Choose between a car loan or the LOA Lease with Purchase Option

Auto loan or LOA 

Auto loan or LOA 

Classic depreciable auto loan or LOA ( Rental with Purchase Option ) which is a rental formula with the possibility of buying your own vehicle at the end of the lease if you wish. Which formula is the right solution to finance the purchase of your car? The answer is not so simple, it is necessary to make a simulation of financing in both cases because according to your case one of the two formulas may be more advantageous for you.

Net price of the vehicle $
duration month
TAEG (excluding insurance)   %
Rent LOA $ / month
Monthly installment of credit    
Cash surrender value LOA $

The car garage or a dealer, in any case a professional, will almost always propose both formulas. To see more clearly you can use this simulator and comparator of credit auto and LOA.

You must enter the price of the net vehicle ie the price of your car after deduct the different discounts. This amount corresponds to the one to be financed and to the one that will be on the lease.

The duration to be seized is the period over which you want to finance your car, a short term will increase the monthly payments but will reduce the final cost of your car and conversely a longer duration will allow you to face lower monthly payments but the The cost of financing will ultimately be higher.

The APR Rate or Global Annualized Rate The best auto credit rate you’ll find on our auto credit comparator by entering the amount, duration and age of your vehicle.

By running the calculation you will get two results:

By running the calculation you will get two results:

  • The rent of the LOA which represents the monthly payment to be paid each month. You must be vigilant here because additional amounts may appear in your contract as mandatory guarantees and other fees. You must add them to the amount obtained by our simulation.
  • The monthly installment of the car loan, which represents the monthly payment excluding borrower insurance (it is optional) to be paid every month in case you purchase a car loan. For information, please note that auto loan insurance is optional for auto credit, it is the law of the consumer code, but concerning the LOA the financing organization may impose additional insurance.

Then you have to add for the Lease Purchase Option the surrender value of the vehicle that you will have to pay after the last monthly lease in order to be able to own your own vehicle. This is not an obligation you can very well return the vehicle to the finance company and leave with a LOA on another new vehicle. If you do not have this amount you could also borrow the cash value but then the cost of your financing may be prohibitive, it must be taken into account.

To conclude and according to our credit and LOA simulations it appears that the classic car loan at the best rate remains the most advantageous solution if you ride normally, the opposite for a car that would make 100 000km per year the LOA is interesting because l wear of the car makes that you will be forced to change it at the end of the financing period, this is also the reason why type of formula is widely used by the professionals of the road in the form of leasing .

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