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What are the differences between the LOA and a balloon loan?

Le monde automobile 28/08/2021 48

What are the differences between the LOA and a balloon loan?

What are the differences between LOA and balloon credit?

Rental with option to purchase (LOA) or car leasing gives the possibility to a potential private or professional lessor to own a vehicle leased for a specific period. The advantage of LOA is that there is the option to purchase at the end of the contract. The lessor will therefore be able to purchase the vehicle and become its owner. As for the balloon loan, it is based on the same rental principles as the LOA but will not give the lessee the possibility of ultimately owning the vehicle.

Offered by dealerships as well as banks, credit balloon is therefore a rental contract associated with a car loan and can be valid for 12 to 48 months (see more), in exchange of course for monthly payments during the rental period. However, the balloon loan gives the possibility of paying lower monthly payments than that of the LOA. By taking out a balloon loan, the credit institution will in fact offer you to reimburse only the interest on the loan during the entire contract. It will still be necessary to pay a personal contribution before to avoid paying too high monthly rents.

Presentation of the advantages and disadvantages of the two financings

AdvantagesDisadvantagesLOA– Two options are possible at the end of the contract : pay the purchase option to become the owner of the car or take out a new contract for another car - Rents are always less expensive than a conventional loan - You have a manufacturer's guarantee throughout the rental - Possibility of resale - The maintenance costs of the vehicle is your responsibility - The offer is limited for used vehicles - The overall cost is in most of the time greater than with a consumer credit (provide a monthly budget) - Maintenance must often be done within the manufacturer's network Balloon credit - Lower rental amounts (limited to interest on the loan). - Ease of contract renewal - You can buy the vehicle for u sum that was defined when signing the contract - If you do not wish to buy it, you can return it to the dealer - Possibility of reselling the vehicle - Higher interest - Payment of the costly contribution (the "balloon") - It is a credit that is more suitable for those who want to change vehicles regularly and who are regularly on the roads - You will be subject to a mandatory annual mileage not to be exceeded - Vehicle maintenance is your responsibility

The Kyump / CapCarKyump / CapCar service is a trusted intermediary in the sale of used cars. The Kyump / CapCar service is an inspection of your car by our mechanical inspectors and a simplified sale. We find a buyer for your car and sell it quickly. In the case of a car in LOA, our service is a big asset for the seller who will be able to find potential buyers much more easily and who will be accompanied in all the specific steps to leasing.


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