Lease and anticipated termination
What is a lease?
In Switzerland, more than 50 % of the new vehicles are sold with leases. There are three different types of leases:
- Total rental lease
- Lease with an option to purchase
- “Sales type” lease
The total rental lease is about renting a vehicle with monthly installments calculated on a defined length and a number of kilometers known beforehand. It is a long-term rental. The vehicle must be returned at the end of the contract.
The lease with an option to purchase works like a total rental lease except that when the contract is ended the customer can purchases the vehicle at a price given beforehand (the residual price). This situation is adopted by more than 80 % of the private customers.
The “sales type” lease works like a lease with an option to purchase except that when the contract is ended, you become the owner of the vehicle without having to pay the residual price.
With a total rental lease, you will pay lower monthly installments, but you will have to give the vehicle back when the contract expires.
With a lease with an option to purchase, you will pay higher monthly installments but you will become the owner of the vehicle at the cost of the residual price.
With a sales type lease you will pay even higher monthly installments but you will become the owner of the vehicle without having to pay for the residual price.
What is the residual price?
The residual price determines the value of the vehicle when its length of rental has expired. Residual price = purchase price – amount of amortizations
How is a lease organized?
A lease is organized thanks to the actions of three branches:
- The motorist, wishing to rent out a vehicle
- The bank or the credit institution purchasing the vehicle
- The mechanic selling the vehicle and making it available.
For the whole length of the lease contract, the bank or credit institution remains the owner of the vehicle. You are the bank’s or the credit institution’s lessee. You must bear the expenses related to the use of the vehicle (maintenance, comprehensive vehicle insurance…)
At the end of the contract:
- In the case of a total rental lease, you must give the vehicle back.
- In the case of a lease with an option to purchase, you can buy the vehicle back at the cost of the residual price.
- In the case of the sales type lease, you become the owner of the vehicle
The anticipated termination of the lease:
The monthly installments of your lease contract are calculated according to the contract’s length and the number of kilometers stated when the contract is subscribed. The shorter the contract is, the more expensive your installments will be.
In the case of an anticipated termination, your installments will be recalculated according to the effective length of the lease contract. You will have to pay the difference of the installments you have already paid and the total of lease installments recalculated upwards according to a coefficient mentioned in your contract. This sum can stand for MORE THAN A THOUSAND SWISS FRANCS!
In most cases, you will be asked for allowances according to the number of kilometers you made.
If you transfer your car lease contract, you will not be charged with these restraining, sometimes excessive allowances.
LeaseTransfer offers a simple and efficient solution to let go of your lease contract at a lesser cost!
A car lease: it can cost you a lot! Voir l’émission de la RTS