Do you no longer want to invest in purchasing a new car, or do you want to change it more often? You might find that a long-term rental is the best option for you.
How does it work? What are the advantages and disadvantages? All the answers to your questions...
What is an LLD (Long Term Rental)?
Buying a car is a long-term waste of money, not an opportunity. You can rent your car to save money. Alongside Rental with Purchase Option, Long-Term Rental allows you to rent a vehicle for one to five years for a determined mileage, but not to become the owner.
Your bank or financial company purchases the vehicle and rents it to you for a set period for a monthly rent determined by the cost of the vehicle, the cost of its residual value at the end of the lease, the length of the contract, annual mileage, and any optional services (insurance, repairs, assistance, etc.) provided.
It is an outright rental, without a security deposit, with a return to the seller at the end of it. This rental form allows you to drive another new car at the end of the rental if you want to change your vehicle often.
Be careful, however, to respect the mileage imposed by the contract, which is generally 15,000 km/year for a gasoline vehicle and 25,000 km/year for a diesel, but which can be negotiated.
What are the advantages/disadvantages of an LLD?
The Long Term Rental allows you to drive a new car against the payment of monthly rent. This has advantages and disadvantages.
Long Term Rental's advantages are more or less numerous depending on whether it is made by a private individual or by a company. As for the disadvantages, they are the same for everyone.
Benefits to individuals:
- Budget control (identical rent every month)
- Maintenance, insurance, and assistance included in the contract
- No starting capital
- Frequent change of vehicle without worrying about resale
- Cost per kilometer more economical than the purchase of 15 %
Benefits to companies:
- Controlled and planned cash flow
- No staff dedicated to the maintenance
- Not included in the balance sheet
- Reduces the apparent indebtedness of the property
- No VAT advance
- Total financing
- No depreciation
- Rents are expensed
- Vehicle always in perfect condition
- No mileage allowance to manage
Disadvantages:
- Not owner
- Mileage to be respected
- Excess mileage costs
- Gray card in the name of the lessor
- Any signs of wear (scratches, missing parts, etc.) will also be invoiced at the end
- No purchase possible at the end of the contract
What documents do I need to provide?
When you opt for the Long Term Rental, the rental establishment will ask you to provide several documents.
The documents to be provided may vary, and it is necessary to distinguish between the individual, the companies or the self-employed, or the self-employed.
For individuals, here are some documents you may be asked for:
- Request for prior authorization
- Bank statement of identity
- Proof of identity (identity card, family record book, passport)
- Last tax notice
- Last or three last payslips
- Proof of address of fewer than three months or accommodation certificate
- Last statement of a bank account with salaries and pensions
- Mileage allowance
certificate - Bank certificate mentioning your level of indebtedness
For companies, self-employed or self-employed, here are the documents that may be requested:
- Identity card of the Manager or the CEO
- The SIRET number
- Extract from K-BIS or the Trade Register of less than three months
- Bank identity statement
- Contact details of the chartered accountant
- Extracts from the balance sheet
- The number SIREN and the last tax return
- The Statutes in the event of the association
LLD: Who should insure the vehicle?
Vehicle purchased by an establishment which rents it to you, you are not the owner, but all vehicles must be insured; Who will have to insure the car?
Unlike the Purchase Option Rental contract, maintenance, assistance, and car insurance are services included in most Long Term Rental contracts. Most often, the lessor offers the insurance that he has negotiated on his side with the contract.
You are not responsible for securing the car; this is included in the monthly rent. However, since insurance represents almost a third of the monthly rent, it is an optional service, and you can opt for the guarantee offered by your insurer. Before choosing, compare the prices; everything is negotiable with the provider.
Taking charge of claims management, a little extra for the lessor
The lessor can offer you as a service the management of claims to which you can subscribe even while keeping your insurer. In the event of an accident, you will be helped to complete the report or find a garage, and the rental company will take care of the rest: expert, replacement vehicle, garage invoicing, reimbursement by insurance, recovery once the vehicle has been repaired. You will have very little to do.
In addition to the all-risk guarantee included in the contract, your lessor can offer you other optional guarantees that may cover personal effects, objects, accessories, professional equipment, transported goods, etc. They can sometimes be included in the price of the base.
Is it possible to settle an LLD?
While your Long Term Rental contract has not yet expired, you decide for one reason or another to end it. Can you, and if so, how?
The Long Term Rental contract ends at its term, but by deciding to pay it off, you choose to terminate it before. To end your Long Term Rental before its end, three situations may arise at your sole initiative.
You can agree with your landlord. You will pay him compensation calculated based on the number of months remaining. To this are added the allowance for excess kilometers, as well as repair costs if applicable.
You can decide on your own to end the Long Term Rental. You must notify your lessor by registered letter with acknowledgment of receipt, at least 60 days before the date of return of the vehicle, then you must pay the compensation mentioned above.
Pay close attention to the vehicle's overall condition as well as the number of kilometers driven.
If you wish, you can sell the vehicle to settle the financing jointly. If the amount of the sale covers the early return indemnity, the buyer will issue a cashier's check for the amount of the indemnity to your lessor, and the excess will be paid to you with another check. Otherwise, you will have to write a cashier's check in addition to the payment made by the buyer to your lessor.
How to end an LLD?
For one reason or another, you decide not to continue with a Long Term Rental. You can terminate the contract either in progress or at the end of the rental.
To terminate the Long-Term Rental contract early, you can agree with your landlord. You will pay him compensation calculated based on the number of months remaining. To this are added the allowance for excess kilometers, as well as repair costs if applicable.
You can decide on your own to end the Long Term Rental. You must notify your lessor by registered letter with acknowledgment of receipt, at least 60 days before the date of return of the vehicle, then you must pay the compensation mentioned above.
Pay close attention to the general condition of the vehicle, and the kilometers traveled
If you wish, you can sell the vehicle to settle the financing jointly. If the amount of the sale covers the early return indemnity, the buyer will issue a cashier's check for the amount of the indemnity to your lessor, and the excess will be paid to you with another check. Otherwise, you will have to write a cashier's check in addition to the payment made by the buyer to your lessor.
The Long-Term Rental contract can be terminated at the lessor's initiative if you do not respect the terms eight days after sending a formal notice.
The leaseholder should inform you two or three months before the end of the contract, setting out the time and place of return if you wish to terminate the contract at the end. The car's general state will be reviewed, and the landlord will pay you for the costs of maintenance and any additional miles.
How to obtain the gray card of a vehicle in LLD?
The Long Term Rental contract allows you to drive a new vehicle and change it regularly. What about the registration card essential to be in order in the event of an inspection?
The procedures and the number of documents to provide to the Prefecture services to obtain the vehicle registration document are not what you prefer. By changing vehicles regularly via the Long Term Rental contract, it could have been off-putting. Fortunately for you, it is not.
Indeed, the gray card must be established in the name of the owner of the vehicle. In this case, you are the tenant. Therefore, it is up to your lessor to carry out all the administrative procedures for establishing the registration card. The gray card will be in his name, and you will appear there well, but under the mention "Tenant".
The cost of the vehicle registration document is often included in the rental price
The rental company will give you the vehicle registration document or a copy so that you can drive in good standing with your new vehicle. The vehicle registration document's cost is also the lessor's responsibility, and there is a very good chance that the latter has reflected it in the rental price.
Looking for the best rent a car in Karachi? Carlay Car Rental is just right for you. We provide excellent car rental services with an affordable price range and provide all the necessary services to make our customers ride better.