The 5 essential conditions for a leasing contract
You want a leasing contract to drive your dream car? These are the conditions to meet before you can apply.
1. Which documents do you need for a leasing contract?
This is a summary of the documents you need to provide to obtain a vehicle leasing contract:
- A valid identity document (identity card or passport)
- A copy of your C or B residence permit if applicable
- A copy of your last 3 pay slips
- A copy of your employment contract if requested
- An extract from the credit history register
- For the self-employed, a copy of your last full tax dues may be requested
2. What are the conditions for obtaining a leasing contract?
Certainly less strict than a car loan, the financial establishments, banks or car manufacturers offering leasing contracts require guarantees before granting a leasing contract. Minimum conditions:
- Have a residence in Switzerland, be of Swiss nationality or have a B or C residence permit valid until the end of the leasing contract in question.
- Proof of the financial resources needed to pay the monthly instalments such as an employment contract and pay slips for example.
Furthermore, your credit history certificate must be provided. If you have unpaid debts, it is very complicated to obtain a leasing contract from official and trustworthy service providers.
If your assets or income are high enough but for too short a period, for example in the case of a young person who has only been earning a good salary for 6 months, an initial deposit may be required.
3. Leasing and unemployment?
Many of you are asking yourselves this question: can I apply for a leasing contract while unemployed? No, as a rule unemployment benefits are not enough to obtain a leasing contract.
However, if you already have an existing leasing contract and become unemployed or unable to work, there are insurance policies to protect you.
This is a brief comparison of 2 known leasing insurances in Switzerland:
Coverage offered by Credit Now:
In the event of involuntary unemployment or incapacity to work, payment of monthly instalments of up to CHF 2,000 for a maximum of 12 months, limited to 24 monthly instalments over the entire contract period. In the event of permanent earning incapacity due to disability: payment of the balance of the debt up to a maximum of CHF 100,000.
Coverage offered by Cashgate:
In the event of involuntary unemployment or incapacity to work, payment of monthly instalments of up to CHF 2,500 for a maximum of 12 months. In the event of permanent earning incapacity due to disability: payment of the monthly instalments until the end of the contract, up to a maximum amount of CHF 70,000.
As with any contract, it is essential to be fully informed because the terms and conditions differ widely from one insurer to the next. For example, for the insurance offered by Credit Now, you must be over 20 years old, have a permanent employment contract of a minimum of 25 hours per week and have been in your current employment for at least 6 months. Whereas in Cashgate’s leasing insurance, the conditions are more flexible regarding age and working hours. Indeed, an adult working over 20 hours a week can request a proposal.
4. Compare leasing offers
Before requesting a quote from a financial establishment, you should always compare the different leasing rates and conditions using an online comparator. There are big differences between the rates of financial establishments and manufacturers that also offer leasing contracts. The big difference is that the manufacturers only provide leasing contracts for their own vehicles.
Examples of the impact of the difference in the rate for a car costing 35,000 chf and a leasing period of 36 months, i.e. 3 years:
- Amag Leasing(Audi, SEAT, Skoda and Volkswagen:
Proposed lowest rate: 0.9 %
Price: 1,013.47 chf
- Cembra Money Bank(For all new and used cars):
Proposed lowest rate: 5.5 %
Price: 972.22 chf
- Cashgate(For all new and used cars):
Proposed lowest rate: 4.85 %
Price: 1,030.73 chf
- BCGE(For all new and used cars):
Proposed lowest rate: 2.75 %
Price: 1,044.99 chf
5. Beware of early termination
In leasing contracts, your monthly payments are determined by 2 things:
- The duration of the contract. The longer the contract, the lower the monthly instalments.
- The agreed mileage. If you exceed it, be aware that you will have to pay an additional amount.
If you terminate your leasing contract before the end of the term, your monthly instalments will be recalculated using the residual value table coefficient indicated in your contract. You will pay the difference between the amount already paid and the newly recalculated monthly instalments. Sometimes, the financial establishment may also charge you a fee to repair the car. This amount can rise very quickly and very often represents thousands of francs. However, the longer the leasing period, the lower the compensation.
If you have to get rid of your car, choose a lease buyout which will save you money!
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