LOA electric car: what you need to know before buying an electric car

Electric cars are still expensive to buy, which is why many French people are using other funding vehicles like LLD or LOA.

A lease-to-own (LOA) option is a financing offer that allows motorists to lease their electric vehicle with the option to buy or return the vehicle at the end of the contract.

Therefore, buyers are required to make monthly payments over the period specified in the lease, which can range from 2 to 5 years.

 You should also be aware that LOA is considered a consumer loan offered by approved organizations. Therefore, you have a 14-day opt-out right.

75% of new cars bought from LOA

LOA attracts more and more French people

In 2019, 3 out of 4 new cars were funded according to the annual activity reportFrench Association of Financial Companies... Compared to 2013, the share of LOA in financing new cars increased by 13,2%. In the used car market, LOA financed half of the cars. 

Leasing with an option to buy is indeed a financing offer that the French like because it is a safer way to own your car and therefore have a stable budget.

Motorists value the freedom and flexibility that LOA provides: it is a more flexible form of loan where the French can take advantage of a new vehicle and latest models while still having a controlled budget. Indeed, you can buy back your car at the end of the lease or return it and thus change the car frequently without feeling financially involved.

This trend is also appealing to buyers of electric vehicles, who can spread the cost of a car across several monthly installments and therefore manage their budget wisely.

An offer with many benefits:

LOA has many advantages for financing electric vehicles:

1. Better control your budget : The cost of an electric vehicle is more important than its thermal counterpart, so LOA allows you to smooth out the amount of your investment. This way, you can drive a new electric vehicle without paying the full price right away. Only the first rent will have to be paid immediately, but it ranges from 5 to 15% of the sale price of the car.

2. Very low maintenance cost : In a LOA contract, you are responsible for maintenance, but it remains low. Since an electric vehicle has 75% fewer parts than a gasoline vehicle, maintenance costs are reduced by 25%. This way, in addition to the monthly rent, you won't have a lot of additional costs.

3. Nice deal anyway : LOA provides some freedom in the possibility of buying or returning the car at the end of the lease. You can buy your electric vehicle back with the chance to get a great deal by reselling it on the secondary market. If the resale price of your vehicle does not suit you, you can return it as well. Then you can enter into another lease and enjoy the new, more recent model.

Electric Vehicle at LOA: Buy Back Your Car

How do I repurchase my electric vehicle at LOA?

 At the end of your rental, you can activate the purchase option to take ownership of the vehicle. If you want to repurchase your electric vehicle before the contract expires, you will have to pay the remaining monthly payments in addition to the vehicle's resale price. Fines may be added to the price paid, especially if you have exceeded the number of kilometers indicated in your rental agreement.

 Payment must be made to the landlord and your lease will subsequently be terminated. The landlord will also issue you with a handover certificate allowing you to take the necessary steps to acquire the vehicle, in particular with regard to the registration document.

 Before deciding to buy an electric vehicle, you need to determine if this is the most profitable option for you.

What should you check before buying?

The first thing to determine before buying back a car is its residual value, that is, the resale price. This is an estimate made by a landlord or dealer, usually based on how well a model has held its value in the past and the perceived demand for the model being used.

For an electric vehicle, residual value is more difficult to estimate: electric vehicles are recent and the used car market even more so, so the history is rather short. In addition, the autonomy of the first electric models was much lower, which does not allow for realistic comparisons. 

To decide if a buyout is the best option for you, we advise you to simulate a resale by posting an ad on a secondary site like Leboncoin. You can then compare the possible resale price of your vehicle with the purchase option offered by your lessor.

• If the resale price turns out to be higher than the purchase option price, you will get more benefits by buying your vehicle back in order to sell it on the secondary market and thus earn a margin.
• If the resale price is lower than the purchase option price, it makes sense to return the vehicle to the lessor.

Apart from checking the residual value of your vehicle before the buy-out, it is also important to check the condition of the battery.

Indeed, this is one of the main concerns of motorists when buying a used electric vehicle. If you wish to repurchase your vehicle after the LOA expires in order to resell it from time to time, you must confirm the condition of the battery to potential buyers.

Use a trusted third party like La Batterie to provide you battery certificate... You can diagnose your battery in just 5 minutes from the comfort of your home.

The certificate will provide you with information, in particular, about the SoH (health status) of your battery. If your electric vehicle battery is in good condition, it will be beneficial for you to buy the vehicle and resell it in a used market because you will have an additional argument. On the other hand, if the condition of your battery is unsatisfactory, it is not worth buying a car, it is better to return it to the lessor.