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Leasing for business: LOA or LLD?

The Topic Of the Post Rental with option to purchase (LOA) Long term rental (LLD) Good to know Rental with option to purchase (LOA) The choice of a leasing offer for a company can be … Read More

The Topic Of the Post
Rental with option to purchase (LOA)
Long term rental (LLD)
Good to know

Rental with option to purchase (LOA)

The choice of a leasing offer for a company can be articulated around two contracts, leasing with an option to buy and long-term leasing. The choice will depend on the company’s expectations for the vehicle.
Rental with option to purchase (LOA)
Rental with the option to purchase is a rental contract financed by consumer credit. This formula will allow the insurance company to rent a vehicle for a period of between 12 months and 72 months, with the possibility of buying the vehicle back. at the end of the contract.

To be more precise, a purchase option is defined from the 13th month and then each following month until the end of the contract. The company can therefore buy back the vehicle to become the owner from that date. It will nevertheless be necessary to pay the amount of the residual value corresponding to the current month.

In terms of setting up the contract, the company can choose the vehicle, personalize it and configure it according to its needs. When the sale price is obtained, the rental offer with an option to purchase and structured around the latter to propose a monthly rent for the company.

It is important to note that the subscription to a legal contract can be done with an automobile dealership but also with a reseller or an agent offering its services online. It is also strongly recommended to carry out an online LOA simulation to compare the different offers for the same vehicle.

Long term rental (LLD)

Long-term rental is based on a movable rental contract, so there is no consumer credit included in the contract. There is also no possibility of repurchasing the vehicle since this rental does not include a purchase option.

Concretely, the contract is set up for a period of between 12 and 72 months, the company must return the vehicle at the end of the long-term rental contract. Most companies will focus on a long-term contract since this car leasing makes it easier to change vehicles and very few professionals will buy a car at the end of the LOA contract.

The set-up is strictly identical to that of a rental with the option to buy, that is to say, that the company can choose the vehicle, configure it and define its needs in terms of use to obtain the amount of rent to be repaid each month.

Annual mileage, vehicle maintenance, warranty, or even insurance, everything can be included in a long-term rental contract, which avoids any additional expense for the company. Here again, it is quite possible to carry out a long-term rental simulation to compare the offers for the same vehicle.

Good to know

The rent in an LOA or LLD contract is not taken into account in the balance sheets as financing, the rent is taken into account as a classic charge, which does not impact the borrowing capacity of the company.

Author: admin