Depending on your automotive project and your budget, you may have already considered a lease with purchase option or a car credit? These two solutions are often proposed by automotive professionals, but are they really interesting for the buyer? Discover the advantages and disadvantages of each solution.
What is a lease with purchase option?
Lease with purchase option or RPO is also known as “leasing”. This type of financing allows you to lease a new vehicle. You pay rent every month until the end of the lease. The contract has a maximum term of 5 years and you must pay 10 to 15% of the vehicle price at the beginning of the lease. At the end of the lease, you have the option to exercise your purchase option and become the owner of the vehicle. To do so, you will be required to pay 5-10% of the new vehicle price. Be careful, you have to respect the mileage, otherwise you will have to pay an extra.
On the seller’s side, this system is rather advantageous since it avoids for the buyer to go through a credit with a bank. Here is what you can expect if you opt for a RPO. In the long term, it must be noted that a purchase lease is less profitable than a car loan. Yet more and more people are choosing this solution for their new car. The price is therefore perhaps not the only factor to be taken into account.
How does car credit work?
Although the RPO is popular with new buyers, many still prefer to rely on car credit. It is the most popular solution in many countries. Credit allows you to pay a very large sum in one go. You call on a lender, usually a bank, to buy your vehicle, new or used. You will then pay it back to the lender on a monthly basis, according to the terms and conditions that you will have defined. To take advantage of the best car credit offer, don’t hesitate to discuss the subject with your advisor.
The interest rate for car loans generally hovers around 6% over 4 years, which is fair for a repayment. As soon as you have been granted the loan, you will be the owner of your vehicle. This security makes car credit a preferred choice. In some cases, following the loan, the bank has a guarantee (pledge) in case of insolvency of the customer. When the loan is repaid, the owner can then obtain a certificate of no pledge for the sale of his vehicle.
The security of car credit
Choosing a car loan is safe. You have the choice between new and used and you are the owner from the moment you purchase the vehicle. This allows you to resell your brand-new Audi Q2 whenever you want. You don’t have a mileage limit, you have your name on the registration document, in short the vehicle is yours.
Moreover you compare the offers of the various credits that we propose you. The repayment penalties are also very convenient in case of early repayment. However, do not neglect to take out insurance, as you will have to pay the monthly installments until the final due date, even if there has been damage, theft or destruction of the vehicle. Take into account as well that the manufacturer’s guarantee is often shorter than the established credit.