LOA or purchase? The keys to choosing | Car loan

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Leasing with an option to buy allows you to rent a vehicle for four to five years on average, before having the choice of returning it or buying it. Which solution between LOA or a purchase is the most advantageous? Let’s review the pros and cons of the two alternatives.

LOA or purchase: two very different solutions

LOA or purchase: two very different solutions

Principle of LOA

Rental with option to buy consists of renting a vehicle over a given period. Once the duration of the rental contract has elapsed, the consumer can choose to buy the vehicle at the price indicated upstream on the contract. It is also able to restore it. The dealership then checks the condition of the vehicle and in most cases offers a new LOA offer .

The LOA mainly appeals for three reasons:

  • Its ease of access
  • Acceptable monthly payments
  • The possibility of changing vehicles regularly

Apparently perfect, rental with option to buy is not always the most financially advantageous solution for the consumer. Far from there.

What are the disadvantages of LOA?

Renting with a purchase option does not allow you to become the owner of the vehicle before the purchase option has been exercised. This is its main difference with a classic car loan. Unfortunately, this is not the only gray area around the rental with option to buy (see LOA notice ). Here are the main points to check before committing to a new or used LOA solution.

The cost of guarantees and the total operation

Dealers or professionals offering LOA motorcycles or cars do not hesitate to add packages providing repairs and other vehicle maintenance for the first years. Guarantees not always useful, even less when talking about a new vehicle. It is always interesting to take a good look at the details of the guarantees offered with the formula. Integrated into the total cost and buried in the monthly payments, they can quickly go unnoticed.

It is also interesting to look at the cost of the vehicle itself before committing to an LOA. Claiming the details of the costs can allow some of them to be negotiated downwards.

Lack of APR rate

The car loan rate in LOA is never mentioned. The LOA does not enjoy the same transparency as a car loan on this point. Systematically associated with car loan solutions, the annual effective annual rate makes it possible to distinguish at a glance a cheap car loan from another to be avoided.

The calculation of a conventional LOA rate does not generally position the solution to its advantage over car credit. Illustration with this comparison of LOA without input from a simulation of LOA performed at a car dealer.

LOA’s monthly payments are lower, but its total cost is much higher than that of the car loan. This example perfectly represents the advantages and disadvantages of this solution.

LOA or purchase: the advantages of classic car credit

LOA or purchase: the advantages of classic car credit

Car credit is always cheaper than an LOA solution . Above all, an auto loan allows you to become an instant owner. This distinction obviously does not prevent from reselling your vehicle at the price of argus after three or four years, to settle your loan in advance and consider a new, new or used purchase.

Auto credit, on the other hand, is not always easily accepted. This is the reason why we set up a credit comparator with immediate response.

LOA or purchase: how to get an immediate response?

Our auto credit comparator allows you to get immediate advice at the best APR rate . Integrating the best online credit organizations, our tool guarantees several things:

  • A classification based solely on the APR rate ( find out more about the APR )
  • An immediate response in principle from the best organization
  • The possibility of questioning each of the three best specialists in case of refusal of the best

Online specialists generally offer more favorable auto credit rates than those of banks, dealers or insurers. Once the favorable response corresponding to its criteria (amount, duration) is obtained, it is always possible to approach these different players in the hope of finding better credit. In fact, the offer pre-accepted by the best organization in our comparator is often difficult to compete with.


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