car in this article has a better price than the rest (ie temporary manufacturer special offer).
To check how good a leasing deal really is, I would compare the cost of leasing the same car in the UK versus Greece, in this example at least, we would want to prices to be pretty close, if they are, we can probably say the price of the Greek car lease is fair.
If you want to go further and look into the residuals ie how well are they reflected in the price you can get an even better idea of the quality of the deal you are looking at in Greece.
And we don’t even need to look at residuals in the UK, perhaps it would be more accurate to look at the prices in left hand drive markets like Germany where used car are slightly more expensive than in the UK.
And for more information on getting a good deal on car leasing Greece. Here is a good video from VinWiki. It seems that getting a good deal on a car lease in the USA is an amateur sport!
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