Financing your car

Car Financing: Car Loan or Lease?

Car financing |

When buying a car in Switzerland, paying in cash is the cheapest option. However, there may be times when additional funds are needed for auto financing. In this case, you may consider a car loan or lease. Find out which option is more suitable for you in this article.

What are you looking for?

  • Car loan calculator
  • Car lease vs loan calculation 
  • Loan or lease: What's the best option?
  • Car loan comparison

    Do you want to get a car and keep it? Check if a car loan is the right choice for you. Simply put in how much you need and the duration of your loan.

    Calculate the cost of your personal loan – and compare products.
    • Ownership

      The car is yours right from the start. This means that you may use the car in any way you like.
    • Termination

      If you suddenly find yourself in financial difficulties, you are free to sell the car and terminate the personal loan.
    • Choice

      You do not have to rely on a specific repair shop and are free to choose the cheapest provider.
    • Decision-making

      You decide which parts should be repaired, not the leasing company.
    • Flexibility

      After two to three years, you can switch to cheaper partial casco insurance or you may even choose to get partial casco from the beginning.
    • Deduct interest costs

      In your tax declaration, you can deduct the interest paid from your income. If you lease a car, you cannot make any deductions.

    How much does a car lease really cost?

    At first glance, leasing a car may seem like the better option. However, there is more to leasing than just the annual interest charges. When deciding between a car loan and a lease, you should also consider factors such as ownership, insurance costs, mileage, taxes and contract duration, which affect the total cost of a vehicle over its entire useful life. And what happens when your personal circumstances or needs change while on a leasing contract?

     Calculate the lease payment for your preferred car and obtain an estimate of the approximate costs involved:


    Example: Lease vs. loan

      Lease 4.9% Loan 7.9%
    Purchase price of car 30,000 30,000
    Residual value 12,000  
    Financing amount 18,000  
    Duration in months 48 48
    Interest rate 4.90% 7.90%
    Monthly cost 458.90 727.15
    Total cost of instalments 22,027 34,903
    Total cost including acquisition of car 34,027 34,903
    Difference in financing   876
    Difference in insurance   -804
    Total difference (savings compared to loan)   72

    Assumptions / explanations

    According to analyses by, full casco insurance for a leased car costs on average 200 francs more per year than that for a non-leased car. The costs of a lease at 4.9 percent roughly correspond to those of a loan at 7.9%.

    The hidden costs of a car lease

    A lease may sound like a quick and straightforward way to acquire a car, but many people fail to consider the many additional costs before they decide to lease a vehicle. 

    • Car Insurance

      As lessee, you are obliged to buy expensive full casco insurance. Even after a few years, you may not switch to a partial casco insurance, which is cheaper. What’s more, full casco is more expensive for leased vehicles than it is for vehicles paid for in cash.
    • Ownership

      You are not the owner of the car while you lease it. You may not sell the car nor lend it to third parties without restriction. If there is no purchase option in your lease contract, you have no claim to the car even after the lease has expired. In this case, the garage buys the car at the residual value. This price is usually less than the market value because the car depreciated in value as you used it. At the end of the day, the garage makes a profit at your expense. If you finance a car with a loan, on the other hand, you can sell it any time at its market value – and if you can get more for it than the residual amount of your loan, you can reap the benefits yourself.
    • Financing trap

      Should your income or personal situation suddenly change and you are unable to continue the lease, you can expect to pay a high price for early termination. So instead of being able to resolve money worries by selling your car, you could actually run into more financial trouble.
    • Excess mileage

      The lease contract stipulates a maximum number of kilometres you can drive per year. If you exceed your allowance, you will be charged for the additional kilometres.
    • Service

      Under a lease, you may be contractually obliged to have your car serviced in authorised repair shops only, which are expensive. You may also incur considerable additional costs when returning the car after the lease has expired. Why? As the garage has to buy the vehicle from the leasing company at the residual value, it is in their interest to bill as many repairs as possible to the customer.
    • Tax

      For private individuals, loan interest is tax-deductible, whereas interest payments for a lease are not. For self-employed people, a lease may be more convenient because it can be accounted for via the company and thus deducted from the profit.

    Car loan or leasing: What’s the best option?

    When deciding how to pay for a car, getting the cheapest interest rates should not be the deciding factor. More often than not, aspects such as flexibility, car ownership, insurance costs and annual taxes are not considered during the decision-making process, which could lead to you paying more than you originally anticipated. Consequently, the best auto financing option should always take your personal situation, priorities and circumstances into account.

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