Prospective buyers of a Peugeot must have heard of LOA solutions. Indispensable, rental with option has become the preferred auto financing solution for the French. However, it is a more expensive formula on average than conventional car credit. Let us delude the true from the false with a small study of the LOA proposed by Peugeot.
The Peugeot LOA explained
Here are the characteristics of the rental with purchase option offered by Credither, finance company of the Peugeot group:
- LOA without compulsory contribution
- A monthly rent fixed in advance
- Possibility to buy or return the vehicle or term of the contract
- Option to buy the vehicle from the 12th month
The Peugeot LOA corresponds to a perspective pack. It differs from the “Axcess” pack, which is associated with a more classic car loan. We have already compared the depreciable Peugeot credit when we reviewed PSA’s offers.
Peugeot LOA or classic car credit?
The majority of French people have abandoned car credit in favor of the LOA, no doubt reassured by the promise of small monthly payments and the possibility of changing vehicles at the end of the contract. Renting with a purchase option, however, raises several questions from a competitiveness point of view.
The negative points of LOA
- It costs more on average than a new or conventional used car loan.
- Its APR rate is never communicated on contracts.
- The driver is only the tenant of the vehicle.
- The complete “maintenance” package included in the monthly payments is not always suitable.
- Penalties are applied in the event of exceeding the mileage rate established in the contract.
- The vehicle must be returned in immaculate condition, in which case additional costs may be applied.
- It is generally associated with small monthly payments.
- The LOA is easier to obtain than a conventional car loan.
Comparison of LOA rates for a Peugeot 308
We carried out a simulation of Peugeot LOA on the Peugeot site, looking for a car available immediately for a test in the dealership. We chose a Peugeot 308 SW Access PureTech 110, sold at a net price of $ 20,700 (June 2019). The LOA Peugeot offers us to personalize the funding, so that it best suits our profile. Here is what we choose on the LOA Peugeot simulator:
- No contribution
- Annual mileage: 15,000
- Duration of the Peugeot LOA: 49 months
- No additional service (PCS Maintenance, PCS Warranty extension, replacement security)
- Without optional insurance
Result of our simulation
- 49 rents of $ 305.53
- Purchase option at the end of 49 months: $ 9,936.00
- Total amount due in the event of acquisition: $ 24,906.97
Interest therefore reaches $ 4,206.97, i.e. the total cost in the event of acquisition – the initial sale price ($ 24,906.97 – $ 20,700). The APR rate of our Peugeot 308 LOA simulation peaks at 6.92%!
Auto credit, the cheapest solution?
Our auto credit comparator has been designed to offer the best rates charged by credit organizations. A new car loan simulation over 72 months allows us to obtain monthly payments very close to those found on our Peugeot LOA simulation, namely 305.53 USD. However, we see that the auto loan rate of the two best specialists reaches 4.10% and 4.15% fixed APR respectively. To go further in the comparison, we must look at our survey ” LOA, LLD, car credit: which one to choose?” “.
The LOA Peugeot in a nutshell
The rental formula with purchase option offered by Peugeot is well established. The manufacturer puts forward takeover offers and offers a real simulator. The LOA Peugeot is completely on the road. It is for example possible to carry out a simulation, but above all to obtain an immediate agreement in principle. An online request form present on the group’s website allows you to start online procedures. You just need to enter your identity and profession to get a first opinion.
Principle immediate response
A first agreement in principle makes it possible to reserve the chosen vehicle for 3 days. The chosen point of sale is then authorized to establish contact by email or telephone in order to plan a visit to the concession. It is also possible to print the summary of the pre-contract in PDF format. The cost of credit is well specified, but still no rate on the horizon.
Good to know: it is possible to retract and thus cancel the sale for 14 days. Only an express delivery request can reduce this period. In any case, it can never be less than 3 days, nor more than 14 days.