What is residual value ?
The residual value of a leased vehicle is the residual amount that must be paid at the end of the lease in order to become the owner of the vehicle. It is like a Eurotax rating, defined at the signing of the leasing contract and which remains unchanged until the end of the leasing period. The residual value is equal to the financed amount (purchase price of the vehicle including interest) minus the leasing payments.
How is a residual value calculated ?
All leasing contracts with a purchase option include an option to purchase the vehicle at the end of the lease. This allows the lessee of a vehicle who wishes to do so to become the owner at the end of the leasing contract. And although the majority of leasing contracts end with the vehicle being returned to the garage, it is important to understand what criteria are used to calculate the residual value of a leased car in Switzerland.
What is the relationship between the leasing amount and the residual value ?
A leasing contract has three main components: the down payment, which is usually optional, the lease payments with or without optional guarantees and the residual value at the end of the lease. The payment of an initial deposit reduces the amount of the lease payments. Similarly, the residual value of the lease influences the amount of the lease payments. The logic is simple: the higher the residual value of the lease, the lower the lease payments… and conversely, the lower the residual value of the lease, the higher the lease payments. The residual value of a leased car is therefore an important criterion for estimating the monthly car leasing rent in Switzerland.
If the supplying garage believes that the vehicle will be sold at a good price at the end of the lease, the residual value of the lease will be rather high and consequently your lease payments will be a little lower. If, on the other hand, the vehicle you are leasing is less sought after or less popular on the market, the leasing instalments will be higher.
On what basis is the residual value of a leased vehicle calculated ?
As mentioned above, the calculation of the residual value of a leased car in Switzerland depends on several criteria such as the selling price, the age and mileage of the vehicle at the end of the lease, and its make and model.
The residual value of a new leased car is usually between 35% and 50% of the total leasing cost. It is estimated on the basis of the value that the vehicle is likely to lose after the leasing period. This percentage can be higher or lower, depending on the characteristics, make and model of the vehicle. The garage owner determines the amount of the residual value at the end of the lease based on depreciation tables and his experience. At the end of the leasing period, he is obliged to buy back the vehicle from the leasing company at the residual value specified in the leasing contract.
The advantages of buying back a leased car
Buying back a leased car in Switzerland that you have been leasing for years has many advantages. On the one hand, you only have to pay the residual value of the leased car, the buy-back value, which some garages even offer to finance with a new lease. And on the other hand, you already know your vehicle well, so that you will no longer have any secrets about its overall condition. If the residual value of the lease is low, you can become an owner at a low price. You can make a good deal by paying the residual value at the end of the lease to become the owner. Please note that the vehicle supplier is free to decide whether to sell the vehicle at the end of the leasing contract.
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