Are Buy-Back Car Leases Better than Car Rental in Europe?

Want to rent a car in Europe long term? Try a buy-back Lease instead

The Peugeot 206 is a popular buy-back lease choice
••• The Peugeot 206 is a popular buy-back lease choice. Franco Dal Molin/Creative Commons

You know the car rental drill. You check around for the best price, then you start to book a rental for your European vacation. Then comes the bad news. You want your spouse to drive the car? That'll be five euros a day extra. You want insurance with that? Oh, boy, that's extra too! On long duration rentals, all this adds up fast.

It's not just the cost up front. Will your credit card company really pay your CDW (Collision/Damage Waiver)?

Will the rental company try to charge you for that ding you noticed after you drove the car off the lot? Maybe you think there should be a better way.

French Buy Back Lease to the Rescue... Maybe

If all of the above conditions apply to your car rental search -or you're just tired of the hassle and worry of renting a car in Europe, you might want to look into the French Buyback Lease program. It's the way I choose for my car travel in Europe. You'll have to need the car at least 17 days, but you'll get a new car, all insurance with zero deductible, family members can drive the car, and you probably won't stand in line to pick it up. This summer we chose to use the Auto Europe Buyback program.

We picket the car up in Avignon. Actually, the car picked us up, because when we called to tell them we were in town and would be picking up the car in a couple of days--they offered to pick us up at our hotel.

The manual-transmission Peugeot (which is pretty standard in Europe, though automatics are available on some models) worked like a dream for our month-and-a-half vacation. Then we returned it in Avignon, got our stuff out of it, signed the release papers, and were driven to the train station to start a train trip back to Paris.

No hassles! 

Check out Auto Europe's Peugeot Buy Back Program (Auto Europe also rents cars in Europe and offers frequent specials on rent and buy back lease cars).

How Buy-Back Leases Work

So what makes the buy-back program work? Here's the deal. There's this little consumption tax called Value Added Tax in Europe, except everybody is ashamed to call it that, so you'll see it written as VAT. In France, the VAT on a new car purchase is about 20%. Ouch.

So why not sell the car as barely used, saving the new owner some of that tax burden? To do that, why not let a tourist from outside the EU--someone who's not usually subject to VAT--buy the car, drive it on vacation, and turn it in to be transfered to a new owner or a rental car company? Yes, the government of France allows their car companies to supply cars to tourists tax free.

Pretty slick way to get around VAT, eh?

In any case, everyone benefits with the buy-back program. You get a car that is brand new, the new French owner gets a slightly used car for much less than the cost of a new one, and the outfit leasing the car is strongly motivated to make sure nothing happens to the car before it gets passed on--so they offer full, zero deductible insurance coverage and a 24-hour hotline for service.

This is an idea that seems to have taken hold in France, with Citroen, Peugeot and Renault offered on lease programs. (This doesn't mean you have to start your lease in France; they ship the cars all over, including airports, but you'll have to pay a bit extra for the service. You will have to deal with people thinking you are French, because the plates will reflect that assumption.)

Pros and Cons of Buy-Back Leases

Buy Back Pros:

  • You get a new car
  • The car is fully insured (zero deductible)
  • You have 24/7 breakdown coverage in case anything goes wrong
  • You get the exact vehicle you order
  • You only have to be 18 to participate in the buy back program
  • You can pick up and drop off the car in different cities (free within France)
  • You don't have to struggle to find a gas station near the airport, you can return the car empty

    Buy Back Cons:

    • The car will usually come with very little fuel in it
    • You'll be charged extra for pick-up or drop-off outside of France
    • You need to lease for at least 17 days

    Price: Buy Back Lease vs. Rental

    On long term leases, say a month or more, chances are you'll save money over a rental. You'll definitely save some hassle. In a short 17-21 day lease, you are likely to find better prices for rental, especially if you're sure your credit card will cover CDW and you don't have a second driver.

    Things to watch out for when renting:

    • You'll probably want the Collision Damage Waiver (CDW). It's insurance that covers the high deductible that the normal insurance comes with. Used to be that some Gold Cards covered this cost, but you'll really need to check, since some have stopped offering that service. You might check your own insurance policy as well for coverage.
    • The rates quoted in advertisements seldom include all the costs you'll incur in renting a car -there are many hidden costs, such as having more than one driver. Plan where you'll drive your car, then get a final, all-inclusive quote before you compare the costs to leasing.
    • It often costs more to rent from an airport, because the airports charge the rental companies to run their businesses there. If you land in a big city, and want to explore that city--why not spend time there and rent the car when you're ready to leave town?
    • Reserve the car in the U.S. You'll often get a better rate than you might as a walk-up and you'll get peace of mind as well.

    Another Bonus with Buy-Back Leases - Great Insurance

    Some folks say that leases are slightly more expensive than bargain-basement rentals. This is likely true, but note that on a lease program, the leasing company has a vested interest in the car which will be resold, likely to a rental company, and they protect that interest by offering very good insurance. The full coverage insurance that comes with the price of the lease is well worth the peace of mind in the opinion of this traveler. We've been hit twice in parking lots. With a rental car with the over-expensive "full" coverage we were charged a 50 euro "paperwork" fee. When we returned our lease car that had been dented the day before in a parking lot they looked at the car and said, "don't worry about it, we'll take care of it." We didn't have to fill out any paperwork.

    More Things to Consider

    Whether you're renting or leasing, here are a few things to think about:

    • While not absolutely necessary in most countries, it is getting quite common to ask for an International Driver's License. We've found them to be mandatory in Italy at random stops by the highway patrol. You can get an IDL from an American Automobile Association office (although the ones around me are always out of them, it seems) or online. You'll need a passport size picture. (The license is pretty much just a translation of a standard US license. They don't test you by making you slalom around women in black sitting in wicker chairs randomly dispersed over the cobblestone surfaces of one-lane roads squeezed between medieval houses, a skill you may need in Italy. You'll have to learn how to do that on your own.)
    • Gas costs more than you're used to if you're from the US. It's measured in liters, which makes it sound more reasonable than it is until you get the bill for the fill-up. Diesel is usually far cheaper than gasoline. If you're on a budget you might consider renting or leasing a diesel car to save fuel costs.
    • Automatic transmissions aren't very common on European cars.