We're leasing a car, but we will eventually own it. We set the restvalue as low as we could (1,000CHF) so we can pay it off easily at the end of the term. How does the mileage limit work since we're going to own it? Is that something that's checked yearly or at the end of the term? Who checks it?

I can't imagine having to mind the limit if we're just going to end up owning it anyway.

Does anyone have any experience with this?

Thanks..

The mileage only comes into account (rather expensively) if you return the car after leasing.

If not, you need to settle the residual value at the end of the lease and you're a happy camper.

Leasing a Car in Switzerland

i can confirm shorrick's view - this is what happened when we leased, and then ultimately purchased outright, our car....

We leased to own. Our residual value was set at CHF0 and the kilometers were not an issue. When we made the last payment, the leasing company (automatically) sent us a letter stating they give up all claims to the car.

Its nice that everyone does not think of maybe why the mileage limit is there...

If you look in your leasing contract you will see a value table that determines the value of your car at any stage of the contract. Often it is a percentage table showing how much the car is worth at point x as a percentage of the initial purchase price. Why is that relevant? And why is Shorricks answer not quite right?

The stated mileage per year is a straight line accumulation from delivery to return (or take over). If you see the lease to the end then you can give it back or take it over. If the mileage is at that point above the limit they can charge you xRp per kilometre for every kilometre above the limit to a cap of the difference between the value in this table and the amount the garage pay for the car.

If however you die or need to leave the country or for some other reason cannot complete the lease term then they use the table and the straight line mileage calculation to calculate how much you owe for an early return. This is often expensive as Shorrick so rightly says... Interestingly they also give you a rebate for being below the stated mileage but don't believe it will be anywhere near as much as being above

Yes, what you say is of course true. and luckily I didn't die before I paid off the car. We did put in a number (I think it was 20K per year).

But in a practical sense it didn't matter. As I said, when we made the last payment I got a letter from the leasing company and no one checked or asked the number of kms on the car.

the form from the lease company when the lease is paid off is also important. Take this and the car papers to the local car registration office so that the car can be declared no longer under lease. Send a copy of this to your insurance person too and you might see insurance go down.....

miniMia, they don't check the Kms on the car when everything goes well.

In the case something goes wrong, for example, you had an accident and the car is declared "beyond repair" or you just have to give it back, they'd calculate the residual value of the car according to their abusive formulas and add to this the extra depreciation you made of the car by running it more than allowed, which is charged about c/.70 / Km and then you'll have trouble.

I had a car on leasing, it was a cabriolet and everything was going well, my plans were to keep the car at the end, the Leasing thing was only to have a financing of it.

But one day in the highway there was an accident and the traffic speed went down fast, then after the accident place we accelerate but suddenly we had to drop the speed again down to 80Kmph, but the car behind me didn't saw it and crashed his car into my trunk.

The car was is mint condition, only used by around 1 year, but as I had to do Zurich-Geneva-Zurich often I had more km than allowed.

It was not my fault. The insurance took in charge the car and declared it "beyond repair" as the chasis has been damaged, and simply calculated the residual value and paid the leasing company. But the leasing company made their own calculation and determined that my car depreciation was higher so at the end the contract was simply dissolved and I got just CHF 1200 back. After a year of paying 650 CHF / month of leasing, plus the initial leasing payment ( about 2500 ) !.

They graciousely offered to give me a new car and start a new leasing, but I didn't took it.

This teached me a lesson. Never again leasing.

Yes! the insurance certainly does go down!

There is of course a way to avoid this problem in that you can take Insurance with depreciation against time. This is the normal insurance you need for Leasing cars and for cars of high value... If you do not have it then you might learn a lesson for next time...


Here is a table from Winterthur showing depreciation against time:

ZeitwertzusatzDank dem Zeitwertzusatz erhalten Sie bei Totalschaden eine Entschädigung, welche höher ist als der Wert Ihres Fahrzeugs beim Schadenszeitpunkt.

Die Entschädigung ist nach den Betriebsjahren wie folgt abgestuft:

BetriebsdauerVersicherter Fahrzeugwert in %
im 1. Jahr 95 - 90
im 2. Jahr 90 - 80
im 3. Jahr 80 - 70
im 4. Jahr 70 - 60
im 5. Jahr 60 - 50
im 6. Jahr 50 - 45
im 7. Jahr 45 - 40
im 8. Jahr Zeitwert

(MM: original message snipped, see above)

Thanks so much for adding this. It's true it seems we were lucky. I hadn't thought of any of those things. Something to think about for next time (if there is one! )

Is the rate of interest charged by the car leasing companies in Switzerland higher or lower than the rate a bank would offer for a car purchase loan? If higher, why lease? Is it the residual value 'guarantee' which is attractive?

Its typically about 4-6% lower...

there is largely nothing called a "car loan" IIRC. You can get a loan from a bank, though.

lease rates you might find around 4-5% - or less - if you're lucky. Typically the residual value will be low market value - and you could sell privately for more (money and hassle). You might find your company will do you a cheap lease - for example UBS offers all employees leases through Alphabet.

Leased cars must have fully comprehensive insurance.

The reason you see many Porsches and so on is often the person leases the bare minimum amount possible - ie. to never own, do as few km as possible, etc. So not everyone is as "loaded" as they look

clive,

the fact is that those are two different things.

When buying through a credit, the bank gives you the money, you buy the car. then you owe money to the bank and the car is yours. Probably the car could be seized if you don't pay. you are charged an interest for a credit.

When leasing, the leasing company buys the car and rents it to you, the car belongs to the leasing company, you pay a monthly ammount that involves the car rental and an amortization to buy the car at the end of the leasing contract.

The thing is that the leasing companies uses exponential formulas to calculate those 2 components. So at the beginning of the leasing contract you are paying mosty rent and fees and little amortization and this inverts at the end of the contract.

But you should also take into account the car depreciation. They use another exponential formula so the car value goes down fast at the begining of the lease and then goes down slowly until it reaches the residual value in the contract ( that could be 0 ).

So if everything goes well, at the end of the contract your car worths nothing or very little for the leasing company, so you can keep it.

But if you have to stop the leasing at the beginning of the contract you'll find yourself with a car with a little value ( as the depreciation put down fast the value of it ) and your amortization is also little ( as at the beginning what you pay is mostly rent and not amortization ). But you received a car worth full value so you have to pay back the difference.

Result. the case I described earlier.


The leasing contract reaches an equilibrium point around past the middle of the period in which what you paid is what you have.. but not before.

We went with a lease when we bought a new mini because the interest rate at the time was 1.9%. I don't remember exactly, but the rate for getting a loan was about 8%.

There are other things to consider as LR says, the insurance on a leased car is more expensive than if you buy the car & pay off your loan with the bank. We ask our insurance agent to quote both options and although the rate for leased was higher, monthly we paid less due to the low lease interest rate.

I heard something recently about being able to deduct the interest from a bank loan. But since it wasn't our case I didn't pay attention. Anyone know about this?

You can deduct just about any debt interest (except maybe interst on your tax ).

I found leasing to be a cheaper option overall than a loan but then I got a real bargain on an ex demo with the dealer offering a much lower price if I took the lease and helped his figures with the brand owned leasing company .