Selecting the method of financing a family car is not a decision to be taken lightly, especially if you are hesitating between a Rental with Option to Purchase or a Long-Term Rental. Each of the formulas has its own advantages and disadvantages. Your choice will be essentially guided by your needs.
Leasing is a financing solution that is gaining ground in the automotive sector. Although it has long been the prerogative of companies, more and more individuals are showing their interest in this offer. The latter is available in two types:Rental with Option to Purchase and Long-Term Rental. Abbreviated as LOA, Lease with Option to Purchase allows you to enter into a lease agreement with a dealer, broker or salesperson to have a new vehicle to use over a period of two years from six years. Its mode of operation is relatively simple. You first go through an initial interview with the rental company to identify your needs and your budget. The professional will then select models of leased cars that best suit your requirements.
Then comes the stage of setting up the rental file which will be presented to a lending agency. It is the latter who acquires the car and who therefore owns it. Once the contract has been accepted, you must pay an initial contribution of 10 to 25% of the total cost of the vehicle. Throughout the duration of the rental, you will also have to pay rent. And at the end of the contract, you can end the operation by returning the vehicle, subscribe to a new contract to have an even more recent car or buy the car by paying the residual value. The LOA is thus recommended if you first want to "test" the car for a certain period of time before making a definitive acquisition.
Long-term rental has the specificity of not offering a purchase option. It will then be aimed at people who do not plan to buy their vehicle or who need to change models regularly. This is the ideal formula if you plan to expand your family in the years to come, which will force you to frequently renew your car for an ever more spacious model. If today you still use a sedan, but in three years from now you plan to welcome a newborn, you will certainly need to evolve towards a minivan, a MPV or even an SUV which can offer up to 7 seater. Only LLD gives you such flexibility, because by buying your car, you will be forced to take care of the resale each time you change your vehicle. However, the rental solution transfers all its constraints to the lessor who even bears the depreciation of the automobile.
In addition, the LLD also gives you the opportunity to access additional services such as maintenance, upkeep, breakdown assistance and car insurance, the costs of which are directly integrated into the rents. If you absolutely want to carefully manage your car budget every month, this solution is for you. On the other hand, you must pay attention to the mileage package imposed by the rental company, because if you are a heavy rider, you risk paying penalties in the event of mileage overruns. The ideal is to opt for flexible contracts that allow an increase in the mileage limit to avoid additional costs at the end of the lease. Also take care of the vehicle during the rental period to avoid any repair costs charged by the rental company when it is returned.
