Financing Your Car in the Netherlands: What You Need to Know

Whether it’s a new job, a growing family, or just wanting to be able to explore more of Europe, you’ve made up your mind, you want a car. But then comes the hard part: how do you finance it? Luckily, in the Netherlands, you have many options. However, the world of car financing is full of confusing terms, and choosing the wrong one could cost you thousands. Here’s everything you need to know to get financing for your car in the Netherlands right.

The Two Main Ways to Get a Car in the Netherlands

There are two main ways to get a car: leasing or financing. The definitions of these terms confuse many people, mainly because the differences between them are not immediately clear, and the options differ depending on whether you are an individual or a business owner.

First of all, let’s tackle the terminology.

Leasing a Car

Private Lease: A private lease is a monthly payment arrangement that includes road taxes, insurance, maintenance, and, of course, depreciation. You are renting the car for a long, indefinite period; however, you never actually own it. There is no buy-out option at the end of the term. For new vehicles, terms are typically 48 months, while for used cars, they can be 12 to 72 months. There’s no option for a down payment with a private lease. They are generally more expensive, but there are no maintenance costs with a Dutch car lease. This option can be handy if you know you’ll be here for three years and don’t want the hassle of selling the car later.

Full Operational Lease: A full operational lease is similar to a private lease, but only for business use; the company rents the car, and it never becomes a business asset.

Financing a Car

Hire Purchase: This is called “huurkoop” in Dutch, which sounds much more complex than it really is. With a hire purchase, you pay off the value of the car in installments, including interest. That means you fully own the car at the end of the term. You can make a down payment up front, thereby reducing interest. Terms start at 24 months and can go up to 90 months. You can also choose to have a “final term” left at the end. This is a larger payment made at the end of the agreement, which you agree to beforehand and which reduces the smaller instalments paid during the agreement. You can also put down a deposit. For example, a car is worth €20,000. You can make an upfront payment of €5,000, so you get a car loan for the remaining € 15,000. With hire purchase, you are responsible for tax and insurance. This is a handy option if you want to own the car at the end of the term.

Financial Lease: This is the business version of Hire Purchase. You pay for the car in installments, but by the end of the term, the car becomes a company asset. A financial lease is the business equivalent and is available only to companies (ZZP/BV). The car usually appears as an asset on the company’s balance sheet. Many expats confuse hire purchase and financial lease because both lead to ownership at the end, but hire purchase is for private buyers, while financial lease is for companies.

Most expats choose huurkoop hire purchase agreements for car financing in the Netherlands, which means they will eventually own the car.

What’s Required?

Individuals

You will need:

• Three months of your most recent payslips
• A valid ID or passport
• Your residence permit
• BSN number
• Address
• Most lenders require a Dutch bank account with an IBAN to verify your income and expenses.
• Lenders typically look back at around six months of transactions using PSD2-based tools, with your consent, to check affordability.

Businesses/freelancers

Freelancers and entrepreneurs have an advantage. The car purchase process is easier for freelancers (ZZP’ers) than for regular employees. The application process starts after your business reaches its first month of operation. Your company needs to obtain a KvK (Chamber of Commerce) number, which is used to confirm your income and bank details. The application process requires only your KvK and a driver’s license picture, but lenders will perform a credit check.

If you are a start-up, you can get up to €20,000 in finance, but if you’ve been around for over a year, you can go up to €50,000. The 30% ruling may also help in cases.

Read Also: Conquering Classifieds for Cars in the Netherlands

Tips

• Pay on time – missed payments can lead to repossession. Private lease, hire purchase, operational lease, and financial lease are all registered with BKR, so missed payments are listed in the BKR register.
• Make a down payment if you can. The interest rate banks range from 6.99 to 12.99, depending. So if you show them you can make a down payment and have a good salary, interest may be lower.
• Lenders will only approve a monthly payment that still leaves enough budget for basic living costs.
• If you have a Dutch car driving license, the registration and transfer processes are an absolute breeze. You can do it all digitally from the comfort of your home via the RDW website. If you are still on a foreign driving license, try it digitally first. If no joy, you’ll need to visit a local RDW station to have the car registered in your name.

What If I Leave The Netherlands?

So, what if you got an out-of-this-world job offer in Switzerland, or your grandma falls sick, forcing you to leave the Netherlands quickly? Life happens. In all cases, you need to pay off the money.

Here’s where those predicaments leave you:

Leasing a Car

With a private lease, you are usually locked in for the whole term; ending early often means paying a substantial penalty that can be close to the remaining lease amount. If you have chosen a term, for instance, 24 months, you will likely have to complete it. There are significant implications if you don’t pay. They will come and take the car, or sue you to get it paid. This applies to both the consumer and business options.

Financing a Car

With hire purchase, you have more freedom. If you need to leave early, first pay off the remaining finance to get the registration codes, and only then can you sell the car. You can also choose to pay off the finance and keep the car. This applies to both the individual and business options.

If you are unsure how long you’ll stay in the Netherlands, then hire purchase could be the best option for you. If you need to leave early, you can at least sell the car.

What Else To Consider

When budgeting for a car, consider more than just the monthly loan payment. Depreciation might be important if you go for the purchase option. For example, if you decide to leave the Netherlands and need to sell your car, the amount you receive may be less than the car loan. Road tax is another major consideration that depends on your car’s weight and the province where you live. Road tax is higher in some parts of the country.

Also, don’t forget insurance. There are three types, and these can be confusing and different from what you’re used to.

• Legal Liability (WA): Covers damage you cause to others, but not damage to your own car. This is the cheapest option.
• Legal Liability Plus (WA + Beperkt Casco): The insurance policy provides coverage that includes the same protection as WA, together with theft and fire, storm damage, and window breakage. The policy does not provide coverage for vandalism or for damage that you bring about yourself through actions such as hitting a pole. Some companies offer advanced policies that include 50% protection for damage that policyholders cause themselves.
• All Risk (WA + Volledig Casco): Covers everything, including 100% of damage you cause to your own car. Most expensive option. For example, scratching your own car.

Many expats who finance their car in the Netherlands choose a combination of hire purchase and all-risk insurance because their monthly costs remain manageable and the coverage is as comprehensive as possible.

Financing Your Car In The Netherlands

Suppose you are ready to buy a car but are confused about the private lease and hire purchase options. Luckily, there’s Carvendo, which operates like the “Airbnb of cars”—they connect you to cars from dealers across the Netherlands. With English-speaking car experts and an English-language website, they offer a 12-month BOVAG warranty for every car sold on its platform (wear and tear excluded) and guarantee no maintenance costs for the first 12,000 kilometers or twelve months, whichever comes first. Moreover, they offer free home delivery, and the entire process is handled digitally.

Carvendo doesn’t try to sell you a car; they try to find a car that’s right for you and provide independent advice. Carvendo uses the latest financial technology to streamline the entire agreement process. Approvals can be issued in 10 minutes. Carvendo makes getting approved easier. If you only have a Revolut account without a Dutch IBAN, lenders may still consider you via a more manual process.

Navigating car financing in the Netherlands is never that easy, although the Dutch system can be simple if you know how to navigate the jargon. Leasing or buying a car should be the beginning of an adventure, not a headache.