Differences between leasing and car financing
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Differences between leasing and car financing
You have found your next car already and it’s time to think about how you will finance its purchase. Take a look on the comparison between two of the most common car financing methods: leasing and car financing via auto credit.
| Car financing | Leasing | |
|
Mileage |
No restriction, the car is yours and you drive as much as you like. | Yes, indicated in the leasing contract. 0,3 to 0,5 CHF per additional km, if over the limit. Annual mileage allowance. |
|
Repayment duration |
84 months max. | 60 months |
|
Vehicle ownership |
You own the car. | The bank |
|
Residual value |
None | Yes + VAT to be paid |
|
CASCO insurance |
Free to choose | Mandatory full Casco coverage |
|
Life insurance covering the remaining balance on the loan |
Yes, included in the interests. No additional fees. | No, option to be added |
|
Down payment |
Not necessary | Yes, often requested |
|
Interest on VAT |
None | Yes |
|
178 code indicated on the vehicle registration card |
No | Yes, meaning impossible to resell the vehicle to a third party |
|
Mandatory maintenance of the vehicle |
Free, not mandatory | Mandatory |
|
Contract early termination |
Yes, at any time, lower interest charges based on the unused remaining time | Possible with fees and costs |
|
Car purchase, discounts |
If paid in cash, a discount can be negotiated with the seller | Little negotiation |
|
At the end of the contract, the vehicle can be returned |
No, as you are the owner of the car | Yes and a residual value to be paid |
|
In case of accidents, whether partial or complete damage |
The insurance company will pay you directly, according to the insurance contract. | Must repair and in case of total damage, the insurance company will pay the full amount to the leasing company. |
|
Vehicle resale at any moment on market price |
Yes, market price | No, garage price |
|
Damage inside the vehicle (seat, …) |
You are the owner | If the vehicle is returned to the dealer, all the damages will be charged to the customer. |
|
Deductible interests and debts |
Yes, fully deductible | No deduction |
|
Trouble with the vehicle warranty |
More flexibility for you | You must keep on paying the leasing company. |
|
Vehicle is inspected when returning it to the garage |
No, the vehicle is yours | Yes, it is required by the leasing company, the garage will inspect the car |
|
Lawsuits or disputes over leasing payments |
No repossession of the vehicle. You are the owner. | Vehicle is taken back by garage, you are a lessee… |
|
Use of the vehicle |
Free | Restriction against who drives |
Article written by Münür ASLAN Managing Director of Cashflex MultiCredit Sàrl in Fribourg Switzerland.
