Lifestyle
Car Leasing vs Buying
A leasing instalment looks small next to a purchase price. Add up the down payment, every instalment and the final buy-out value, and you can compare leasing with paying cash on the same basis — plus see the interest rate hidden inside the contract.
Difference in total cost
CHF 3'040
Buying outright costs about CHF 3'040 less (7.6% of the price). Leasing totals about CHF 43'040, buying outright CHF 40'000.
Total cost of leasing
CHF 43'040
Down payment + 48 instalments + final buy-out
Total cost of buying
CHF 40'000
The cash purchase price
Difference in %
7.6%
Measured against the purchase price
Implied interest rate (nominal)
2.8%
Nominal annual rate (the rate as it is written in the contract) on the CHF 36'000 the leasing company finances — 2.9% effective with monthly compounding (slightly higher, because it also counts interest on interest)
Total instalments
CHF 23'040
48 x CHF 480
Final buy-out value
CHF 16'000
Paid at the end if you keep the car
Total cost side by side
Everything you pay under the leasing contract, against the cash purchase price.
How the payments add up
Cumulative cash out year by year. Buying is a single payment up front; leasing keeps climbing until the buy-out.
Cost breakdown
Every payment on each side of the comparison.
| Item | Leasing | Buying |
|---|---|---|
Down payment | CHF 4'000 | CHF 0 |
Monthly instalments (48 x CHF 480) | CHF 23'040 | CHF 0 |
Final buy-out value | CHF 16'000 | CHF 0 |
Purchase price | CHF 0 | CHF 40'000 |
| Total | CHF 43'040 | CHF 40'000 |
What these numbers mean
Leasing and buying the same car end up as two different totals: CHF 43'040 against CHF 40'000, a gap of CHF 3'040 (7.6%). The comparison assumes you keep the car at the end of the leasing contract by paying the buy-out value, so both routes leave you owning the same vehicle.
The gap is financing cost. Spread over 48 months on the CHF 36'000 the leasing company advances, the instalments plus the buy-out imply a nominal rate (the rate as it is written in the contract) of about 2.8% per year — the figure a contract prints. That is the price of not paying cash.
If you return the car instead of buying it out, the comparison changes: you have paid the down payment and every instalment and own nothing, while the buyer still holds a car with a resale value.
The two routes each carry a cost that the totals alone do not show side by side. Leasing charges interest inside the instalments — about 2.8% a year here. Paying cash charges nothing, but it means having to pay the whole amount at once: at 2% a year over 4 years that is roughly CHF 3'200 of opportunity cost (the money you could have earned by investing it instead of spending it now) given up. Neither figure is added to the nominal totals; they sit next to each other so you can see both readings. The point is not that leasing is bad, but that leasing plus buy-out costs more to reach ownership — while a cash buyer gives up a return on the capital.
Interest is not the only extra. Leasing almost always requires full casco insurance, usually dearer than the cover an owner would choose, and contracts cap your yearly kilometres, with a charge per extra kilometre at the end. On top of that: penalties if you end the contract early, no equity built along the way (return the car and you own nothing; buy it out and you still pay its full value), possible return charges for wear or cosmetic damage that can be disputed, restrictions on modifying the car, and the leasing company checks your financial situation, a bit like for a loan.
Leasing still has non-financial merits: predictable monthly cost, a car under warranty, no need to pay the whole amount at once, and cash you keep free for other uses. This tool prices the nominal difference; whether the convenience is worth it is your call.
Other things to weigh
Factors the nominal comparison does not price, but that belong in the decision.
- Leasing almost always requires fully comprehensive (casco) insurance, usually more expensive than the cover an owner would choose.
- Contracts cap the annual mileage, with a per-kilometre charge if you exceed it.
- Ending the contract early normally triggers a penalty if your needs change.
- No equity builds up until the buy-out: return the car and you hold nothing; buy it out and you pay its full residual value.
- Wear-and-tear or cosmetic damage can be charged at hand-back, and the assessment is often disputable.
- Modifications to the vehicle are restricted while the contract runs.
- The leasing company checks your financial situation, a bit like for a loan, and in Switzerland the contract is registered under the same protection rules that apply when you take out a loan.
- Insurance, servicing, tyres, fuel and cantonal vehicle tax are paid either way and are not part of this comparison.
This is a nominal cost comparison for orientation only — not financial advice or a financing offer. It does not value the smaller amount of capital you avoid having to pay at once when leasing, nor any return you could earn on the difference if you invest it, nor warranties and services included in some contracts, VAT treatment, or the different tax treatment for business use.
It also excludes the typical leasing drawbacks: mandatory full casco insurance, annual kilometre limits with excess charges, early-termination penalties, no equity built up, disputable wear-and-tear charges on return, limits on modifying the car and the check the leasing company runs on your financial situation.
Always read the leasing contract, in particular the buy-out terms, kilometre limits and return conditions. Your inputs stay in your browser.