Leasing for a young driver: possible or not?
By definition, a young driver is very likely to have obtained his driving license very, very recently. And therefore to be very, very broke. And when we know the prices of young driver car insurance contracts (with the famous 100% surcharge for the first year), it is sometimes not financially feasible toto buy a careven used.
This is where leasing can prove to be an attractive solution for a young driver. But does this solution have a chance to come true? And first of all, what is leasing and what are its advantages for the young driver ? Elements of answers.
Leasing is the English name for a hire-purchase contract, also known by the acronyms LOA (rental with option to buy) or LDD (long-term rental). In effect, you are not buying a vehicle directly. You just rent it, with the key a put option at the end of the rental.
Concretely, leasing is therefore a lease contract (with monthly rents) possibly leading to a purchase, the lessor becoming the owner of the vehicle at the end of the contract. Each month, the rents paid under the rental agreement make it possible to pay simultaneously the remuneration of the rental period and part of the acquisition amount.
Young driver leasing: what are the advantages?
Concretely, leasing allows a young driver:
- Of drive a new car without paying cash, but paying a monthly rent
- Of do not need to mobilize the entire sum to have a car of his own
- Of pay rents based on the number of kilometers traveled, and therefore to be able to act on the amount of monthly payments
Not insignificant: acquiring a leased car makes it much easier to resell it if the need arises.
To be clear, is leasing interesting for a young driver?
In summary, and to rephrase …: if you are a young driver, choosing a leasing will allow you:
- Of have a new vehicle without necessarily having the means at time T. In any case without having to pay the total amount corresponding to the sale price
- Of take advantage of a credit rate (rents) lower than the rate for consumer loans (in fact, the really interesting rates charged by LOA establishments are around 2%)
- Ofadjust your monthly repayments necessarily limited financial capacities
In practice, leasing therefore allows a young driver to benefit from a new car without buying it right away, while leaving him the choice of whether or not to acquire it at the end of the contract.
A lease = three parties and three conditions
To carry out a proper leasing, three parties are necessary:
- The car salesman
- You (the lessor and future owner)
- A lending institution (also called a lessor credit)
To implement a leasing file, three conditions must be met:
- The purchase of the car by the lender
- The car rental contract
The purchase option
So, finally, is leasing possible or not possible for a young driver?
You will have understood it from reading the preceding lines: yes, leasing is a possible option for young drivers. And it’s not the 40% of young people under 25 who buy a leased car every year that will annoy me.
And if the leasing is so popular with younger generations is that it is in fact open to everyone, without age criteria, license seniority or driving experience. The one and only condition naturally remains to prove that you have your driving license in your pocket.
But in real life, and you can imagine it a little bit, this one and only condition hides another, much more trivial: so that your young driver leasing file be accepted by the lessor credit, you will have to show your white paws, that is to say that you prove that you are able to meet the monthly rent payments.
Because it is the lending institution that will put the new car in your hands, and he’ll want to be sure you’re not going to fail him. Suddenly, if you present the slightest risk in his eyes, your wishes to benefit from a leased car can quickly go unheeded …
But even (and above all?) If your file is accepted, beware of defaults which can cost you dearly! Indeed, the leasing company could sue you to force you to respect the execution of your young driver insurance contract (including via wage garnishment if you work). And this after having collected the vehicle!
Be careful not to commit lightly. Yes terminate a leasing contract is possible at any time, it can be extremely expensive due to the fees charged. Read the “early termination fees” paragraph in the GTC before signing: this will prevent you from serious inconvenience in the event that you wish to backtrack.
Long-term rental (LDD)
Duration: 1 to 5 years, with the number of kilometers fixed in advance.
Monthly rents according to:
- From the chosen model
- The duration of the contract
- The number of kilometers traveled
- Selected options (insurance, maintenance, assistance, etc.)
Rental with option to purchase (LOA)
Advanced security deposit: +/- 15% of the price of the new vehicle chosen
Monthly rents according to:
- The price of the car
- The duration of the rental
- Miles traveled negotiated
Maintenance and insurance at your expense
At the end of the contract, you will be able to:
- Acquire the vehicle by paying the outstanding amount
- Extend your LOA on a new model
- Return the vehicle by recovering only part of your contribution