Cars are an everyday part of life for most people. More than 4 million private cars and half a million motorcycles call Switzerland home and many people count on their cars to commute to work or to go about their business.
At the same time, the costs of owning and running a car are relatively high. Poorly-informed or hasty decisions often cause drivers to pay more than necessary to get from A to B. Following these basic tips from moneyland.ch can help you cut out unnecessary expenses and get more driving for your money.
1. Cut the cost of insurance
Whether you drive your car much or not, you will have to pay for insurance because having your car covered by liability car insurance is compulsory under Swiss law. If you own a new car, getting coverage against damages can help protect your investment.
Because insurance is one of the main ongoing costs of owning a car, cutting out unnecessary insurance spending is the surest way to save. You can find the best ways to cut the cost of insuring your car in Switzerland in the moneyland.ch guide to car insurance savings.
2. Buy instead of leasing
Leasing a car may seem preferable to paying for a car in cash or using a personal loan. Many showrooms market leasing as an affordable and easy way to drive the cars you want. But in actual fact, leasing a car has few financial benefits and generally works out more expensive than buying. You can use our car leasing calculator to calculate the total cost of leasing a car.
In addition to high leasing costs, leased cars typically come with potentially expensive obligations attached. For example, you may be required to service the car on a very regular basis and you may be limited to servicing the car at a specific garage which may charge uncompetitive prices. You can learn more about the disadvantages of leasing cars in Switzerland here.
3. Pay less for fuel
Unless your car sits in the garage most of the time, filling your tank is likely one of your biggest car-related expenses. While you cannot get around the cost of fueling your car, you can cut several percentage points off your fuel bill by following these tips for saving on gas in Switzerland.
4. Don’t pay unnecessary wealth tax on your car
When calculating wealth tax, the value of your car must be added to your overall wealth. A number of drivers ignorantly base their wealth declaration on the price they paid when they bought their car, even after several years of ownership. Doing this can over-inflate your wealth tax, especially if your car’s original purchase price was high.
Because the value of cars generally declines steadily with every year of ownership, cantons allow you to deduct a fixed percentage of a vehicle’s value from your taxable wealth every year that you own the car.
Depending on the canton you live in, you can knock between 20% and 40% off a car’s value every year for tax purposes. This deduction generally applies for each year that elapses from the time a car is sold new, and is applied to the car’s new purchase price. In most cantons, cars become worthless insofar as wealth tax is concerned after a certain amount of time (7 years from their new purchase date, for example).
5. Claim income tax deductions
Do you use your car to commute to work? Chances are, you may be able to deduct the cost of commuting from your taxable income, up to a maximum of 3000 francs. This deduction applies if you live relatively far from your workplace and public transportation is not a viable alternative.
If you can prove that your home and/or workplace are very far from the nearest public transport service points (bus stops, train stations) or if your physical condition makes using public transportation difficult, you can claim a fixed deduction for every kilometer you travel by car. If public transportation connections between your home and workplace are very poor – making commuting by public transportation much more time consuming than traveling by car – you can also claim these deductions.
6. Choose your car carefully
Which car you drive is the single biggest deciding factor in determining the cost of owning a car. In addition to the obvious differences in the price tags worn by different cars, there are a number of factors that add to the overall cost of owning different cars.
The engine size and the weight of a car have a direct impact on the road taxes you pay, with taxes for bigger, heavier cars being higher. Liability insurance premiums go up along with a car’s engine size. The value of a car will, in part, determine your semi-comprehensive insurance premiums.
Fuel consumption not only dictates what you will spend on fuel, it can also affect insurance premiums. Some insurers offer major discounts for electric, LPG-powered and hybrid cars, or for cars with low emissions.
You will also want to look into a car’s potential resale value. Some cars, especially less popular models and cars with unusual colors or other niche features, lose their resale value very quickly. Popular cars, on the other hand, lose less value over time. Certain cars lose value as much as twice as quickly as others. Loss in value is one of the biggest costs of owning a car.
Owning a car in Switzerland does not need to be excessively expensive. If you take advantage of the many opportunities to save on costs, you can radically reduce your car-related spending.