Get out of car leasing for free
If the amortization schedule in the lease agreement contains a hidden penalty clause, it is possible to terminate the agreement without incurring additional costs. This is the ruling of the Federal Supreme Court. By Michael Krampf, lic.iur., attorney, lawyer, and editor at the Beobachter Advisory Center.
Have you leased a car that you no longer need? Or no longer want it because you are struggling to pay the leasing rate in the current financial crisis? You currently have a good chance of getting out of your leasing contract without incurring additional costs. This is because the tables contained in the contracts, which are used to calculate the costs for early withdrawal, are often invalid, as the example of Anton Meier (name changed) shows:
Meier was young and single when he signed the leasing contract for a Lexus. He was supposed to pay 1423 francs a month for four years. After one year, he could no longer afford the lease payment. He returned the car. The leasing bank recalculated the leasing rate for the shortened term and demanded a total of 35,000 francs for the loss in value of the car. Meier called in a lawyer because the amortization table led to abstruse results: Leaving the car after the 19th month would have been more expensive than if the car had been leased and paid for until the end of the contract. Or even worse: if Meier had returned the vehicle one month before the end of the four-year contract period, he would have had to pay a whopping 45,000 francs for the loss in value.
This is wrong, ruled the Federal Supreme Court. The amortization table had to be drawn up according to recognized principles, without a "hidden contractual penalty for premature termination of the contract". The court declared the table null and void. Meier was able to withdraw from the contract without incurring any costs (judgment of December 18, 2008, 4A_404/2008).
The ruling applies to all existing car leasing contracts that were concluded for private (non-commercial) use and that contain an inadmissible table. In addition, the cash purchase price stated in the contract may not exceed CHF 80,000.
How do you find out whether the amortization table in your leasing contract contains a hidden contractual penalty? Work out how much it would cost you to get out one month before the end of the contract. Deduct the leasing installments to be paid up to this point. If the sum calculated in this way corresponds approximately to the last leasing installment to be paid, the table is correct. A free exit is then not possible because the table is incorrect. However, if you have to pay a multiple of the last installment, the amortization table is incorrect. A free exit is possible according to the Federal Court ruling. This is based on the advertising slogan of a leasing provider: "Now or never - fulfill your dreams!".
Meier was young and single when he signed the leasing contract for a Lexus. He was supposed to pay 1423 francs a month for four years. After one year, he could no longer afford the lease payment. He returned the car. The leasing bank recalculated the leasing rate for the shortened term and demanded a total of 35,000 francs for the loss in value of the car. Meier called in a lawyer because the amortization table led to abstruse results: Leaving the car after the 19th month would have been more expensive than if the car had been leased and paid for until the end of the contract. Or even worse: if Meier had returned the vehicle one month before the end of the four-year contract period, he would have had to pay a whopping 45,000 francs for the loss in value.
This is wrong, ruled the Federal Supreme Court. The amortization table had to be drawn up according to recognized principles, without a "hidden contractual penalty for premature termination of the contract". The court declared the table null and void. Meier was able to withdraw from the contract without incurring any costs (judgment of December 18, 2008, 4A_404/2008).
The ruling applies to all existing car leasing contracts that were concluded for private (non-commercial) use and that contain an inadmissible table. In addition, the cash purchase price stated in the contract may not exceed CHF 80,000.
How do you find out whether the amortization table in your leasing contract contains a hidden contractual penalty? Work out how much it would cost you to get out one month before the end of the contract. Deduct the leasing installments to be paid up to this point. If the sum calculated in this way corresponds approximately to the last leasing installment to be paid, the table is correct. A free exit is then not possible because the table is incorrect. However, if you have to pay a multiple of the last installment, the amortization table is incorrect. A free exit is possible according to the Federal Court ruling. This is based on the advertising slogan of a leasing provider: "Now or never - fulfill your dreams!".
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The Beobachter's new service: competent legal advice for SMEs and their employees. 6 months for only Fr. 99.- (introductory price).
You can reach the legal experts Monday to Friday from 9 a.m. to 1 p.m. on 043 444 54 09. You also have full access to the advice platform Helponline.ch and an Beobachter magazine every 14 days. The price also includes a gift: the standard work for SMEs from Beobachter-Buchverlag,
"How to get your money", worth CHF 48.
Order the consulting subscription for SMEs at: www.werbewoche.ch or by phone: 0800 83 0800.
