I've had a search round and can't find the answer to this:
If I agree to a lease with a residual value of x francs, at the end of the lease term if the car is worth more than x, can I buy the car from the finance company for x?
For example, I lease a new Ferrari worth CHF 1,000 now, which the lessor says will be worth CHF 100 in 2 years time (leaving me with CHf 800 to finance over the two years). The Ferrari after two years is actually worth CHF 200 - Can I buy said Ferrari from the lessor for CHF 100 and sell it for CHF 200, so my cost of ownership is actually CHF 700 (+ interest, + maintenance/fuel/consumables/insurance blah blah blah)?
I will buy your Ferrari for 200
Utterly predictable
I chose a silly example to avoid any "you're a rich arsehole ask your tax advisor" comments if I said I wanted to lease something expensive (cf is CHF xxx,000 enough to live on threads) or "just buy it" comments if I said I wanted to lease a Kia.
I prefer your response Although an answer from someone would be good...
yes, you enter into a contract where the residual is calculated at the beginning of the lease.
be careful with the km and any wear/scratches on the car - this can affect the value when you give it back.
The best thing to do, read some leasing contracts. Far better is never to lease a car, money wise and avoiding unnecessary obligations.
To be honest, I wouldn't be looking at giving it back. I get preferential rates through work on leasing, but the range of residual values the quote website lets you use are ridiculous. For example a 2 year old car for sale at 80,000 has a maximum residual value of 29,500 after a 2 1/2 year lease. The cheapest comparable car that is 4 1/2 years old is nearly 50,000. I know that's retail price, so I wouldn't be able to sell it for that, but I would certainly be able to sell it/part-ex for more than 29,500, hence my question about being able to buy it at the agreed residual value.
If you lease the car a buy out value can be agreed at the start of the lease. That is you can put down a deposit of X, finance Y and then pay the balance of Z at the end of the leasing period. You can set these values to suit how much you want to put into the car at the start and how much you want your monthly repayments to be. It is then contracted how much you buy the car out for at the end of the lease. If the car is worth more then the contracted amount then you still only pay the contracted amount.
If you intend to give the car back at the end of the leasing period then you need to pay if you are over the allowed mileage or the car is damaged.
I've done pretty much exactly what you said (all be it for much lower figures!) for the same reasons. At the end of my leasing contract I will pay a residual value, own the car and if I want to change it I can sell it privately or part exchange for a new one.
From where?
This is going very off topic but, I'm comfortable with the leasing rate and the period and I think that the interest rate I'm looking at is fair and is a premium I'm prepared to pay to allow me to have the car now rather than in the time it would take to save for it.
Moneywise I have compared the cost of getting a loan and the cost of leasing and with the deals I have access to, assuming I can buy the car for the residual value, it is cheaper to lease than finance.
Thanks - that is how I assumed it worked and gives me a lot of comfort about the crazily low residual values I am being offered. I didn't want to finance the lessor's profits over and above the interest
Minor point, but insurance is more expensive for leasing, if you are thinking of a super car then the difference might be more significant.
Sadly never owned a super car myself; apart from the VW I'm selling in July, which is a super car but in a different sense.
Thanks for that. It doesn't seem to make a make or break difference for me to be honest. In terms of car, I'm looking at a sports car (1-2 year old Boxster S or 3 year oldZ4M) rather than a supercar, but I know when I go to the Porsche dealership I will be enquiring about a 6 year old 911 turbo. Deep down I know that even though the leasing price will probably be similiar, the 911 will have the potential to ruin me
You are right about this. That's how I did it.
I used a online leasing calculator (BankNow) to calculate the monthly payments. As I wanted to do it as cheap as possible i.e. pay as little interest as possible, I told the leasing company, that I will do 40.000+ km/year which gives me a high monthly payment. Additionally I chose a short payment plan which also adds to the monthly payments, but the total amount in interests is of course lower. As the yearly km is high the residual value is very low naturally.
Well, if at the end of the lease the car is worth more than agreed upon at the beginning, this basically means your monthly payments have been too high. For this reason it is logical you can buy the car at the end of the lease for the (low) agreed price...
WARNING! BRONTOSAUR DROPPINGS!
Why do you think are there leasing busineses out there?
Why do you don`t have a look here and get some contracts to read?
http://en.comparis.ch/leasing/result...3&amount=35000
Peugot I think is doing Leasing at 3%, but always read the terms of contract and understand what leasing means.
You can build your own super car no problem. Get an old van with rear wheel drive (old transit) preferably with 2 times 2 wheel on the rear. Buy a few motorcycle engines at a breakers yard, let say 4 to 6 engines 150 hp each. Weld engines in the back of the van. Cut a hole through the floor, weld sprockets to the vans drive shaft. Run motorcycle chains from engines to sprockets through the hole in the floor.
Presto: 600 to 900 hp van which will smoke most cars on the road. No handling though but who cares
If only I had the time....
Thanks for the link. Not sure why I didn't think to look at comparis for leasing, as I use it for everything else.
Again going to go off topic, but I'm an accountant who works for a bank (that sounds incredibly arsey, but isn't supposed to be), so I understand the ins and outs of leases, financing and so forth or at least I did in the UK, hence my question about CH. If we ignore the ownership issues leasing is just a form of secured financing (with permutations for down payments and balloons) hence using comparis the cheapest leasing rate is 4.5% and the cheapest loan is 8%, all things being equal the leasing is cheaper, because a) it is secured and thus less risky from the lender's point of view (so they are happy to take a smaller margin) and b) I have given up ownership, so am rewarded for that. I have no intentions of modifying the car etc so the benefits of ownership aren't that high to me.
Another issue to throw into the mix is that I've been here less than a year so am not eligible for a loan, but am eligible for leasing, as it's secured.
I'll definitely start reading some contracts though
So your going for a 911. I might have to drive one of them soon
Not for too long though hopefully. Sell it and make a few quid with luck
I have to give my lease auto back pretty soon, and I have
way overshot my kilometer limit. I will probably have to
pay about 2000CHF on the giveback. If I were you, I would set
it much higher than you think.
Well I've just seen an 04 996 turbo cabriolet at the Zurich Porsche centre. I may have to have a wander down after work and have a look I'm obviously justifying it to myself as having better residuals as it's an older car, is 4 wheel drive so safe all year and even has back seats for luggage, oh and has mind blowing performance and if it comes with a 2 year warranty (not to mention the 2.9% leasing deal and free driver training day)...
Why the sad smiley though?
I think the cheapest loan is around 5.9% from MigrosBank.
The big advantage of loan is you can sell the car at any moment and pay back your loan without any penalty. For leasing, if you have a problem to pay the monthly rate, the penalty will cost you much more.
I think if you compare risk and total cost of ownership, loan is i think better. Of course all this depends on the buyer's risk profile and possibilities.
Do you know if leasing or loan is tax deductible?
Have you considered just to get a decent car for around or so 10`000.- til you have saved enought for your Ferari?
I make an example, a Porsche Cayenne is new around 120000k that means you pay off every month 2500.- +5% leasing rates during 4Year.
You can buy a 4 year old Porsche Cayenne for around 45`000.- so that means the depreciation during the leasing period is 75`000.-
Isn`t it far much better to put the the leasing pay offs on your Bank account for 4 years and drive a cheap car in this period. So that means at the end you have 75k on your bank account plus rates on it plus your Porsche and saved a lot money for mandatory insurance.
So where are the higer costs? owning a Car and over 75`000 bucks or Having a car only and already payed a lot for Insurances?
Looks like you are doing your job well. But in practical live you have to catch up a lot.
There are a lot cars out there which have a depreciation of 50% in the first 3 years, so why don`t you save up for one ?