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Pay attention! Borrowing money, costs money
Borrowing money starts with yourself

Date: June 22, 2020
By: Alfredo Junior

Difference between subscription, private lease and loan

We increasingly live in a subscription and lease economy. A subscription can, for example, be the newspaper, Spotify, Storytel, magazines or Netflix. You can also lease everything from cars to washing machines, a TV, furniture, beds, and even the solar panels for the roof. The term private lease or operational lease is often used for this type of long-term (and more expensive) subscriptions.

Some choose private lease because of the convenience. Another reason may be that people want to own less and less of their own and therefore prefer to rent, share or lease. But the lack of money to buy a new washing machine, for example, is also common. Then a lease contract is signed in no time.

We are now fully used to the possibilities of borrowing, subscriptions and leasing. But what is actually the difference between the different shapes?

Difference between subscription, private lease and loan

1. Subscription: you purchase a product or service for a while, such as a newspaper, swap bike or magazine, against a short notice period. Your income or financial capacity is not tested. There is also no BKR registration.

2. Private lease or operational lease: you rent more expensive goods such as white goods, furniture, a car or solar panels. The contract includes the end date (usually after 3 to 5 years) and canceling earlier will result in a hefty fine. There is hardly any income test, but private lease is registered as a financial obligation with the BKR and is therefore regarded as a loan. The loan amount is included at the BKR as 65% of the monthly amount times the duration. This can be disadvantageous when applying for a mortgage . Operational lease is made easy because no loan standard is set. Leasing is therefore a form of borrowing, but without financial supervision. You should also be careful if you drive more or less than contractually stipulated with car lease. Suppose you lease a car for 10,000 km per year for 5 years. If you drive 15,000 km per year, you pay the main price for these extra kilometers (just like calling outside the bundle). However, you will not always be reimbursed for fewer kilometers. The car, washing machine or solar panels are also not your property at the end of the contract.

3. A loan or consumer credit ( personal loan ) is a well-regulated financial obligation. A loan has an interest rate of between 3.5% and a maximum of 14% and is subject to borrowing standards. You borrow an agreed amount for a purchase and pay off the loan at a fixed interest rate and an agreed term. Early repayments are always possible and are free of penalties. On the other hand, if you lease a washing machine, for example for ten years, you will ultimately pay much more than that 14% and you will not be the owner at the end of the journey.
A loan / consumer credit is always included in the BKR.

The difference between a subscription, lease and loan is therefore mainly in the amount of the loan, the BKR registration and whether an income test is done. This loan standard is the minimum amount that a person or household must keep available for subsistence, so that no financial problems arise. Income and fixed costs play a major role in this: repayment and interest must be able to be paid without people getting into trouble.

AFM also wants private lease loan standards

Private lease therefore entails a considerable financial obligation, including a BKR registration. But there are no borrowing standards. That actually means a double disadvantage for consumers: registration, but no statutory financial security.
That is why the AFM is asking the Minister of Finance to also apply conduct supervision for private leases. The aim is to create clarity for consumers and to prevent over-lending.

As with consumer credit, the AFM must conduct supervision for private / operational lease. Examples include a loan standard, but also maximizing the costs and regulations surrounding advertising for leasing. For consumers, it must become completely clear what exactly a lease entails, what the risks are and how much they will spend on their lease contract in the long term.

Personal loan: borrow safely

Do you have to or do you want to make a somewhat larger expenditure soon and is there no money box for that? Then carefully weigh your options against each other: lease or a loan. For those who do not want to get into financial trouble and eventually become the owner of the washing machine, car or furniture, a personal loan is by far the safest and cheapest option. Especially now that the interest rate is historically low with us: you can borrow from 3.5% interest.

As with so many things, it also applies to leasing or borrowing: look before you start. Would you like to know more about a safe loan? Then view our loan guide.

Alfredo Junior

Partner and Head of Realization

Author: Alfredo Junior

Halmar is solution-oriented, creative and very efficient. He has a suitable solution for every problem. Are you looking for financing for a holiday home, a car, boat, caravan or the renovation of your owner-occupied home? Halmar thinks along with you. He ensures a fast and error-free settlement and payment of your loan.

Specialization within Snaploan Online - Realization of the returned contracts, completing, checking and forwarding the complete credit files to the banks.

"I personally guarantee that you will have access to your money quickly and safely."

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