Differences between leasing and car financing
Blog | Car Credit | Credit
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Car financing |
Leasing |
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Mileage |
No, the vehicle is yours. You use it as you like |
Yes, indicated in the leasing contract. 0,3 ou 0,5 chf per additional mile, if over the mileage limit. Annual mileage allowance. |
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Repayment duration |
84 months max. |
60 months |
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Vehicle ownership |
The customer |
The bank |
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Residual value |
None |
Yes + VAT to be paid |
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Full casco insurance |
Free to choose |
Mandatory full Casco coverage |
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Life insurance covering the remaining balance on the loan |
Yes, included in the interests. No additional fees. |
No, option to be added |
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Down payment |
Not necessary |
Yes, often requested |
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Interest on VAT |
None |
Yes |
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178 code indicated on the vehicle registration card |
No |
Yes, meaning impossible to resell the vehicle to a third party |
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Mandatory maintenance of the vehicle |
Free, not mandatory |
Mandatory |
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Contract early termination |
Yes, at any time, lower interest charges based on the unused remaining time |
Possible with fees and costs |
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Car purchase, discounts |
If paid in cash, a discount can be negotiated with the garage owner |
Little negotiation |
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At the end of the contract, the vehicle can be returned |
Not possible to turn the vehicle in |
Residual value to be paid |
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In case of accidents, whether partial or complete damage |
The insurance company will pay you directly the market value of the vehicle 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. |
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Vehicle resale at any moment, market price |
Yes, market price |
No, garage price |
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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. |
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Deductible interests and debts |
Yes, fully deductible |
No deduction |
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Trouble with the vehicle warranty |
More flexibility for you |
You must keep on paying the leasing company. |
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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 |
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Held legally liable in case of lease monthly payments litigation |
Your vehicle will not be taken away from you, no causality. |
The vehicle is returned to the dealer, you are not the owner… |
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Use of the vehicle |
Free |
Restriction against who drives |
Article written by Münür ASLAN Managing Director of Cashflex MultiCredit Sàrl.
