Leasing a car in Europe can be a great value

A reader recently asked if the well-known "French lease" buyback program is still available for travelers to Europe, and I can assure him that it is. It's best for long-term rentals, senior drivers facing a maximum age cap on regular rentals, or young drivers ages 18 to 24, but it can also be a good deal for drivers of any age.

How it works

On paper, you buy a factory-new car, drive it for up to six months, and sell it back to the leasing company at a guaranteed resale price. Conventional wisdom says that a new car loses maybe 25 percent of its value the day you drive it off the showroom floor, but this counterintuitive program works because the car manufacturer treats the sale as an export, thus avoiding VAT, and the barely-used return cars can be a much better deal for French residents than a new car.

In practice, you don't have to put up the purchase price at all. All you pay is a regular lease prepayment, which you can put on your charge card just like a rental. The leasing company carries the deal.

What you get

You drive a factory-new Peugeot, Renault, or Citroen (or one of a few Nissan models). As far as I can tell, the leasing options are confined largely to the lower and middle ends of the regular line: economy, compact, and midsize, plus wagons and vans. You can arrange your choice of gasoline or diesel—a majority of the options seem to be diesels these days, reflecting the popularity of diesels in the used market. You can select automatic or manual shift, with automatic becoming less expensive over the years. Air conditioning is optional on some lower-end models, bundled into the mid-range options. You're allowed to drive in all of Western Europe, plus quite a few Eastern countries.

Rates

The minimum 17-day lease for an economy-class Renault Clio is $1,074; the rate for a Peugeot 1007 is $993. Those figures work out to about $60 a day. On a 30-day lease—$1,275 for a Clio or $1,269 for the Peugeot—the average daily rate drops to a bit more than $40 a day. The most upscale lease I could find was for a Peugeot Executive 2.7 V6 diesel, starting at around $150 a day for 17 days and dropping to $96 a day at 30 days.

The lease rate is all-inclusive: base lease, full no-deductible liability and collision insurance, and roadside assistance. You don't pay VAT on a lease, but some airport and other location-based surcharges are extra. There's no maximum age limit or senior surcharge and no surcharge for drivers in the 18- to 25-year-old group—a group that is either banned from or heavily surcharged on conventional rentals.

Pickup and return is available at airports, rail stations, and city offices throughout France at no extra charge. For Renault, either pickup or return adds another $125 at nearby locations such as Amsterdam, Barcelona, Brussels, or Frankfurt, to $275 for more distant locations such as London and Rome. The fees for Peugeot and Citroen are similar.

Is it a good deal?

The lease works best for longer periods, trips that begin and end in France, and very young or old drivers who face age-based limits or surcharges. Auto Europe, for example, offers 17-day all-inclusive conventional rentals on comparable vehicles for less than its own lease rates, so the lease is clearly not a good deal for short trips. But for trips of 30 days or longer, the lease gains the advantage. The lease advantage decreases for trips that start or end outside France. And expect an extra $300 to $600 for round-trip ferry costs to and from England.

Where to get it

You can arrange Renault leases through Renault Eurodrive or Auto Europe; Peugeot leases through Auto France or Auto Europe affiliate Kemwel. The only sources I could find for Citroen leases are in Australia, including Europe Travel Centre.