Is 0% leasing simply an incentive used by car manufacturers, or do I actually benefit as a customer?
Is leasing with a 0% interest rate free for me? How can a bank even afford this?
In this article, you will learn what to look out for in a lease offer.
Car manufacturers regularly advertise attractive leasing conditions on posters. Some campaigns even talk about 0% leasing. But what does it mean exactly? Is this type of offer free for me as a client?
"No, you can't talk about something being free," says Peter Steiner. You still have to pay the installments. "But what you can say is that this leasing solution is interest free."
Steiner heads up the Vehicle Financing Sales Management department at BANK-now and is an expert in leasing issues. "Zero percent leasing means that the bank does not charge the client any interest for the lease," he explains. So, the benefit to the client is that they save this interest. "Over the entire term, you can quickly save CHF 2,000 to CHF 3,000 compared to leasing with interest," he says. The more expensive the car, the longer the term and the higher the normal leasing interest rate, the more the client benefits from 0% leasing.
Every car loses value as soon as the lease begins. This is calculated as the difference between the purchase price and the residual value, which is negotiated with the garage owner prior to the start of the contract. This difference has to be paid via installments even in the case of a 0% lease.
The client pays less with 0% leasing
The question is: How can a bank survive on a 0% leasing business? After all, interest is the main source of income for a bank. Steiner: "The bank's service of providing capital while foregoing interest is charged to the car manufacturers." Zero percent leasing therefore means higher costs for the car manufacturer, while the client pays less.
The same applies in the case of a low leasing interest rate like 0.9%. In this case, the bank simply charges the car manufacturer correspondingly less than with 0.0 % leasing.
No hidden costs
There are no hidden costs with a 0% leasing offer, assures Steiner. Clients need to keep an eye on the same factors as with normal leasing. This is first and foremost making sure that the car is treated with care during the term of the contract. This is because if exceptional damage occurs that goes beyond normal wear and tear, the lessee must pay for this damage at the end of the term. It is also important to bear in mind that the agreed number of kilometers per year must not be exceeded. If the figure was set at 20,000 kilometers and the client drives 25,000 kilometers in 12 months, they must pay for the extra kilometers.