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Differences between leasing and car financing

Blog | Car Credit | Credit

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.