The different options for leasing an electric car: LMD, LLD and LOA
Switch to electric car is an important decision when looking for a new vehicle. Leasing is a less demanding alternative to buying. But there are a number of advantages and disadvantages to leasing an electric car.
There are several rental options:
- medium-term rental (LMD) :
- 1 to 24 months
- renewable
- makes it possible to change vehicles frequently to keep pace with the latest developments in electric car technology.
- long-term leasing (LLD) :
- 24 months to 72 months
- allows you to have a new vehicle at all times, paying only for the use you make of it
- flexible contract (duration, mileage, services, etc.)
- lease with purchase option (LOA) / leasing
- 24 to 72 months
- possibility of purchase at the end of the lease (price defined when the contract is signed)
- flexible contract (duration, mileage, services, etc.)
See also : Should you buy your electric car on a leased or leasing basis?
Take advantage of our leasing offers for electric cars
The advantages of leasing an electric car for the self-employed
Tax benefits
For professionals, an electric car offers two to three times more depreciation than a combustion-powered car. In the case of leasing, the non-deductible amortization (NDA) will be much lower for electric cars. As a result, you'll be able to charge almost all your lease payments to your income statement.
On the other hand, you've probably already heard of the vehicle use tax (formerly known as TVS). With an electric car, you're exempt because you emit less than 60 g/km of CO2.
However, in 2023, this tax will be replaced by two new taxes, the annual the annual tax on CO2 emissions and the annual tax on emissions of atmospheric pollutants.. If you own an electric vehicle, you'll be exempt from these two taxes.
See also : Electric vehicles for leasing: what are the advantages for SMEs and VSEs?
Simplified procedures
When you lease an electric vehicle, the advantage is that you don't have to worry about insurance or maintenance. In fact, your monthly payments include :
- insurance
- maintenance
- repairs to your electric car
- assistance
This also reduces your costs, as you won't have to take out no insurance or maintenance costs.
State aid: ecological bonus and conversion premium
The environmental bonus 2023 is a government grant of 3 000 € for professionals on the leasing or purchase of a vehicle costing less than €47,000to help them make the transition to cleaner vehicles.
Let's take the example of a MG4 on a business leasing contract with a 48-month, 10,000 km contract, to which we add the environmental bonus:
LLD (without environmental bonus) = €520.12
Ecological bonus for professionals = €3,000 / 48 months = €62.50
LLD (with environmental bonus) = €520.12 - €62.50 = €457.62
The French government has also introduced a scheme called the conversion premium. This aid will reward drivers who agree to destroy their old polluting vehicle and switch to an electric or plug-in hybrid. It is possible to receive €2,500 for a legal entity. If you live in a ZFE (low-emission zones such as Paris, Lyon, Marseille...), the grant will be increased by €1,000for a total of €3,500.
Enjoy a modern electric vehicle
As stated above, leasing an electric car, whether as a LLD or LOA, allows you to change vehicles frequently. So, at the end of each contract, you can opt for a new electric vehicle that has recently appeared on the market, taking advantage of new technologies.
The disadvantages of leasing an electric car for the self-employed
Limited mileage
Your lease contract is defined by a number of months, i.e. the duration of your lease, but also by the number of kilometers you will cover each month. The number of kilometers can be, for example, 10,000 km, 15,000 km or even 30,000 km if you use the car frequently for travel.
In the case of self-employed professionalsIn the case of self-employed professionals, such as nurses or sales representatives, it's advisable to use a high mileage rate, to avoid paying overrun charges. Your mileage can be increased or decreased in the middle of the contract.
Cancellation fees
You're not an owner. You can imagine that, when you lease an electric caryou won't have full control over it. As you're committed to a fixed term, you don't have the option of terminate your contract before the end without incurring additional costs.
Take the example of the Kia Niro EVwith a 48-month leasing contract at €490, here are the cancellation charges according to the period of your contract:
- first half of the contract: 490 × 10 months = €4,900 4 900 €
- second half of the contract: 490 × 6 months = €2,940 2 940 €
- last year: 490 × 3 months = 1 470 €
- the last three months: 490 × 1 month = €490 490 €
- last month: €0.00
Repair costs
Beware of any scratches or damage to your electric vehicle's rims, bodywork or bumper, which will incur repair costs. The amount of these charges will depend on the model of your electric car and your dealer. You can discuss this when you sign your contract with your rental company.
The advantages of buying an electric car for the liberal professions
Let's take a look at the advantages of buying an electric car.
No debt
If you opt for a cash purchase, you won't be indebted to a third party, and you won't have to pay any interest to a lending institution such as your bank. If you buy an electric car on credit, the main benefit is that your monthly instalments are fixed, as with a leasing contract and your budget is under control.
Unlimited mileage
Unlike the LMD, LLD or LOAyou'll have no restrictions on your monthly mileage. This is a great advantage for self-employed professionals, as you won't have to pay any overrun charges.
Tax benefits
As with leasing, you'll be exempt from the two new taxes replacing the vehicle use tax (VUV). So you won't have to pay anything for the annual tax on CO2 emissions or the annual tax on emissions of atmospheric pollutants.
What's more, when you buy an electric car, you'll be exempt from tax on vehicle registration unless you live in the Centre Val de Loire or Bretagne regions of France.
On the other hand, an electric car can be amortized up to €30,000. It's also possible to write off your battery entirely. However, you'll need to apply for a separate invoice for your car and your battery to benefit.
If your profession requires you to drive a commercial vehicle, you should know that by switching to electric power, the VAT on your vehicle is 100% deductible.
See also: Buying an electric commercial vehicle in 2023: what you need to know
The disadvantages of buying an electric car in cash for the self-employed
It's important to stress that these disadvantages don't apply in all cases. Depending on the financial situation of each professional, cash purchase may be more or less advantageous. So it's important to carefully assess your financial situation before making a purchasing decision.
Professionals can also consider other financing options such as long-term leasing (LLD), which can enable them to retain their liquidity while obtaining the use of an electric vehicle.
Affects cash flow
Firstly, a cash purchase involves a high initial cost, so it can be difficult for self-employed professionals with high financial burdens. The cost of an electric car, which can be higher than that of a traditional car, can therefore represent a significant investment affecting your cash flow. What's more, if you want to buy an electric van, you'll have to pay in advance the 20% VAT which will be reimbursed after purchase.
On the other hand, self-employed professionals may need to use their savings to finance future business projects or meet unforeseen expenses. By paying cash for an electric car, you risk reducing your ability to meet these expenses, and may be forced to dip into your savings to finance other projects.
Depreciation of your electric car
Finally, electric electric cars are subject to rapid depreciation, just like petrol or diesel cars. By paying cash for an electric car, professionals risk losing a large part of their initial investment if they decide to sell the car after a few years.
This loss of value can be difficult to bear for professionals who have made a major investment. What's more, there's the risk of vehicle obsolescence, with a shorter range and less advanced technologies than the new electric cars on the market.
The disadvantages of buying an electric car on credit for the self-employed
Paying interest
When you finance the purchase of an electric car on credityou'll have to pay interest on top of the amount borrowed. This interest can represent a substantial sum, which increases the total cost of the car. Liberal professionals who choose this option should therefore be aware that the total cost of the car will be higher than if they had paid cash.
Pay additional costs
On the other hand, in addition to interest, lenders may charge other fees such as :
- an administration fee,
- processing costs,
- fees for early repayment of the loan.
These fees can also represent a significant sum, and liberal professionals need to be aware of all the costs associated with the loan before making a decision.
Electric vehicle depreciation
As with cash purchases, owning an electric car carries the risk of obsolescence.
Leasing or buying an electric car: how do you know the long-term cost?
TCO (Total Cost of Ownership) is an indicator that compares the total cost of ownership between different types of vehicle, particularly between electric and combustion-powered cars.
The TCO for a rental takes into account :
- rent or purchase price
- maintenance and tire costs
- insurance costs
- parking
- TVS
- ecological bonus or penalty
- fuel or refuelling costs
- amortization
In general, electric cars have a lower TCO than combustion-powered cars due to their energy efficiency and lower maintenance costs. As a self-employed professional looking to acquire a vehicle, you need to consider TCO when comparing the cost of ownership between electric and combustion-powered cars in order to make an informed decision based on your budget and needs.
Let's take the example of a TCO calculation between the Renault Megane e-Tech and its internal combustion equivalent, over five years.
| Electric car | Thermal car | |
|---|---|---|
|
Car model |
Renault Megane e-Tech |
Renault Megane |
|
Purchase cost |
37 200 € |
29 300 € |
|
Government aid* (Bonus écologique, prime à la conversion) |
6 500 € |
0,00 € |
|
Insurance cost / year |
840 € × 5 = 4 200 € |
840 € × 5 = 4 200 € |
|
Maintenance cost / year |
720 € × 5 = 3 600 € |
1 080 € × 5 = 5 400 € |
|
Cost of a terminal |
1 200 € |
0 € |
|
Parking / year |
0 € |
720 € × 5 = 3 600 € |
|
TVS / year |
0 € |
290 € × 5 = 1 450 € |
|
Consumption and cost of fuel for 30,000 km |
816 € × 5 = 4 080 € |
3 600 € × 5 = 18 000 € |
|
TCO |
40 180 €** |
61 950 €** |
* More help is available depending on your region.
** You can write off €30,000 for an electric car and €18,000 for a combustion-powered car.
We can therefore see that the purchase of an electric car is €21,770 cheaper over a five-year period. The difference will be more obvious with a lease.
You can get a more developed TCO by contacting one of our experts.
How can I compare rental and purchase offers to find the best deal?
Beev wants to make a real change in the electric car industry. electric car by providing multi-brand offers to help liberal professionals, and by facilitating their purchasing process to find the electric car that best suits their needs. Liberal professionals can access a wide selection of electric car models, enabling them to easily find the model that best meets their needs in terms of range, charging capacity and cost.
What's more, our electric car experts will be with you every step of the way, from research to financing to test drive. By analyzing your situation, we'll advise you not only on vehicles, but also on which financing method is best suited to your needs. With Beev, you can be sure of finding the right electric car while benefiting from expert advice and quality service.
In conclusion
In conclusion, for liberal professionals, the acquisition of an electric car is an attractive option from a tax point of view. However, some prefer to lease rather than purchase. Leasing offers the advantage of being able to change vehicles regularly, with insurance, maintenance and repairs covered by the monthly rental payments.
Financial advantages include no large down payment on the first monthly instalment and exemption from vehicle use tax. However, disadvantages include a limited number of kilometers per year and the fact that you don't own the vehicle.
Ultimately, the decision between buying and leasing will depend on your priorities as a liberal professional, and your preferences in terms of budget, consumption and comfort.
