Is car LOA the best solution to finance your vehicle? Let’s go over the points to check before signing an LOA offer too quickly. We will see that if the solution allows access to small monthly payments, it is often accompanied by a very salty invoice.
What is car LOA?
The car LOA allows you to rent a new or used vehicle over several years, three or four on average. The promise to take the wheel of a beautiful car for rents often less than $ 200.00 per month is very attractive. At the end of the LOA contract , the borrower has two options:
- Purchase vehicle
- Return the car (and maybe leave on a new LOA) before having the opportunity to buy it
The price to be paid in the event of a final purchase is always fixed in advance. It corresponds on average to 35-40% of the total cost of the LOA. The total cost of the LOA for car is also fixed when the contract is signed. It is in reality always calculated on an annual kilometric basis not to be exceeded. The contract also includes additional guarantees and / or a “maintenance” package. The LOA without contribution is the most widespread, but the fact of making a personal contribution makes it possible to obtain more advantageous conditions.
It is always important to claim the details of all the costs of a car LOA contract, in order to identify any excessive charges . The potentially too high costs most often concern:
- The cost of the “maintenance / repairs” package
- Prices of guarantees of all kinds
- Cost of starting the vehicle
Car LOA: points to check
The LOA does not communicate any rate, unlike all other types of consumer credit .Manufacturers benefit greatly from this by posting used or new LOA solutions in their TV spots at rents of less than 100 USD per month.
These cheapest LOA solutions for cars actually actually correspond to contracts of 10,000km / year for short periods. However, the average distance traveled on average by individuals in France is closer to 15,000 km than 10,000. It is important not to underestimate the distance traveled: any excess will be charged (10 to 15 USD cents / km).
Finally, note that any damage – even minimal – or malfunction may involve additional costs when returning the vehicle.
Auto LOA: what to check
- The number of kilometers per year provided for in the contract (and its kilometers traveled in the last year)
- The cost and interest of additional options (maintenance is not always necessary for new vehicles in the first years)
- The price of the car
LOA for car or car loan?
The LOA auto allows you to drive with a new or used vehicle without having to commit to a purchase. It is however essential to keep in mind that it is a rental. It is therefore important to accompany your contract with guarantees covering damage and of course theft. Significant additional costs that handicap the LOA when it comes to doing the accounts. Indeed, the LOA is more expensive on average than a conventional car loan .
Our LOA or purchase file lists the advantages and disadvantages of the two financing solutions.
Compare auto loan rates
Our auto loan comparator provides a ranking of the best auto loan rates among the best specialist organizations. Above all, this system guarantees an immediate response in principle, without obligation . A good way to get at least a precise idea of the cost of a conventional car loan, and especially of its borrowing possibilities. It is indeed sometimes much more interesting to take out a loan and to buy a car to resell it at the price of the argus to settle your credit rather than to opt for an LOA solution.