Leasing or car credit – what's the smartest way to finance your next car?

Prefer paying monthly to spending your savings all at once? Your decision. Your lifestyle. Your budget.

You finally found your dream car – and now what? Should you finance it with a lease or a car credit? Gowago offers both options and gives you the freedom to decide what suits you best and matches your needs.

It’s crucial that you make the right choice – one that suits your budget and meets your expectations. To make the choice easier for you, here's a clear comparison between the two. Without beating around the bush. Without confusing technical language. Only useful tips and real-life insights that will help you take the decision with confidence. Let’s go.

• Leasing vs. Car Credit: At a Glance
• Leasing: An Overview
• The Pros and Cons of Leasing
• Car Credit: An Overview
• The Pros and Cons of a Car Credit
• Decision Guide
• Conclusion

Financing instead of purchasing: a strategy of the finance-savvy.

In Switzerland, one prejudice persists: if you don’t buy your car with cold hard cash, it shows you can't actually afford it.

In reality, the opposite is true – in Switzerland, around 50% of vehicles are financed, leased or bought on credit. And not just by those on a tight budget.

In particular, wealthy people also deliberately choose to finance their cars. Why? Because they use their capital strategically. Instead of tying their money up in products, they keep it liquid – for investment opportunities or simply more financial freedom. It's not that they can’t afford it. They just do the math, see the bigger and realise that buying a car can result in a net-loss.
There are many reasons to finance your car. Sometimes it’s strategic, sometimes the realities of life make it necessary.

#### Strategic, because you want to use your money with purpose: - [ ] You want to remain financially flexible for investments or other major purchases. - [ ] You prefer to invest your capital in value-adding assets such as shares, your company or real estate. - [ ] You think entrepreneurially – and don't tie up your money in a depreciating product. - [ ] You want to keep your financial options open instead of investing everything in a car.
#### Pragmatic, because life can't always be planned: - [ ] You need a car at short notice but haven't saved up enough. - [ ] Your family is growing – or your commute is changing. - [ ] You want to keep your savings for emergencies. - [ ] Monthly instalments suit your life better.

Whatever your reason, with Gowago, the choice is yours. Clear. Flexible. On your terms.

A smart budget = more freedom + less stress

Whether you opt for leasing or a private credit, you should never live beyond your means. To ensure you don't end up in debt, the bank or leasing company will check your credit rating after you submit your application. This will give you a broad indication of what you can presently afford.

But you go further than that and make your own, conservative budget. Driving is freedom, fun and, for some, a status symbol. But it comes at a price. Tyres, servicing, insurance and fuel are all expenses that you need to factor in. After all, what use is a nice car if you can’t drive it?

Also consider whether situations will arise during the contract that will change your monthly budget, such as a child, an education, or you want to start with a 3a pension plan.

And leaving aside ‘serious’ costs, you also want to be able to treat yourself every now and then. With some smart budgeting before signing the contract, you can still afford a dinner with friends, get that new smartphone or splurge on a holiday by the sea without feeling guilty.

Leasing vs. car loan: at a glance

Leasing: If you want variety and to stay up to date

Story Time: Lukas leases

Lukas is 29 years old, an electrical engineer and commutes 30 km to work every day. The journey to work takes twice as long by public transport as it does by car – so he needs a car. Lukas doesn't drive a lot otherwise – to visit friends, occasionally on holiday to Italy or to go shopping. Nevertheless, without a car, life wouldn’t be as easy.

Buying cash was out of the question for him. He earns well and would have enough saved to buy the car outright, but he doesn't want to spend it all at once: ‘I'm planning a trip around the world in a few years. I want to put something aside for that and not raid my savings account.’

‘Leasing fits my plans perfectly: I don't have to spend my savings on a car and at the same time I can always switch to the latest technologies,’ says Lukas.

It's no coincidence that Lukas is an electrical engineer: ‘I've always been passionate about technology, and that extends to cars too.’ Every few years, he upgrades to the latest smartphone and also wants to be on the road with the latest tech gadgets in his car.

His 36-month leasing contract with Gowago fulfils all his criteria: he can simply return the car in time for his trip around the world without having to find a buyer, his savings are intact, and after his travels he can again lease the latest car.

Now, Lukas can hit the road and drive with a smile, thanks to choosing Gowago. Find out more about the advantages of Gowago Leasing.

What is Gowago leasing?

So, does Leasing suit my needs?

You can broadly compare leasing to renting a flat or an apartment: you pay a fixed monthly rate to use the car over a fixed period of time – but the leasing company remains the owner at all times.

When you lease, you actually pay for the car's depreciation that occurs over time as you drive it.

"You can compare leasing with renting an apartment – you use the car, but it doesn't belong to you. But on the flipside, at the end of the contract, you can simply return it without needing to busy yourself about what happens to it afterwards."

That's why there is an annual mileage allowance. In most cases, you can choose kilometre packages ranging from 10,000 to 30,000 km. Any kilometre driven that goes above this limit means that the agreed upon depreciation, that results from the wear and tear of driving, increases. You should avoid this at all costs, because in the case of leasing, you will be charged for additional kilometres – and that can get rather pricey.

"With leasing, you can choose your annual kilometre allowance. However, you may be charged for additional kilometres. Therefore, stick to the agreed mileage limit."

The depreciation also depends on car ageing – in the first three years after its first registration, the loss of value is the most significant, even if not many kilometres are driven. This is also taken into consideration when calculating the monthly leasing rate. Shorter terms mean slightly higher instalments, especially for new cars.

So, which contract length and which kilometre package should you choose? Your choice will be a mix between your needs and your budget. Gowago gives you full flexibility – the changes in your prospective monthly rate that result from the different configurations of contract length and mileage package are immediately calculated. That way, you can compare your options at a glance and find the perfect deal that suits your needs and wallet.

Do you want to lower your monthly rates? Making a down payment at the beginning of the lease can help you there. Just be aware that this down payment is not a deposit – you will not get your down payment back at the end of the lease.

Are you still unsure whether to choose 10,000 or 15,000 km? 36 or 48 months? Then book a call with our team of advisors now. We'll be happy to help you find the optimal balance between price and performance. Your life. Your car. Your leasing.

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Finally, you also pay in **interest rate** as part of your monthly instalment. Since the bank is lending you money for the car for the duration of the contract, they charge an interest rate to act as a payment for the financial risk they are taking up.

"Because you can simply return the car at the end of the lease, you always have the flexibility to update your next car to fit changes in your life and take advantage of the newest technologies."

Another point to keep in mind when leasing: you have to keep your car in good nick. This includes having it serviced annually, taking out fully comprehensive insurance, and having any damage repaired. If you keep your car in good condition, you won't be confronted with additional costs when you return it. If you're interested in what you need to do to ensure a smooth return, you can read our blog article on things to keep in mind at the end of the contract.

The big advantage of leasing is that you can simply return the car at the end of the lease and don't have to worry about the depreciation.

In other words, instead of tying up your money in a product that loses value, you remain financially independent and flexible. And at the same time, you get to always enjoy a cool, new car with the latest features.

If, however, you've fallen head over heels in love with your car, or it just perfectly suits your lifestyle, then you still have all the options to keep it. You can decide to either extend your lease or make an offer to buy the car.

Gowago Leasing gives you transparent, simple and customisable solutions. With our range of more than 15,000 cars that you can check out digitally from the comfort of your home, you’ll definitely find the right car. Then you can apply for and take out your lease online without all the annoying paperwork. With Gowago, you can get behind the wheel of your next car with a smile.

Get your car with a Gowago lease

To Lease or not to Lease: The pros and cons of leasing

Car Credit – if you value ownership and stability

Story Time: Carla takes out a loan

Carla is 35 years old and finally, her wish has come true: She’s pregnant! She'll be a mum in six months. But then, her boyfriend's two-seater sports car won't be big enough for the little family. So she needs a bigger car.

Instead of investing everything in a car at once, they want to save their money for the baby: ‘Together, we want to pay a maximum of 20,000 cash for the car. We want to supplement the rest with a private credit.’

"We don't have to worry about excess mileage, we can save a bit of money on insurance, and the car is ours – and we definitely don't want to change it again in 4-5 years," says Carla.

But the family planning is not over yet: ‘The dream was always two or three children. So, with the credit, we want to already prepare now and get a larger, really safe car that we will still be driving in 7-8 years’. No problem, because loans can have longer contract periods and you can drive the car for as long as you want, since you are the owner from the start.

They have decided on a used Volvo SUV hybrid. Comprehensive insurance would be too expensive, but with a personal loan you are flexible and can choose partial comprehensive insurance – that way, the couple can save money for the kids.

Since Carla's mother lives just outside of Rome and now occasionally needs help with everyday tasks, Carla will often make the drive south. With the mileage restrictions of leasing, she wouldn't have the same flexibility.

With the Gowago car loan, Carla can now finance the car that will help her take the next step in her life. Find out how you too can start the next chapter of your motorised story with a car credit.

Find out more about the Gowago Car Credit

So, does a private credit to purchase a car fit into my life?

To continue our comparison of mobility and housing, rather than renting a house, a car credit is akin to a mortgage to buy the house, er, car. With a private credit, you borrow money from the bank to buy your car and pay off the amount in monthly instalments over an agreed period.

"You want to convert your car into a camper van and live the “vanlife”? Or are you a tuner and want to lower the suspension so that your car perfectly suits your aesthetic? Do you want to repaint it Barbie Pink to match your look? No problem, it's your car."

The main difference to leasing: the car is completely yours, at all times. So you can customise it to your heart's desire, you don't have to take out fully comprehensive insurance, and you can sell it at any time, even if the loan has not yet been fully repaid.

You also don't have to worry about mileage restrictions, so there's no need to worry about driving too much. Spontaneous weekend trip to Italy? Let's go! Short tour of mountain passes on a glorious summer evening? Let's go. You’re from Zürich but have never been to Geneva? Let's go!

"A car loan is comparable to a mortgage when buying a home. You borrow money from the bank to either fully finance the car or to cover a portion of the cost. The car is 100% yours from the moment you take delivery, and you can do whatever you want with it."

When paying off the borrowed amount, interest is also incurred on the loan. The interest rates of a private credit are often slightly higher than with leasing. However, since shorter terms from 6 months are also possible with a credit from Gowago, the effective interest costs are not always earth-shattering.

"A car loan really makes sense if you plan to drive many kilometres and want to keep the car for more than five years. Although there are no mileage restrictions on personal loans, you should not forget that you will bear the depreciation cost yourself."

Car credits are perfect for supplementing your own money when buying a car. Since a private credit makes particular sense for people who want to drive the car for a longer period of time, the terms can also be set for a longer period. Credits on Gowago can be arranged for periods of up to 84 months.

With a long-term credit, you just have to be aware that the costs incurred by interest and compound interest can be slightly higher than with leasing.

If your financial circumstances change or you want to get rid of the car, a car loan gives you ultimate flexibility. You can always sell the car and pay off the loan. It is also possible to pay off the loan earlier than planned. This makes particular sense if you happen to have more money thanks to a bonus or something similar, and want to save on interest costs.

And finally: with leasing, the cars you can choose are subject to certain conditions, especially age. With a loan? Doesn’t make a difference! Whether you’re dreaming of a brand-new VW Golf or think that an Italian sports car from the 60s suits your style better – the decision is entirely up to you.

Gowago has over 15,000 cars of all makes and models that you can get through a car credit. And you can choose and compare them from the comfort of your own home. With terms ranging from 6 to 84 months, you’ll definitely find the right financing plan for your budget. Our interest rate is fixed at a favourable 5.9% – regardless of your credit history or credit rating.

Find the right car for you

The pros and cons of car credit

💡 Leasing or credit – which makes more sense in terms of depreciation?

**As a rule of thumb:""

• a car loses about 25% of its value upon first registration.
• After three years, it is often already around 50%.

This means:

🔁 If you already know that you want to change or get rid of the car in 2–4 years, then go for leasing. You don't bear the risk of depreciation – the bank does that. It calculates the residual value, i.e. the estimated value at the end of the term. Whether it gets this right or not is ultimately not your concern, as you can simply return the car at the end of the contract.

🚗 If you plan to drive the car for more than five years, a car credit is usually the more fitting solution. This is because the depreciation in value is highest in the first few years – after that, it levels out. The longer you drive the car, the less you feel the depreciation in value on a monthly or annual basis. So buying on credit often makes more sense in the long term.

Deciding how to finance your car is not always easy. If you are still unsure and need help weighing up your options, we are happy to help. Book a consultation with our excellent advisory team today. Then we can look at your questions together and run through your options at your pace!

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Conclusion: What's best for you – leasing or credit?

Whether leasing or a car loan is better for you depends entirely on how you want to use your car, how long you want to keep it and what role flexibility, ownership and budget play for you.

Leasing offers you maximum flexibility, predictable costs and the opportunity to drive a new, modern car every few years – without having to worry about resale or depreciation. Ideal if you don't drive much, love technology or don't want to make a long-term commitment.

A car loan, on the other hand, gives you full control, ownership from day one and complete freedom in terms of vehicle choice and use. It's particularly worthwhile if you want to drive your car for many years and travel a lot.

No matter what you decide – both options will get you to your goal: a car that suits your life. The important thing is to make a conscious decision, plan your budget realistically and know what you're getting into.

With leasing and credit from Gowago, you're on the right track with both options. Move on, take the next step and get started with a car financed by Gowago. Let's go!

Find your car!

*Leasing: Calculation example for a purchase price of CHF 36’400: First large monthly payment CHF 5917, monthly payment from the 2nd month CHF 457, term 48 months, mileage 10,000 km/year, effective annual interest rate 3.99%, comprehensive insurance compulsory. An offer from Migros Bank SA. The granting of credit is forbidden if it leads to the over-indebtedness of the lessee.

Car Credit: The effective annual interest rate is 5.9% in all cases. The repayment period is a minimum of 6 months and a maximum of 84 months. For a loan of CHF 10,000 with a term of 12 months, interest costs and fees amount to CHF 314. This results in a total amount of CHF 10,314. The granting of credit is prohibited if it leads to over-indebtedness (Art. 3 UWG).