Getting a car in Switzerland can make daily life easier, especially if you live outside the city or travel often. But before choosing a vehicle, you’ll need to decide how to pay for it. The three main options are leasing, taking a loan, or buying outright. Each comes with its own benefits and drawbacks, depending on your financial situation and long-term plans.

Leasing a car

Leasing is one of the most common ways to drive a car in Switzerland. It lets you use a new vehicle without paying its full price upfront. Contracts usually last between two and five years, with four years (48 months) being the most popular. In essence, leasing means paying for the car’s depreciation rather than owning it.

Monthly payments depend on several factors: the price of the car, the contract duration, the interest rate, the down payment and the residual value (estimated worth of the car at the end of the lease). For instance, if a car costs 30’000 CHF and its residual value is 5’000 CHF, you finance the 25’000 CHF difference. The lower the residual value, the higher your monthly payments.

At the end of the lease, you can usually choose to return the car, buy it, or refinance it based on the residual value. Most contracts allow early purchase by paying the remaining installments plus the residual value. However, some financing companies charge more than the total amount due until the end of the contract, making early purchase costly. In addition, if you pay off a lease early, interest cannot be reimbursed, unlike with a traditional loan.

It’s also worth noting that getting out of a lease before its end is expensive. If you return your car early, you will be charged thousands in penalties, making it one of the least flexible financing options. The best way is almost always to try to sell the car, and pay it in full in order to transfer it to the new buyer.

Leasing rates are often lower than personal loan rates, and sometimes even down to 0%. Loans typically start around 5% annually. For that reason, leasing often feels more affordable each month. It’s generally better not to make a down payment: if the car is declared a total loss after an accident, recovering that amount can be complicated in certain cases.

You are still responsible for all running costs such as servicing, tires, maintenance, and repairs.

Pros:

Lower upfront cost
Access to new models with warranty and service plans
Often lower interest rates than loans
Option to buy or refinance at the end

Cons:

No ownership unless purchased after the lease
Full insurance coverage required
Limits on mileage and condition
Expensive to end early or pay off before term
Interests are not tax deductible

Good to know: if you exceed the mileage set in your contract, you’ll pay for each extra kilometer when returning the car, typically between 0.35 and 0.70 CHF per km.

Buying with a bank loan

A bank loan lets you become the car’s owner immediately while spreading payments over time. Swiss banks and some dealerships offer car loans for new or used vehicles, usually lasting two to five years.

Pros:

Ownership from the start
Flexibility to sell or modify the car anytime
If you pay off your loan early, part of the interests can be reimbursed
Interests are tax deductible

Cons:

Higher interest rates than leasing
Depreciation while still repaying
You remain liable for the loan even after selling the car

Because of the higher cost and limited advantages over leasing, loans are generally less popular in Switzerland.

Buying outright

If your budget allows it, paying the full amount at once is the simplest and most cost-effective way to buy a car. You avoid interest, own the vehicle immediately, and can insure it as you prefer.

Pros:

No ongoing payments or financing charges
Full control and flexibility
Easier resale

Cons:

Large initial cost
Money tied up in a depreciating asset

The real cost of a car in Switzerland

Here is a list of the costs you should plan for when buying a car in Switzerland:

Monthly installments (if you did not pay your car in full)
Insurance (the cost depends on the coverage chosen and the profile of the driver)
Annual car tax (the calculation varies between cantons, in Geneva it is based on CO2 emissions for gas/hybrid cars, and weight for EVs)
Annual services for maintenance
Gas (or charging for EVs)
Parking
Tires (winter set, winter/summer tire swap twice a year)
Swiss highway vignette (40 CHF per year)
Occasional repairs (even when if the car is insured, there is a deductible to pay)
The occasional fine (it happens to the best of us!)

It is very difficult to provide cost estimates, because it varies a lot depending on the car you choose, how often you drive it, and… how you drive it.

Other options

Services such as Carvolution offer long-term, all-inclusive car subscriptions that cover insurance, maintenance, and taxes. While convenient, they are generally expensive and not ideal for long-term use.

My perspective and advice

From a financial point of view: leasing can make sense when considering opportunity cost. If you can invest the cash you would otherwise spend on a car, low-risk investments often yield returns higher than most leasing interest rates. Keeping your capital available for investments can therefore be more profitable in the long term.

From a practical point of view: before deciding, ask yourself whether you really need a car. Public transportation in Switzerland is excellent, and owning a car can be costly and time-consuming. For occasional use, car-sharing services like Mobility can be a great alternative. If you do want your own car, consider buying a used vehicle from an official brand dealership offering approved pre-owned cars with warranties. Paying in full or leasing are usually the most sensible choices, while traditional loans rarely offer the best value.