Car — buy or lease? Cost comparison

Car — one of the biggest financial decisions

A car is the second-largest expense for many Poles after housing. The average price of a new car in Poland is about 140,000 PLN, used 3-5 years old — 60,000-100,000 PLN. The financing method affects your budget for years.

Three financing options

1. Cash purchase

You pay the full amount upfront. The car is yours.

2. Car loan

The bank finances the purchase, you pay installments over 3-7 years. The car is yours from day one.

3. Leasing

The leasing company buys the car, you pay monthly rates for using it. At the end you can buy it out or return it.

Cost comparison — car worth 120,000 PLN

Let's assume a car worth 120,000 PLN, 4-year period:

*Operating lease — net payments, you deduct VAT and include in company costs

Opportunity cost of cash

If you buy for cash, you lose the opportunity to invest those 120,000 PLN. At 8% annual return, after 4 years you'd have ~163,000 PLN. Opportunity cost: ~43,000 PLN.

Leasing — for whom does it pay off?

Operating lease (for companies)

• ✅ Payments in tax-deductible costs (up to 150,000 PLN car value)
• ✅ 50% or 100% VAT deduction on payments
• ✅ Lower down payment
• ✅ Predictable costs
• ❌ Mileage limits
• ❌ Car isn't yours
• ❌ Damage penalties

Consumer lease (for individuals)

• ✅ Lower payment than loan (because you don't pay full value)
• ✅ Option to return car after period
• ❌ No tax benefits
• ❌ You don't build assets
• ❌ Limits and penalties like operating lease

Key rule: Leasing pays off primarily for companies that can deduct costs. For individuals, cash purchase or loan is usually better.

Hidden car costs

Purchase price is just the beginning. Annual maintenance costs:

That's 860-2,200 PLN monthly ON TOP of loan or lease payment.

Depreciation — the silent value killer

A new car loses value:

• After 1 year: -20% to -25%
• After 3 years: -40% to -50%
• After 5 years: -55% to -70%

A 120,000 PLN car after 5 years is worth 36,000-54,000 PLN. You lost 66,000-84,000 PLN — just from depreciation.

Life hack: Buy a 2-3 year old car. Someone else paid for the most expensive depreciation, and you get a car in great condition for 40-50% less.

When to buy with cash?

• ✅ You have money and don't need to borrow it
• ✅ You're buying used car (lower risk)
• ✅ You don't run a business (no leasing benefits)
• ✅ You don't want commitments

When to get a loan?

• ✅ You need a car now but don't have the full amount
• ✅ You prefer to spread cost over time
• ✅ Loan rate < expected investment return (arbitrage)

When to lease?

• ✅ You run a business
• ✅ You want a new car every 3-4 years
• ✅ You value cost predictability
• ✅ You need a company car

Decision tree

1. Do you run a business? → Operating lease
2. Do you have cash and don't run a business? → Buy with cash (preferably 2-3 years old)
3. Don't have cash, need a car? → Loan (shortest possible term)
4. Don't need a car daily? → Public transport + weekend rentals

How Freenance can help

Freenance helps make informed car decisions:

• Budget simulation — see how lease or loan payment affects your monthly finances
• Car cost tracking — categorize all car-related expenses and know the true cost of ownership
• Runway — check if car expense won't threaten your financial security

👉 Calculate true car cost with Freenance — freenance.io