If you don’t have the cash for a new or used car, there is the option to finance the car via a loan or .
There is no hard and fast rule as to which of the two solutions is the better option. "It is a very personal decision, and always depends on the client's circumstances and goals," says Patrick Fernandes, Manager of the Zurich City branch of BANK-now. Nevertheless, some advantages of financing with a car loan could be identified.
"At first glance, the interest rates for a loan may appear to be higher. But if you calculate the total costs, it is quite possible that a loan will be the cheaper solution," says Fernandes. For example, with a car loan you do not have to take out comprehensive insurance and the interest is deductible in your tax return.
There are also no mileage or age restrictions for car loans: While leasing is often not possible for a vehicle with over 100,000 kilometers on the clock, there is no problem taking out a loan for it.
A car loan offers greater flexibility
Car loans also offer benefits in terms of flexibility. With leasing, the term is usually three to five years, whereas with a loan, a term of up to seven years is possible. "You can stretch the term a bit, which gives you more flexibility," says Fernandes.
At the end of the contract, the car does not belong to the lessee. They must return the car to the dealer, or can choose to buy it by paying the residual value. When financing via a car loan , you are the owner right from the start. This is another aspect that provides more freedom. It means the car can be sold at any time and the loan can be paid back early.
Additional discounts at car dealers
Many garage owners are happy when you pay for the car in cash with a loan because it means less work for them. There is therefore often an additional discount for you when paying in cash.
Patrick Fernandes advises taking advantage of a free and non-binding consultation with BANK-now early on in the process. "It's annoying when you've fallen in love with a vehicle that costs CHF 70,000 and then realize that the budget will only cover CHF 40,000." It makes sense to find out how much you have to play with in advance. "This makes the search for a suitable vehicle more efficient and enjoyable," he says.