Are you looking for a vehicle but you don’t have the equity? In Switzerland you can benefit from various financing options.
- The leasing
- The “car financing”.
- personal loan
We compare these different options to determine which funding best suits your needs. Several possible financing options for buying your vehicle, but which one is best suited to your needs?
Although leasing rates may seem more attractive, especially for new cars that sometimes offer 0.9% interest rates, it’s an option with many disadvantages and hidden costs:
First, you have to propose an amount equal to a monthly lease payment, which means that you have to pay double the monthly payment in the first month.
Second, and one of the biggest drawbacks, you are a user but not an owner. The vehicle is yours during the entire refund period and afterwards. If you want to own the vehicle at the end of the leasing contract, you have to pay an amount called the residual value. This amount is agreed when the leasing contract is signed. The lower the residual value, the higher your monthly lease payment.
The personal loan is only in your name, in the eyes of the administration, a personal debt, the interest of which is deductible from taxes, more precisely from your taxable income.
It is true that leasing in itself is a debt, just like credit, but in reality you are leasing the vehicle.
The mandatory additional costs have recently been introduced:
Obligation to take out full insurance that covers the damage you and others cause to the vehicle. This insurance costs around USD 100 a month.
You are also limited to an annual number of kilometers that was agreed at the time the contract was signed;
The final invoice will be invoiced to you, while it is free with the credit.
Maintenance is mandatory and usually has to be done in partner workshops, so you don’t necessarily have to choose the workshop.
Car finance ?
Car Finance “or car loans, such as personal loans, enable you to own the vehicle you are looking for immediately.
In contrast to leasing, you can sell the vehicle as needed. There are many other major advantages:
The annual interest is tax deductible. For example, if you have interest of USD 500.00 over a year, you can deduct this amount from your taxable income.
The interest rate corresponds to the leasing rate. Since the finance company gives you a loan for a guarantee on a property, in this case the vehicle, interest rates can be granted that are more or less similar to leasing.
No repayment limit, you only have to pay the agreed minimum monthly payment, but if, for example, thanks to your 13th salary you want to pay 3 (or more) monthly payments at once, you are free to do so. This has the advantage that the total interest on your loan will decrease. The faster you pay, the less total interest you have.
No mileage limit, no unpleasant surprises at the end of the reimbursement, you won’t have to expect thousands of extra francs for the extra kilometers you’ve driven. The vehicle is yours, so do whatever you want with it!
- No advance payment is required. Unlike leasing, you don’t have to pay money in advance when you sign a contract.
- No residual value. You do not have to pay anything at the end of the refund.
- Choose the car insurance of your choice.
- No service obligation. Execute your service wherever you want and whenever you want.
The personal loan is an option that is almost identical to the “car finance”. The only difference is that with personal loans, you are not required to use the car as collateral for your loan.
On the other hand, “Car Finance” is not available for any vehicle and the money goes through the garage in question to finance the vehicle of your choice directly.
With a personal loan, you get the money in your account and you can do whatever you want with it.