Leasing, or rental with option to purchase (LOA), is a formula favored by a growing number of motorists to travel at the best price with a recent vehicle. This formula induces certain specific rules concerning the choice of your auto insurance contract. Find out below the essentials to remember about leasing insurance with Turbo.fr
What is a leased vehicle?
Leasing, or rental with option to buy » (LOA), is a possible alternative to buying a new or used vehicle and taking out a car loan. It simply consists of renting a vehicle from a rental company for a fixed period, generally included between 2 and 5 years.
The driver of a leased car is therefore not the legal owner. However, he holds a registration certificate drawn up in his name. To drive, he is subject to payment:
- A security deposit at the signing of the rental contract, the amount of which can reach 15% of the estimated value of the vehicle;
- A contribution or monthly rent, to be paid directly to the rental company and the amount of which depends on the value of the vehicle.
Many motorists appreciate the advantages of a leased car: indeed the amount of the rent is generally lower than that of the car loan which would have been necessary to acquire the same model.
At the end of the rental period, the driver can exercise his purchase option if he wishes, and thus become the definitive owner of the car for a price defined in advance in the contract. If he returns the vehicle, his security deposit will be refunded to him after any deduction of the costs of repairs.
The possibility of a buyout at the end of the contract is the main difference between leasing and long-term rental (LLD).
The LOA vehicle rental contract – and sometimes also the auto leasing insurance contract – includes an annual mileage limit not to be exceeded. It is often set by default at 15,000 or 20,000 kilometers per year. Be sure to define this quota according to your real needs: any overrun may result in invoicing of a significant amount.
How to insure a leased car?
As part of a leasing contract, taking out car insurance remains the sole responsibility of the lessee-driver, even if he is not the owner of the vehicle. Two solutions are generally possible. The driver can:
- Either take out car leasing insurance directly with the rental company (group contract);
- Either choose a contract himself with the insurer of his choice.
The first option is certainly the simplest and fastest, but not necessarily the most advantageous from a financial point of view. By using an online auto leasing insurance comparator, you can quickly identify competing and less expensive formulas.
As a reminder, French law imposes at least “third-party” car insurance for all motor vehicles traveling on public roads. This is a civil liability guarantee covering damage caused to other road users.
However the rental company is entitled to request more protective insurance. In practice, the contract will most often require the motorist to take out “all-risk” car leasing insurance.
What guarantees for auto leasing insurance?
It is in the interest of the tenant to benefit from a more protective contract than a simple third-party insurance. In fact, leased vehicles are most often quite recent and therefore have a high value. In the absence of sufficient cover, the insured is liable to reimburse significant sums to the rental company in the event of an at-fault accident.
Lessor-imposed warranties typically include:
In addition, it is not uncommon to include in the car leasing insurance contract a “financial loss” guarantee: the latter takes into account the difference between the market value of the vehicle and its new value to avoid the insured everything remains dependent.
How much does car lease insurance cost?
The following table offers you a comparison of the best car lease/LOA insurance quotes, in all-risk formula. The advertised rates apply to exclusively private use, for a driver living in Lyon, driving 15,000 kilometers per year, with a closed garage and a maximum bonus with no recent liability claims.
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