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Old 19.12.2011, 10:51
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New car: Lease or Credit?

Hi folks,

I'm in the process of buying a new car (35000 CHF value), and I was wondering if I buy it on leasing or credit. I can make a deposit of ~ 20000 CHF, so basically I would need around 15000 for lease or credit. Migros bank offers a credit for the rate of 5.9%, and my dealer's leasing rate is also 5.9%! With these rates, would it then make sense to go for the credit, or am I missing something here?

Assuming yes for the question above, do you know of any more preferential leasing offers? I found BCGE online which offers a rate of 4.8-5%, was wondering if you know of any banks offering lower rates (e.g., < 4%)? And if leasing rate is lower, would it then make sense to go for leasing, or are there still advantages for credit? For example, I've heard that owning the car would decrease the insurance premium...

Thanks for your help!
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Old 19.12.2011, 10:53
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Re: New car: Lease or Credit?

Migros Bank is usually best for a loan.

Leasing ties you into a water tight contract, which in my opinion is not worth the hassle.
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Old 19.12.2011, 11:02
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Re: New car: Lease or Credit?

If you go for a leasing, you will pay higher insurasnce premiums, why i have no idea and nobody can give me a sensible answer, you can easily check the difference in Comparis.ch, do one with leasing as payment and another as cash.

Mine was Chf 1400 cash, Chf 1800 leasing, EXACT same terms apart from financing !

If the credit is same as leasing, go for credit.
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Old 19.12.2011, 11:16
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Re: New car: Lease or Credit?

Depending if you are committed to the particular dealer you may be open to looking at AMAG who offer very reasonable leases

Current leasing rate with them is 2.9% (second hand cars) 5.4% (new) provided you deposit 10% of the car value for the purchase.

Have used them before and quite reasonable. Just make sure you understand the terms which you will only get in the 3 official swiss languages.

Details are on their website
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Old 19.12.2011, 13:02
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Re: New car: Lease or Credit?

Thank you all for your comments. I haven't yet found a lease offer of < 4% for new car. If any of you are aware of this, please let me know.

So I calculated the costs with the leasing offer of 4.8% I've received. Considering the increase in the insurance premium for a leased car, finally this would give me a marginal benefit of 100-200 CHF (over the whole contract term) compared to a loan of 5.9%! Are there other costs/disadvantages of leasing (other than the insurance that I took into account) compared to credit? Or shall I still take the loan due to the negligible overall price difference?
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Old 19.12.2011, 13:18
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Re: New car: Lease or Credit?

Leasing reduces your tax burden. Buying increases you tax burden.

If you buy a cheap(ish) car then it doesn't really matter.

If you buy a car with a list price of 80 - 100k CHF leasing would make sense.
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Old 19.12.2011, 13:36
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Re: New car: Lease or Credit?

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Leasing reduces your tax burden. Buying increases you tax burden.
Could you explain how exactly?! I'm on a B permit, getting paid from source (taxes deducted automatically from my income). Will this extra tax be deducted from the income then? How would they find out about the loan?!

One more question: Would it be possible to sign the contract for buying the car in the name of myself and also my wife? Would then the car value be split half-half? Sorry I don't have any info on Swiss property system
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Old 19.12.2011, 13:53
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Re: New car: Lease or Credit?

[QUOTE=TenaciousJ;1437867]Leasing reduces your tax burden. Buying increases you tax burden.

If you buy a cheap(ish) car then it doesn't really matter.
QUOTE]

I would guess the opposite as you can't deduct the leasing interest but you can deduct the interest on personal loan. Tax on capital being so low, the impact on the tax should be minimal....
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Old 19.12.2011, 14:00
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Re: New car: Lease or Credit?

Not too sure about the split ownership scenario, doubt that will work though.

In CH any asset you own is taxable (large assets only I suppose). Like houses and cars for example. This is why declaring foreign property may be or may not be worthwhile.

So if you own a house the tax man will work its presumed rental value and charge you tax on its rental value, whether you rent it out or not.

Same thing for a car. You have expensive car then it has a value and that value is taxable.

That said if you use your car to go to work then you can deduct a per km cost (think its 70 rappen/centimes per km).

I think your tavelling time by car must be half the time you would spend to go to work using public transport... so there has to be a valid reason why you are driving and not using the public transport system.

This is why the Ferraris, Lambos, Bentleys and big German cars you see around are so prevelant. Its cheap/easy to have one and it works in your favour.

If you earn 120k CHF a year or more you automatically are sent a tax declaration form and this is where you would claim mileage, expenses, etc.

Below 120k CHH you can still claim these expenses I suppose, but it would be up to you to get the forms and fill them in.
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Old 19.12.2011, 14:03
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Re: New car: Lease or Credit?

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Are there other costs/disadvantages of leasing (other than the insurance that I took into account) compared to credit?
Not sure what type of employment contract or permit you have, but leasing ties you in for a set period of time. If your situation changes and you have to leave CH, it is often not easy or financially disadvantagous to get out of the lease, espeically at short notice.
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Old 19.12.2011, 14:17
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Re: New car: Lease or Credit?

Yes, so car leases are typicallz for 4 years, but you can make them shorter. For 35k CHF its probably better buying it and claim the mileage back against your taxes...
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Old 19.12.2011, 14:20
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Re: New car: Lease or Credit?

[QUOTE=bnallama;1437898]
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Leasing reduces your tax burden. Buying increases you tax burden.

If you buy a cheap(ish) car then it doesn't really matter.
QUOTE]

I would guess the opposite as you can't deduct the leasing interest but you can deduct the interest on personal loan. Tax on capital being so low, the impact on the tax should be minimal....
When leasing, you can deduct the monthly lease from your taxable pay as the car is basically "rented", only when you own it it is classes as an investment, after 4 or 5 years depending on your lease. But then you can caculate the depreciation at 25% per year to bring the value down

I am speaking on a business point of view, not 100% sure if it also works that way privately

Last edited by TonyBhoy; 19.12.2011 at 14:22. Reason: extra info
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Old 19.12.2011, 14:27
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Re: New car: Lease or Credit?

My accountant told me it was best to take the lease as a private person and claim the mileage against my personal income taxes.
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Old 19.12.2011, 15:26
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Re: New car: Lease or Credit?

Thank you guys! Based on your feedback, I guess I'll go for the credit option, as the credit amount would be ~ 15000 CHF, it's tax deductible and I feel less tied!

Regarding my other question: does anyone know if it's possible to register the car under two names? Should any special process be taken for this, or can we do it at the signature of the contract?
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Old 19.12.2011, 15:31
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Re: New car: Lease or Credit?

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Leasing ties you into a water tight contract, which in my opinion is not worth the hassle.
I leased (I think) my car when I first got here, but I'm really tired of it as it's not meeting my needs. I would really like to trade it and upgrade into something else.

Is that not possible on a lease contract?
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Old 19.12.2011, 16:10
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Re: New car: Lease or Credit?

It is possible to treade it back and get a new lease. It just has to be worthwhile for the garage... so you need to get a better car from them.
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Old 19.12.2011, 17:27
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Re: New car: Lease or Credit?

Simple rule: if you can't pay cash, you can't afford it.
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Old 19.12.2011, 23:54
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Re: New car: Lease or Credit?

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Regarding my other question: does anyone know if it's possible to register the car under two names? Should any special process be taken for this, or can we do it at the signature of the contract?
Being married, you are taxed as one entity. And recently they stopped allowing dual ownership of vehicles. So no you cannot.
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Old 20.12.2011, 11:47
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Re: New car: Lease or Credit?

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When leasing, you can deduct the monthly lease from your taxable pay as the car is basically "rented", only when you own it it is classes as an investment, after 4 or 5 years depending on your lease. But then you can caculate the depreciation at 25% per year to bring the value down

I am speaking on a business point of view, not 100% sure if it also works that way privately

This may only works for businesses. Private persons do not have this option.
From the Basel Taxoffice
Quote:
Kann ich den Zinsanteil bei den Leasingkosten für mein Auto steuerlich abziehen?
Nein. Nur Zinsen für die Beanspruchung von fremdem Kapital wie Schuldzinsen aus einem Darlehens- oder Kleinkreditvertrag sind abziehbar. Ein Leasingvertrag stellt aber keinen Darlehensvertrag dar und somit begründet er auch keine verzinsliche Kapitalschuld.
Only intrest paid on loans can be detucted. As a lease is not loan but a rent you cannot detuct anything.

Last edited by aSwissInTheUS; 20.12.2011 at 12:37. Reason: Fixed bogus quote
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