Why French drivers are turning towards long-term car rental

The trend in France for long-term car rentals is showing no signs of slowing down as drivers explore options for funding vehicle purchases. 

Both the new- and used-vehicle market have seen a shift in recent years, with options for long-term leasing (location longue durée, LLD) or long term-leasing with an option to buy (location avec option d'achat, LOA) becoming more popular. 

They are now replacing the traditional method of buying a car through a loan or straight cash purchase in many instances. 

In 2022, for the first time long-term rental became the main method for acquiring new vehicles.

Two years on, more than 90% of new car purchases and up to a third-of transactions for used-cars were financed via leasing arrangements according to French consumer information website UFC-Que Choisir.

How does leasing work? 

A contract to lease a car sees a driver (lessee) have use of it for a set period in exchange for monthly payments. 

For an LLD, the agreement can run from anywhere between one to five years (12 to 60 months), after which the vehicle is returned to its owner, usually a vehicle dealership.

Rules are different for an LOA. The rental period can be between two to seven years, after which the person leasing the vehicle has the option to buy it at a lower price than its original value which takes into account its depreciation over the rental period. 

The lessee is not obliged to buy the car, however, and can return it to the dealership.

Exact rules can differ between dealerships, so it is important to read the contract carefully before signing up.

Note that the lessee is usually responsible for ensuring the car is correctly insured and otherwise fit to be driven, although certain costs can be built into the monthly rental payment.

Full information on rules for both LLDs and LOAs can be found in French and English on the Service Public website.

Cost and flexibility main factors 

Flexibility and the ability to spread the costs over a period are key factors behind the success of leasing. 

“I don't want to spend €40,000 on a vehicle. So I am looking at what alternative financing solutions there are,” said one potential customer to French media outlet TF1. 

A breakdown of costs at one dealership highlighted by TF1 shows the difference. 

The example vehicle is available to purchase for €31,500. 

Taking out a loan with the dealership, total payments are €35,450 payable over a fixed number of years.

A long-term lease with option to buy costs €37,240. 

While a higher sum, a large element of this is optional and dependent on whether or not the driver chooses to exercise the purchase option at the end of the contract. 

The above example includes maintenance for the vehicle which is not always offered in leases.

Ensuring that drivers do not need to worry about these factors is another reason for the popularity of leasing. 

“The maintenance was completely taken care of,” said another person to TF1.

“I realised that as a retiree it offered a solution that, while a little more expensive than a purchase, provided peace of mind,” they added.

Leasing comes with obligations 

Be aware that once a contract is signed to lease a vehicle the monthly payments still need to be made even if there is a change in your circumstances. 

A potential seven-year lease is a long-term commitment towards paying for a vehicle you may not own after this period has ended.

Lessees will be responsible for the repair of any damage (over and above any accepted ‘wear and tear’) to the vehicle, even if this is something you may not have addressed had you owned the car (small dent, scrape etc).