Leasing , all you need to know about vehicle leasing with an option to buy3 min read
Leasing or rental with option to purchase (LOA) is a practice allowing you to rent a car for a period of 2 to 5 years, with the possibility of buying the vehicle at the end of the contract. Advantageous for car drivers on a tight budget or who do not wish to commit, leasing nevertheless requires you to be vigilant on certain point
Leasing, how does it work?
Appeared a few years ago, leasing now attracts more than a million French people who want to find an alternative to the financial effort of buying a car . Indeed, to take advantage of leasing with option to purchase , there is no need to take out a long-term car loan : the consumer pays a defined amount to an organization each month or each quarter and spreads out the financing of his vehicle in this way. In return, he benefits from a new car protected by the manufacturer’s warranty throughout the rental period .
The LOA is thus similar to a consumer credit (although it is not one) which requires a certain amount of vigilance when signing the contract. The following elements are in particular to be studied closely:
The security deposit . The financial institution may ask the lessee to pay an amount generally corresponding to the amount of the purchase option, ie 15% of the total price of the vehicle;
The rents . Their amounts vary according to the rental period, the model and the mileage defined beforehand . It may happen that the first installment is more important than the others (about 30% of the initial price). An essential element to take into account when you do not wish to buy the vehicle in the long term;
The benefits of leasing
Leasing everything to know vehicle rental purchase option advantages
Rent-to-own appeals for its ability to be flexible in terms of payment terms. Leasing generally lasts between 24 and 60 months and the financing is up to what was concluded at the signing of the contract. Thus, you are sure to be able to enjoy your vehicle while having a budget set each month, devoted to the rental of it.
Did you know ? No need for contribution to sign a car leasing contract. However, you must choose a vehicle whose rental corresponds to your budget.
The disadvantages of leasing
Although they are less numerous, there are still some. First of all, there is one related to the mileage package to which leasing contracts are subject. Thus, like an auto insurance contract committing you to a certain number of kilometers, it is likely that you will be asked for compensation if you drive more than what is provided for by the terms of the contract.
The purchase of a vehicle at the end of the LOA
At the end of the contract, two options are available to the lessee: take a new vehicle, still leased or buy the one leased until now. The security deposit is then deducted from the sale price corresponding to the residual value of the car. Some offers also include a pre-term purchase option . A period of one year must nevertheless be respected before being able to acquire the vehicle in advance.
The question of car insurance
Leasing everything to know vehicle rental purchase option car insurance Additional expense, car insurance is an element not to be overlooked when renting a car on lease . To find the most economical formula , it is wise to compare the guarantees and prices using the services of an online comparator before making your choice. Indeed, it may be that the insurance offered by the rental company is not so advantageous for you in terms of prices. Refusing his proposal to put you in search of cheap car insurance can be a very interesting alternative!
Accident and leasing: what to know?
The leased vehicle is no exception: in the event of a claim, you will be compensated up to what your protection provides. It is for this purpose that the rental company from which you rent the vehicle will ask you to opt for an all-risk formula . It must be said that some vehicle models are of significant value and that their repair can be expensive.