Car leasing in France: fee disputes flagged by consumer watchdog

Long-term car hire has become the most common way for people in France to acquire new vehicles: in 2024, the latest year for which data is available, 66% of all cars sold were obtained through leasing arrangements. 

These include location longue durée (LLD) and hire-purchase-style contracts known as location avec option d’achat (LOA).

However, one of France’s principal consumer watchdog organisations is now warning of problems with the system.

LLDs usually require drivers to pay a deposit of between 10% and 20% of the vehicle’s value, and then commit to fixed monthly payments, generally for three years.

In such cases, the car can be resold by the dealer without needing a valid contrôle technique (roadworthiness test), which is required for cars over four years old.

In LOA agreements, the car can be purchased by the driver for an agreed sum once the contract period has ended, giving them full ownership and a known vehicle history.

These contracts are often longer, usually lasting four years.

Both types of agreement typically impose limits on the distance vehicles may be driven over the contract period, as well as conditions regarding the state in which they must be returned to the dealer.

Contract detail

In most cases, both LLD and LOA agreements include mandatory maintenance, usually on an annual basis, carried out in manufacturer-approved garages and paid for by the driver, unless free maintenance is specifically included in the contract.

In practice, the arrangement involves three parties: the driver, who selects the vehicle from a dealer; a finance company, often linked to the manufacturer, which buys the car and leases it to the driver; and the dealer, which agrees under a separate contract to repurchase the vehicle at the end of the agreement.

Recent European Union changes in consumer law have brought LOA contracts into the realm of consumer finance law, which provides greater protection for buyers. 

Before LOA contracts are signed, the seller must now ensure that a right of withdrawal is provided, carry out checks to confirm that the customer can afford the payments, and supply clearly worded written details of the costs.

The changes have prompted many car manufacturers to promote LLD contracts instead, which are not subject to the same protections and regulations. 

They are becoming increasingly popular with dealers, who view the system as an opportunity to sell the same vehicle twice: first through LLD financing, and then as a three-year-old second-hand car.

Now, consumer rights organisation UFC-Que Choisir has published a report on LLD and LOA car agreements, based on a survey of 1,285 customers with such contracts and around 1,000 cases involving judicial disputes, mainly at the end of agreements.

“What we found is disturbing,” said Marie-Amandine Stévenin, president of UFC-Que Choisir.

“A quarter of the people we spoke to had disputes over fees when they returned vehicles, and were charged an extra €1,200 on average.”

Forced to continue

Other disputes saw drivers forced to continue monthly payments even when their lease car had broken down, or struggle to end agreements early in the event of job loss or separation.

Even when the hirer died, their heirs sometimes reported having to continue paying for the lease of the deceased person’s car.

“What shocked me most was that when the DGCCRF (state agency responsible for consumer protection) carried out inspections in 101 establishments offering long-term car rentals, it found problems with half of them,” said Ms Stévenin.

“And among the people who had to pay extra when they returned the vehicles, 65% thought the additional fees were not justified.

“We are not looking at isolated incidents, but a system. And we have to change that.”

The association is calling for amendments to the law to make it easier to exit contracts following “life events”, as well as for compulsory and standardised agreements across the sector, clearly setting out the total cost and specifying what fees may be charged when vehicles are returned.

It also wants the transfer of risk from the hirer to the provider in the event of breakdowns, so that payments are not required for vehicles that are out of use, and for the consumer protections currently applied to LOA contracts to be extended to LLD agreements.