Did you know that a loan allows y or to reduce the amount of your taxes? Here is a brief summary of what you need to know to benefit from this reduction.
What can you deduct?
If you have a private credit contract in progress, this means that you have agreed to repay a fixed minimum amount each month. This amount consists of two elements:
- reimbursement of the amount borrowed
- as well as an interest
This interest is deductible from your taxes. Indeed, registered in your tax return, it comes to decrease your taxable income and lowers the total amount of your taxes, thus allowing you to profit from an advantageous reduction.
How do you know the amount of interest you paid during the year?
It is possible that the contract of your credit does not mention the breakdown between repayment and interest. It can also vary by bank.
However, during the months of January to March, the financial institution that granted you the loan must send you a certificate of interest for the year before.
If you do not receive this certificate, you can request it free of charge from the bank, or from your service provider. Lite Lending provides you with this document free of charge in case you have not received it and takes care of the necessary procedures for you.
Is the tax reduction substantial?
This gain depends on the situation of each and various criteria, such as the tax rate and the amount of interest you paid, which is defined according to the conditions of your credit agreement (interest rate, duration of the contract and amount borrowed).
In any case, you will not lose anything, and it will necessarily be a reduction. It would therefore be a shame to deprive yourself of it.
A concrete case: credit or leasing?
You have to buy a car and hesitate between leasing or credit. It is true that leasing presents a more interesting interest rate at the base, but unlike credit, its interests are not deductible from your taxes.
Indeed, leasings are considered as rentals and not as loans. As such, they are not deductible from your taxes.
In the case of a loan, you deduct the interest paid and also have the advantage of owning your vehicle upon purchase.
You can thus make all the choices concerning it. For example, you can choose your insurance coverage and make substantial savings, compared to leasing which requires you to have a full cap.
In addition, with credit, you have no risk of costs for exceeding the mileage or for early termination of the contract.
It is therefore interesting to study the question carefully before making your choice between a private loan and a car leasing.
If you would like to find out more about the different financing options available for a vehicle, this article might be of interest to you.
Your credit with Lite Lending
Lite Lending processes your credit request in a few minutes, free of charge and without obligation, looking for the best rate and the best solution, and gives you an answer within 24 hours.
We work with all banks in Switzerland, to be sure to immediately contact the right bank, and get the best offer.
With private credit, you receive the money in your account, and you are free to do what you want with it.