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Andri Zisler of the Swiss Automotive Industry Association tells Radio Südostschweiz that about half of the cars on Swiss roads are rented. At first glance, leasing has many advantages: The monthly rate remains the same throughout the entire period and can therefore be calculated. Interest rates are much lower than consumer loans. There is no need to invest financial resources for the one-time purchase of the vehicle. This way the drivers remain solvent. However, these benefits come with some conditions, and this is where many misunderstandings occur.
Leasing is renting
A common misconception is that renting is the same as renting. When you lease, you pay monthly to use the car, but you’re responsible for taxes, insurance, service and maintenance. This also means you have to pay for it yourself.
Leasing is purchasing in installments.
This is probably the most common misconception. Leasing is not a purchase in installments, but the right to use it for a certain period of time. The vehicle remains the property of the leasing company or bank. Monthly installments only cover the use of the vehicle and rental interest. After the contract expires, you can purchase the vehicle at the agreed residual value after consultation. However, you can determine this residual value at the beginning of the contract and therefore know at what price you can take over the vehicle.
Leasing is valid for new vehicles only
This error is probably due to advertising: the latest models are widely promoted here at very attractive prices. Usually with very low leasing interest rates. Caution is advised here, as these rates are subsidized, for example through a non-discounted list price. Of course, there are also good rental offers for second-hand cars. Decisive advantage: Since the biggest depreciation of a car occurs in its first year, there are used cars in very good condition and you can save a lot. Farie, the online store for cars, is offering a 3.99 percent rental rate in its autumn promotion.
Is it too expensive to buy or rent as a solution?
Low interest rates and low monthly installments seem more attractive than a five-figure purchase price. But you still need a solid financial foundation for renting. Leasing in Switzerland is governed by the Consumer Credit Act. This means it should not lead to excessive debt. That’s why you’ll need to pass a credit check to prove you can afford the payments. To do this, the leasing bank requests information about your income, financial obligations and employment relationships.
Leasing gives me more flexibility
For a lease, a fixed period of time is agreed upon, called the lease term. This is usually between 24 and 60 months. Farie now only offers 12 month rentals. The 3.99 percent interest rate offered in the autumn campaign also has the advantage that the advantageous conditions are valid for maturities of up to 60 months. In general, interest rates are expected to increase. Rule of thumb: the shorter the term, the higher the monthly rate. Leaving a contract early can be costly.
Mileage adjustable
Additionally, a mileage is determined for the entire rental period. This is binding and should not be exceeded. The following applies here: the more kilometers you choose, the higher the rate. Both the lease term and mileage affect the vehicle’s initially determined residual value. However, it may still make sense to expect more mileage instead of having to pay for too much mileage in the end.
More kilometers don’t matter
If the mileage limit specified in the rental contract is exceeded, additional costs will arise. The price per kilometer is regulated in the rental contract. That’s why it’s important to choose your mileage realistically based on your actual driving habits. If you have less mileage at the end of the rental period, there are usually no refunds.
Deposit and residual value do not matter
Paying a deposit is common practice in Switzerland. This is also called a “special lease payment” or “first major installment”. You can choose the height yourself. The higher the down payment, the lower the monthly payment. You can also set the agreed residual value to a lower value to purchase the vehicle cheaper, but the monthly payments will be slightly higher.
Leasing suits everyone
Approximately 50 percent of vehicle drivers rely on rental. If you like to travel regularly with new models and technologies, leasing is a good option. Therefore, replacing your car regularly can be a cost-effective way. However, due to fixed conditions and mileage packages, you will be subject to obligations that must be adhered to. It is also important to consider the total cost of the vehicle. If you want to use your car for a very long time, it is better to buy it with cash.
Everything is included in the rental
Taxes, insurance, maintenance and service are usually borne by the tenant and must be calculated in addition to the rental price for the total cost calculation. An all-inclusive package is available with the car subscription, where everything except fuel or charging power is included in the fixed monthly price.
After renting before buying?
As stated, the vehicle belongs to the bank for the entire rental period. You use it only for the agreed period, under defined conditions. The vehicle then returns to the contract partner and you don’t have to worry about reselling it. Or you can purchase the vehicle at a predetermined residual value and continue using it. One in every two vehicles is rented in Farie. Also thanks to attractive conditions and easy application directly on the Farie website.
Source: Blick
I’m Ella Sammie, author specializing in the Technology sector. I have been writing for 24 Instatnt News since 2020, and am passionate about staying up to date with the latest developments in this ever-changing industry.
