When you want to change your car, it is sometimes difficult to choose between a purchase, Rental with Purchase Option (LOA), and Long Term Rental (LLD). Each of these formulas has advantages and disadvantages. To find their way around, consumers can use an online comparator, an interesting decision support solution. In addition, this file also explains the difference between LOA and LDD.

To rent a car in Lahore, contact Carlay Car Rental. It is a well-known car rental firm. Thanks.

Buy a car to become an owner.

Depending on the use you want to make of your vehicle, it may be interesting to buy a car, whether new or used, especially when you are driving less than 10,000 kilometers per car. year. It can be a long-term investment for a motorist who does not drive much.

To own your car, you have the choice between cash purchase and credit. In the latter case, this financing can be spread over a maximum of 84 months, which makes it possible to reimburse the bank in small monthly installments. It is an ideal solution for tight budgets.

The owner of the vehicle retains the freedom to sell it at any time or to keep it beyond the repayment term. On the other hand, buying a car is not the most economical option if you drive several tens of kilometers per year, and here is why.

• Frequency of revisions,
• Wear of engine parts, tires, and accessories,
• The obsolescence of the car which increases over time, which means that it must be changed regularly even if the credit that allows it to be financed is still in progress,
• Resale more difficult than if it were a vehicle that has driven very little,
• Annual discount of 20 to 25% during the first years, or even more when the vehicle’s mileage is particularly high.

Buying a car is not always the cheapest solution. You have to consider the cost of credit and the cost of using the vehicle, especially if it is used intensively.

Rental with Purchase Option (LOA)

Rental with Purchase Option, also called Leasing, is a concept used for car rental with the possibility of purchase. It is a financial lease allowing you to buy your vehicle at the end of the rental contract. The rental period is generally between 12 and 72 months, depending on the banks or credit institutions. In return, the tenant must pay monthly payments during the period covered by the contract.

At the end of this, the lessee returns the vehicle to the lessor or keeps it. In the first case, the lender must return the security deposit to the person named in the rental agreement. This security deposit can be kept by the lessor, partially or totally, depending on the mileage traveled and the vehicle’s condition. In the second case, the purchaser must pay the difference between the price of the new vehicle and the amount of the monthly payments already paid plus the security deposit.

However, Renting with a Purchase Option does not only have advantages. Its disadvantages are as follows:

• No possibility of reselling a recent vehicle if you wish to obtain a personal contribution to buy a new vehicle,
• Expensive cost when returning the vehicle in LOA if it is returned in poor condition or with a kilometer overrun,
• If the vehicle is purchased at the end of the contract, the purchaser must pay a larger sum than if he had financed it with a conventional loan.
• The consequent impact on the household budget when the motorist opts for a new LOA as soon as the previous one ends, because for years, he is forced to pay monthly payments to rent a vehicle.

Long Term Rental (LLD): an attractive formula

Long-term rental is a device that consists of renting a vehicle for a fixed period, generally less than 48 months. A subscription contract defines the rental conditions as well as the amount and duration of the rent. At the end of the contract, the vehicle is returned to the lessor with no possibility of purchase.

The LLD is an interesting formula for individuals as well as for companies because it allows benefiting from many included services such as:

• Vehicle maintenance,
• Assistance,
• Insurance,
• The replacement of the vehicle in case of breakdown or accident because the repairs are supported by the lessor.

In addition, this formula has significant advantages, namely:

• No need to find financing,
• No personal contribution to plan,
• A security deposit corresponding to one month’s rent only,
• No worry about resale,
• Allows you to change vehicles frequently in order to benefit from a more recent car,
• No additional costs (maintenance, repair, etc.).

Some disadvantages are, however, to be deplored:

• Limited annual mileage: exceeding the mileage can be expensive, and its amount considerably increases the cost of rent,
• Payment of an additional cost at the end of the contract corresponding to the cost of repairing the vehicle: this concerns in particular, the bodywork, the passenger compartment, the tires.
• No possibility of buying the vehicle at the end of the contract.

Purchase, LOA, or LLD: selection criteria

Certain criteria must be taken into account to choose among these three solutions.

• The number of years during which one wishes to keep a vehicle: beyond 5 years, the purchase is preferred.
• The rental period: if you want to keep a vehicle for less than 5 years, it is preferable to opt for the LOA.
• The motorist who does not wish to keep his vehicle for more than 3 or 4 years has every interest in choosing the LLD.

Before choosing the most economical formula, it is strongly recommended to compare the offers intended for individuals and professionals as well as the financing solutions.