What is an interest rate?
An interest rate is the cost of borrowing money, expressed as a percentage of the initial amount of money borrowed. It serves as compensation to the lender for the risk taken and the opportunity cost of lending money, rather than using it for other potentially profitable investments.
Interest rates are fundamental to the functioning of financial markets and economies, influencing consumer spending, investment, inflation, and overall economic growth.
In the context of leasing a car in Switzerland, the interest rate is mostly referred to as “nominal interest rate” and “effective interest rate”. It is a critical component that determines the cost of financing the lease. This rate essentially reflects the cost of borrowing money from the leasing company or financial institution to lease the car.