What are the differences between LOA and LLD?

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To finance your car, two types of long-term rentals (also called leasing) are possible:

  • “Classic” long-term rental;
  • Rental with option to buy.

If both involve the payment of monthly payments for the use of the vehicle, they do not however have common points. So, what are the LOA LLD differences, and why favor one over the other?

JeChange accompanies you in your choice.

Leasing: a new trend in rental

A few hundred euros a month to drive a new car, why not? Long-term rental, with or without a purchase option, is attracting more and more individuals.

This new rental trend, known as “leasing”, is disrupting the market and is partly explained by a less pressing need for ownership than in the past.

Classic long-term leasing (LLD) and leasing with option to purchase (LOA) is aimed at drivers wishing to have a new vehicle, without necessarily owning it, in particular for cost reasons.

Whatever the form of the rental (LLD or LOA), leasing is a financial transaction between an individual, a dealer, and a bank which involves the establishment of a rental contract for a period of 1 to 5 years.

Good to know : the English term “leasing” is normally associated with long-term rental (LLD), but it is used today indiscriminately for rentals with option to purchase (LOA).

Long-term rental (LDD auto)

Do you want to be able to use a car freely, without owning it? Do you like “all inclusive” offers?

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Opt without hesitation for long-term rental (LLD). It offers you the possibility of renting a new vehicle without any contribution being required of you beforehand. The duration of the lease is fixed by a contract, which does not include a purchase option.

The amount of the monthly payments is calculated according to the value of the vehicle, the mileage, the duration of the lease, as well as the services subscribed.

Your contract includes:

  • car rental;
  • vehicle maintenance, any repairs;
  • insurance and assistance;
  • the loan of a replacement vehicle;
  • the ability to change vehicles whenever you want.

In summary, it is a rental contract with service included but not offering the possibility of purchasing the vehicle at the end of the rental period. The vehicle is returned when the contract comes to an end.

Good to know : If the Long-Term Rental does not include the purchase option, be aware that nothing prevents you from making a buyout proposal to the rental company when your contract comes to an end.

Leasing with option to buy (auto LOA)

It’s a small revolution that is beginning to upset the automobile market: rental with purchase option. What is it about ? Quite simply, a rental contract that allows you to rent and then buy a vehicle at a lower price.

The conditions of the purchase are fixed at the start of the rental, which allows you to know the amount you will have to pay to acquire the vehicle at the end of the rental period.

Practically it works like this:

  1. The rental company offers you several vehicles corresponding to your criteria;
  2. Your file is presented to a credit agency;
  3. Once accepted, you sign a contract with the lessor and deposit a deposit which represents approximately 15% of the price of the vehicle;
  4. You pay monthly rent;
  5. At the end of the contract you can buy the vehicle at the price fixed in the contract, take out a new contract or give up the formula.
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The main advantage of this system is to be able to acquire your vehicle at a lower cost at the end of the contract thanks to the payment of monthly installments which reduce the final price of the vehicle.

Only downside, vehicle maintenance, assistance and repairs are not included in this formula. Note also that an initial contribution will be requested and must be paid from the start of the contract, contribution which will be deducted from the sale price of the vehicle if you opt for this option.

But these are far from being the only differences with the LLD!

The LLD and LOA differences in detail

By comparing these two devices, it is possible to distinguish a certain number of differences. Detail Review:

LOA Features

  • The main difference between LLD and LOA lies in the possibility of acquiring at the end of the rental period if you opt for a Rental with option to purchase (LOA).
  • If you are an entrepreneur, Lease with option to buy allows you to buy the vehicle in the name of your company. This is simply not possible with Long Term Rental (LLD).
  • In the event of a claim, the costs are your responsibility via your insurance if you have opted for a Rental with option to buy.
  • At the end of the contract, the condition of the vehicle is less important in a Rental with option to purchase (if you exercise the option at the end of the rental).

LLD Features

  • Long-term rental covers maintenance services. In addition, you have no security deposit to pay at the time of signing.
  • All risks are included in the contract and borne by the lessor.
  • Repair costs will be payable if the condition of the vehicle requires it.
  • You can change vehicles as many times as you want. In addition, it is not mandatory to have an initial contribution to take possession of the vehicle.
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In summary, opting for one or the other of the formulas depends on your project. Do you want to become the owner of your vehicle or not? Whatever your choice, note that leasing can be an interesting option insofar as the value of a new car decreases by 25% from the first year of circulation!