What is electric car leasing?
According to theFrench Association of Finance Companies (ASF)three out of every four new passenger cars financed in France are financed by Leasing with Purchase Option(LOA)".
In addition to the cash purchase of a vehicle, there are two other popular financing methods in France: leasing with an option to buy(LOA) and long-term leasing(LLD).
But what is a lease with purchase option(LOA)? What's the difference with long-term leasing (LLD)? What's included?
See also: Car leasing: how does it work?
What is a lease with option to buy (LOA)?
A lease with purchase option(LOA) allows you to lease an electric vehicle with the option of buying it at the end of the lease.
In simple terms, you pay monthly instalments for a period agreed with the leasing company, and at the end of this period you can either buy the vehicle or return it.
Lease terms vary from 2 to 5 years. The rent paid each month to the vehicle owner (dealer or lessor) is fixed in the terms of the lease contract.
The advantages are :
- Possibility of redemption or early termination.
- Opportunity to make a good deal if the electric vehicle is requested at the end of the contract.
Good to know leasing with purchase option (LOA) is similar to consumer credit.. This means you can withdraw from the contract up to 14 days after signing.
What is long-term leasing?
An electric car can be leased for a period of 1 to 5 years. During this period, the lessee pays a fixed rent and benefits from maintenance and assistance services included in the price. At the end of the contract, the lessor returns the electric vehicle to its owner and selects a new vehicle.
The advantages are :
- Better budget management with fixed rents.
- The ability to change vehicles frequently.
This purchasing method is especially popular with businesses.
Good to know: you can make a buy-back proposal to the leasing company before the end of the commitment period. Although it's more complicated to buy a leased electric car, it's possible that the dealer will accept. However, the buyer will not benefit from an advantageous price; the vehicle will be sold at the market price.
Read also: Everything you need to know about long-term leasing for electric cars
Electric car leasing vs. leasing: what's the difference?
To make things clearer, we've put together a table comparing the two purchasing methods.
| Lease with purchase option (LOA) | Long-term leasing (LLD) | |
|---|---|---|
|
Input |
Yes |
No |
|
Kilometric cap |
Yes |
Yes |
|
Possibility of buying back the vehicle at the end of the contract |
Yes |
No |
|
Right of withdrawal |
14 days |
No |
|
Insurance |
At the tenant's expense |
At the tenant's expense |
|
Maintenance |
At the tenant's expense |
Included |
|
Assistance |
At the tenant's expense |
Included |
|
Restoration costs at the end of the contract |
No |
At the tenant's expense |
Electric vehicles under a leasing contract vs. electric cars under a long-term leasing contract: which to choose?
It all depends on your profile.
- You drive a lot: if you drive more than 10,000 km a year, it's more cost-effective for you to opt for a leased electric car, as maintenance is included. If you drive less, you won't take advantage of these benefits. What's more, if you're a heavy driver, there's no point in buying the vehicle back at the end, as its residual value will be very low.
- You don't drive much : In this case, it's wiser to opt for a lease with purchase option(LOA). Even if you have to pay for maintenance, the budget will be limited. What's more, you'll find it easier to resell a vehicle that has seen less use.
Note that in sectors such as construction and civil engineering, given the risk of damage to the vehicle, it is wiser to take out a leasing contract for your professional leasing.
Lease an electric car
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How to buy an electric car?
If we summarize the various purchasing methods explained above and the advantages of electric cars, we can draw the following conclusions.
Consumer credit for an electric car
With the current economic climate and low interest rates, taking out a consumer credit with a financial institution can be a wise move, as you'll have to make monthly payments. The electric vehicle belongs to you, and you're free to do what you want with it. As the second-hand market gradually develops, the limited production of new electric vehicles and the long-term warranty on batteries provide reassurance about resale value, with all the indicators in the green.
| Model | Battery warranty |
|---|---|
|
8 years or 160,000 km (whichever comes first) |
|
|
8 years or 160,000 km |
|
|
7 years or 150,000 km, for its 64 kWh battery |
|
|
8 years or 240,000 km, with 70% minimum battery capacity retention during the warranty period. |
|
An electric car for long-term leasing
From a maintenance point of view, it's not necessarily advantageous to buy your electric car on a LLD (long-term leasing), as the vehicle requires little maintenance and stands the test of time. Even the battery, which was an unknown factor in the electric equation, has proved to be solid.
On the other hand, if you regularly cover long distances and plan to use your vehicle for a long time, it's worth opting for a leased electric car.
Leasing an electric car with a purchase option (LOA)
This is the wisest option. You'll have to pay for maintenance, but given the cost of maintaining electric vehicles, it won't break the bank. At the end of your contract, you can buy back the electric vehicle. Given current forecasts, the electric vehicle will be worth a great deal on the second-hand market, and you'll be making a handsome profit. If all the experts are wrong, you can return the vehicle to the dealer or leasing company.
Bonus: the case of battery leased vehicles
In this case, you should never buy the vehicle for cash. When you come to resell the vehicle, it will be difficult to find a buyer willing to lease a battery for life. You'll be forced to sell your vehicle in order to get rid of it and stop paying for the battery. Note also that the rental budget for your electric vehicle battery is not insignificant: it starts at €69/month for light-duty drivers. Even when you're not using your car, you'll still have to pay an extra monthly instalment.
The advantage is that, as the battery is the most expensive component of the car, the initial purchase price is lower.
Is it possible to benefit from regional aid?
You may not have access to certain regional subsidies if you purchase an electric car on a long-term leasing (LLD) or lease-to-own(LOA) basis. However, they will be available for cash purchases.
As the ecological bonus is deducted from the overall price of the car by the seller, you'll benefit regardless of the financing method and leasing contract you choose.
| Help Individuals | Leasing with purchase option (LOA) | Long-term leasing (LLD) | Cash purchase |
|---|---|---|---|
|
South region: Bouches-du-Rhône (13) |
✖️ |
✖️ |
✔️ |
|
Normandy Region (14) (27) (50) (61) (76) |
✔️ |
✔️ |
✔️ |
|
The Arve Valley |
✖️ |
✖️ |
✔️ |
| AIdes for companies | Lease with purchase option (LOA) | Long-term leasing (LLD) | Cash purchase |
|---|---|---|---|
|
Île-de-France region (75) (77) (78) (91) (92) (93) (94) (95) |
✖️ |
✖️ |
✔️ |
See also: Regional aid for electric cars.
