Lease with option to purchase (LOA) is a payment method more and more widespread in France. Can we integrate this contract into a credit redemption?
The car leasing allows you to rent a car for a predefined period and possibly buy it at the end of the contract. This is an alternative to auto loan that gives the opportunity to change vehicles regularly. Find out what you need to know about credit redemption and lease purchase.
How does auto leasing work?
Auto leasing, also known as LOA, is another option for borrowers to finance their cars. In exchange for monthly rent, the applicant has a vehicle at his disposal. At the end of the contract, he can decide to buy it or to return it. Thus, with a leasing contract, the motorist is a tenant of the vehicle, for a fixed period, generally between 24 and 72 months.
This solution has several advantages. First, it allows you to enjoy the property before you even buy it. This method of payment may be suitable for households that have insufficient budget to buy a car in the immediate future. Then, when the leasing contract does not impose a deposit or a personal contribution, the financial investment is less heavy than a car loan. Finally, the LOA is particularly suitable for people who want to change vehicles regularly.
As with any consumer credit, banks and credit institutions set their own rules for granting or not leasing a car. Their decision depends essentially on the profile of the applicant and his solvency.
Integrate a LOA into a credit redemption, is it possible?
As a reminder, the repurchase of credit consists in prepaying all the loans subscribed by the borrower. These loans are combined into a single loan with a reduced monthly payment in exchange for an extension of the borrowing period. The loan consolidation may concern real estate loans, consumer loans or bank overdrafts. In the context of a LOA, the repayment conditions are pre-defined and vary according to the leasing lenders. Thus, in principle, a car leasing agreement can not be integrated into a credit buy-back unless it provides that the leased property will ultimately belong to the lessee for payment of a price agreed in advance. In other words, the credit surrender operation may include an auto leasing if the borrowing tenant immediately acquires the vehicle.
In most cases, the borrower who wishes to make a LOA redemption must meet a minimum period, usually set at 1 year from the signing of the contract. A feasibility study is essential to set up this operation. Feel free to use an online credit redemption simulator to get an estimate of your future reduced monthly payment and study the value of this solution.
By using the car leasing credit, you can reduce your debt ratio but also include an additional amount to finance a new project. It is strongly advised to anticipate its credit redemption by comparing the offers proposed by the lenders. To save time, you can also turn to a broker.