On the road to car financing, there is no set road. There are several types of consumer credit : restricted credit, personal loan and rental with option to buy.

To choose between these different consumer loans, it all depends on the lifestyle and auto use of the borrower. Empruntis provides insights to make the right choice and compares the solutions.

Car loan or LOA?

Car loan or LOA?

“Our customers ask themselves the question of what is worth it” between the two financings, explains Cécile Roquelaure. “This is why, since last year, we have offered our customers two financing solutions: conventional credit and LOA “. To find out which auto financing method is best for you, take the borrowing test.

Rental with option to purchase (LOA)

Rental with option to purchase (LOA)

With an LOA, the borrower is primarily a user. To find out if this solution is right for you, the questions to ask yourself are: do I want to own my vehicle? Do I want to change it regularly? What car loan for a new car? What auto credit for a used car?

With an LOA, the borrower pays rent and becomes the owner (only if he wishes) at the end of the contract by paying the residual value of the property. This is provided for in the contract. The rental with option to buy is a guarantee of simplicity for the borrower who commits for a given period with a maintenance, repair contract, a mileage package, etc.

Borrower’s advice for choosing an LOA:

  • Choose a provider with tailor-made services,

  • Start with lower mileage,

  • Choose a contract that can modify this mileage for free,

  • Provide savings for the “new” return of the vehicle.

Even if today the financing of new cars is largely boosted by rental operations with option to buy, car credit is a solution that meets other borrower profiles.

Auto credit

Auto credit

Auto credit can be a personal loan or restricted credit. The affected loan is directly linked to the vehicle it finances, unlike the personal loan. In the case of an assigned credit, if the vehicle is not delivered, the credit is canceled. Conversely, in the case of a personal loan, the funds are always available on the borrower’s account even in the event of a delivery problem.

Some tips for financing yourself with a consumer loan :

  • Choose a short duration to get a low rate,

  • Compare consumer loans and put competition to negotiate your car loan,

  • Compare the APR overall annual effective rate which includes all the costs linked to the credit (application fees, interest, insurance, etc.).

  • Keep savings in the event of a hard blow.

In summary, the good advice is to compare the different credit solutions to find out which one is best suited to your project and your car budget. To better understand, find our infographic on the difference between LOA and consumer credit.

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