Taking over a car lease in Switzerland

I want to buy a car off a friend who is leaving the country. She leased the car so i am not sure how buying it from her works. Can I just buy the car from her like any other car or is the lease a problem?

Hi there,

The first thing you should know is that your friend does not own the leased car - she is simply renting or "leasing" the car from a leasing company. Your friend cannot sell you the car because it does not belong to her.

However, some Swiss leasing companies will allow another person to take over a lease. If you do this, you will be responsible to make the lease payments. However, the car will not belong to you, but will simply be rented to you instead of your friend. When the lease contract expires, the leasing company can choose to take the car back or sell it to you.

Some leasing companies will allow your friend to terminate the lease ahead of schedule. However, when she does this the interest rates will normally be readjusted to match the shorter lease term and she will have to make up the difference. If her lease contract allows her to purchase the car at its residual value, she can do this and then sell you the car for the same price.

In any case, buying a car (new or used) in cash is generally cheaper than leasing a car in the long run. You can read the moneyland.ch guide to the costs of leasing for more information.

Hello,

I am an American in Switzerland and I am about to take a lease over from a colleague to have the car for 2 years. The pay per month isn’t bad but what procedures do I need to take to drive the car? This is my first time doing this so I want to understand everything fully. The dealership doesn’t speak English well so I would like advice before continuing. Thank you very much.

Hi there,

Assuming the leasing company allows lease transfers – and most Swiss leasing companies do – there are a number of points you should consider.

A good first step is to tally the total costs of the lease.

1. Do you have to pay a fee to transfer the lease? How high is the fee?
2. Do you have to make a down payment? How high is the down payment?
3. What is the total of all lease rates across the 2-year lease term?
4. What are the service requirements? Does the leased car have to be serviced by a specific garage? How high are their service fees?
5. What are the insurance requirements? Leasing companies generally require you to take out full-casco insurance coverage (liability, comprehensive and collision) for their cars.
6. Are there mileage limitations? If so, do they meet your requirements or can you change the mileage limits when you take over the contract?

The costs of leasing are explained in detail in the moneyland.ch guide to car leasing costs.

In many cases, the total costs of taking over a car lease are higher than the total costs of buying a car in the same condition. Assuming that leasing makes financial sense in your case, consider these points:

1. Does the lease expire in 2 years? If not, are you confident that you will find someone to take over the lease after 2 years? Finding someone to take over a car lease can be very challenging.
2. What is the car’s residual value at the end of the lease term, as per the leasing contract? Do you have the option of buying the car for its residual value after the lease?
3. You are not obligated to use the same car insurance used by the former lessee. Comparing insurance premiums is highly recommended. Currently, PostFinance car insurance has the lowest premiums for many cars and drivers.
4. You must register the car at the road traffic authority and obtain license plates. In many cases, the leasing company will assist you with this.
5. Consider trying to negotiate a lower leasing rate with the leasing company. Market rates may be lower now than they were when the original leasing agreement was made.

Alternatives to leasing

As a general rule, we advise against leasing in favor of buying. The reason for this is that the costs of buying are (much) lower, when you account for the vehicle's resale value. If you cannot afford to buy a car in cash, using a personal loan is often cheaper than leasing – if you qualify for a low interest rate. You can use the moneyland.ch personal loan comparison to compare the interest rates of Swiss personal loans.

Car plans provide another alternative to leasing. Car plans are generally more expensive than leasing. But they make budgeting easy because almost all costs - including servicing and repairs - are covered by the flat fee. You can find more information and a Swiss car plan comparison here.

Best regards from Moneyguru

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