Law:
https://www.admin.ch/opc/de/classifi.../221.214.1.pdf
Constitution:
No idea if/when there was a specific vote on it, but it is in the constitution - articles 97 and 122 are the basis for the Consumer Credit Act, which gives the government the responsibility for setting the maximum consumer interest rate and the cantons the responsibility for implementing the adjudication process.
You're living in a country which is most definitely not a consumer society, a society where spending money foolishly is frowned upon. Furthermore, those of us that have been here longer have seen this before - the new guy who over commits on credit, then suddenly looses their job and do not have the depth of wealth to sustain their live style. So you should not be surprised at some of the advice you are receiving....
Five or six of my friends own luxury cars, but everyone of them paid cash and a few of them even shop in Konstantz too. In twenty-seven years, I can't say I know a single person who bought a car on HP or via a loan for that matter. So I would not at all assume that the people you seen shopping in Konstantz, have their car on credit.
If it were me I'd spend say 12K or so for a good car and rent a Porsche for a bit of fun every so often. But each to his own...
What DK said.
You will get pay for the convenience of handing the car back if you chose to do so.
If you decide to sell to someone else then that is that, and no "extra" costs.
With today's interest rates credit is cheap so I'd say it makes more sense to lease than with high rates. If you've got 70k in the bank there are far better things to do with it than tie it up in a depreciating asset.
Most of this isn't true.
Generally you get a better price when leasing than paying cash - the dealer makes money on the lease too so even if you take the 0.9% leasing deal there will be a kick back to the dealer which they wouldn't get if paying cash.
In some countries if you buy a cheap car with actual cash (notes, not bank transfer) it helps as the seller doesn't then declare it fully to the tax authorities, but this isn't the case when buying a 70k Porsche.
The 'restwert' is often negotiable too, they tend to try and set it up to be low as it makes it easier to persuade you to trade in for another car at the end of the deal (if you have 5k equity then that's the deposit on the new car) so that suits the dealer.
Penalties only come into it if you give the car back at the end of the deal - if you pay the restwert and keep it, or buy out of the lease early, then it's not a problem.
The rates start at 5%! This isn't a mortgage. If you have a better idea where one can generate risk free 5% return other than by NOT taking a loan at this rate I'm all ears. Savings accounts pay 0%
I guess it depends on your mindset really. I'd never tie up 70k in something like a car for the sake of saving 5% interest a year, and I'd much rather leverage up the capital and invest it in property or similar. Obviously this isn't 'risk free' but it's fairly low risk if you're sensible. Personally though, I don't think I'd ever have 70k which is liquid enough to just buy a car with - it's either in a pension or invested in something else.
In addition, car leasing is often below 5% as it's low risk and secured against an asset unlike a normal loan, and even on used cars manufacturers will offer discounted rates.
You'd be amazed how many very wealthy people choose to lease cars rather than buy outright for these reasons (just to be clear, I'm not very wealthy, or even slightly wealthy) as it's more prudent to use your capital elsewhere.
It's a pretty poor security compared to mortgage notes. Nothing prevents the borrower from taking off abroad with the car and never coming back. Probably the low rate is more than enough compensated by higher hidden depreciation charges
Trust me - they get really pissed when you terminate a lease early because their depreciation model was more conservative than the market
I ran a model earlier checking the cost of purchasing a 100k car out rights and then selling @ 4 years and leasing one (20% deposit) for the same period - while at the same time ensuring 100k was back in saving after 4 years.
Leasing costs around 10k over 4 years. So you are paying 2.5k per year to maintain higher liquidity and for someone else to carry the risk of the car depreciating much quicker than expected.
I don't quite get what you mean by this, there is no hidden depreciation that I see. You pay deposit, monthly payments, and restwert and then the car is yours. Yes, you can give it back instead of paying the final bit but that's your call.
I didn't say it's better security than a mortgage (obviously the rates for this are far lower) but it's much better for the bank than someone just taking out an unsecured loan with no asset attached to it.
If you're borrowing against property to buy a car then you need to be extremely disciplined - this was one of the big triggers for the financial crisis in the UK, lots of people with 100% mortgages on new build houses with a white Range Rover on the drive and a struggle to make the payments when something went wrong. The car depreciates faster than the mortgage reduces so you end up paying for it forever.
They can offset lower interest by more aggressive depreciation schedule, I.e. lower remaining value, or demand a higher downpayment - effectively you'd be paying the interest upfront in the latter case. There's no free lunch
No they can't - you're paying interest on the final amount as well as the monthly payments. It's calculated in an extremely complicated way but if you increase the restwert you end up paying slightly more in interest than with a lower remaining value as although you've borrowed the same amount the payment phasing means you're paying it back at a slower rate. This would be reflected by a change in the published 'APR' rate for a UK deal but the flat rate is not affected.
The downpayment is irrelevant as you only pay interest on the amount borrowed. Yes, they have conditions on how much you need to pay up front but this is determined by your credit-worthiness or maybe if there's a promotional rate which requires a bigger deposit.
Leasing is a TOOL.
It is used extensively as it has an embeded insurance element for a premium. The lessor takes the risk of further depreciation that the agreed upon residual, and the lessee pays interest because (a) they are borrowing the (sales price - residual value - downpayment) amount, and (b) to compensate for the risk offset.
As the leasing rates in CH are always cheaper than any personal loan rate, it is practically a no brainer.
One is borrowing less money than for buying a car outright, and at a lower rate, while at the same time has a floor on the depreciation of the car.
For cheap cars the vollkasko might make it unecessarily expensive to insure the car, but for expensive cars leasing is a great way of managing your car expenses.
And in many cases, leasing can have tax benefits as well.
So yes, it might be abused by people that just want an expensive car, and it might seem like "dark finance magic" to some. But it remains a tool and a great one for people that have a use for it.
Leasing a car never makes sense unless
A. you get some tax benefits since the law allows you to expense the payments if you run a small business
B. you want to avoid the hassle selling the car in a few years time and also as it was mentioned you want to avoid surprises in the future value of the car
C. in some countries you pay less sales tax when leasing a car.
This is wrong. If interest rate is 0.9% and you want to keep the car is no brainer.
I bought a car on a 3 year lease: 35400
Residual value 18 000.
Value as new: 35400
Leasing + purchase = 5000 + 374 × 36 + 18000 = 36400
Ok i loose 1000 chf and if i invest the 7000/year in my 3rd pillar i pay less 1000 chf taxes a year.
Is a no brainer. And leasing can be 12 months
Did you ask for a finance offer?
0.9% rate isn't an adequate compensation for the risk. Probably you got ****ed on the price, have you even tried negotiating it? 5-10% are the going standard rates for consumer loans. Reverse the calculation and that should give you an idea how much discount you should have asked for when paying cash
Explain how I got shafted...
33% discount on a brand new built to order Mercedes AMG with 1.9% leasing. There was no better offer for cash. The car is currently holding its value better than I would have expected nearly 2 years later.
It's also already been pointed out to you that dealers are incentivised to sell finance, so are actually likely to give you a better price than cash.
You shafted yourself already the moment you decided you needed a brand new car, it's great way to burn some money regardless how you finance it. And from a Swiss dealer - you're overpaying for the convenience of not importing it yourself. Of course, for many people a car is more about passion s than utility and they're willing to pay accordingly
On a Mercedes GLA 200 nightstar Auto with 19 AMG + Panoramic roof + rear camera hardly (even insurance quote is 51 000).
The deal was to take a stock car (0 kms) where they made 31% discount.
Der neue GLA «Night Star».
GLA 200 inkl. «Night Star»-Ausstattung CHF 40 130.-
Preisvorteil 22% CHF 9110.-
Barkaufpreis CHF 31 020.-
So mercedes recommend 9110 discount and i got more 7000 from dealer because it is in Stock.
In this case leasing is really good for me. I can see in 3 years if i want to keep the car.
Financing would be not ideal case for me.
See above my post (or below): This GLA is 31 020 (original 40130). Mine was 50550 (AMG wheels, Panoramic roof, Auto gear, GPS, heated seats and so on).
So 50550 i got 35550. Even if i believe someone could get 32 000 in financing mode with 5% interest makes no sense at all.
Der neue GLA «Night Star».
GLA 200 inkl. «Night Star»-Ausstattung CHF 40 130.-
Preisvorteil 22% CHF 9110.-
Barkaufpreis CHF 31 020.-