Several options are available to you for financing your vehicle. On the one hand, traditional auto credit will allow you to buy a car by applying for a loan with interest from a bank. On the other hand, the leasing offers (long-term rental or with purchase option) will allow you to be a tenant for a fixed period. What is the best solution to finance your car? Here is the answer.
Car credit: what are the advantages?
Car credit is still the most common way to finance a new car today . The principle of the car loan is simple. If you want to buy a car, you can ask a bank to lend you money. In return, you will have monthly repayments over a predetermined period, generally 4 years, and will have to pay interest (around 6%). The main advantage is of course the fact that you will own the vehicle . You can use it without constraint and resell it if you wish.
What is auto leasing?
Car rental has two options:
- The LLD
The field of possibilities is open for the automotive market. Each solution has its advantages and disadvantages. Leasing is the good alternative to conventional car loans. If you are looking for a new or used car and want more information, do not hesitate to inquire and compare offers online. Both leasing methods are offered by car agents, for example. They offer negotiated prices, in order to give you advantageous rates on your car purchase.
Rental with option to purchase (LOA)
With rental with option to buy, you will be able to drive with a new vehicle quickly. You will be the tenant of a vehicle that you will rent for maximum 5 years. At the end of the contract, you will have the possibility of buying the vehicle and of owning it. The rental contract must then indicate the monthly payments to be paid as well as the purchase price after 5 years. LOA has many advantages from a financial point of view. The monthly payments are low, and the total cost of the leasing will be higher than the car loan only if you opt for the purchase. The possibility of changing cars is often one of the strengths of the LOA.
Long-term rental (LLD)
Unlike the LOA, long-term rental will not allow you to buy the vehicle. As the name suggests, it is a simple rental but for a period defined by the contract. The latter must indicate the amount of the monthly payments as well as the various rental methods (in particular concerning maintenance or car insurance). The LLD is therefore aimed at people who do not wish to own their vehicle and who wish to change it regularly. This also has the advantage of avoiding those wishing to use it from going into debt.
What is the best solution: car loan or car rental?
There is therefore no better solution strictly speaking to finance your car, but rather choices that can be made according to the situation of each. For example, if you want to become the owner of your vehicle, then auto credit will be cheaper than with an LOA. Taking out a car loan can however be a problem for indebted households. In this case, leasing will be preferred. This will also be the case if you like to change the model regularly.