Car Leasing : Is Leasing Better against Buying Car in India

Car Leasing Explained in Detail with Real Life Scenario including Lease Rentals, GST, Tax Benefits and Comparison against Car Loan Finance in India 

Car Leasing Vs Buying : Comparison

Car Leasing easing is short term contract (typically 2 yrs to 5 yrs) for those who do not want to tie there hands in Downpayment, Recurring Insurance Premiums, Resale, Maintenance etc, but rather wish to Experience New Car for Contracted Period in Hassle Free Experience.

Post Contract Period over - can consider whether

• Wish to Upgrade to New Car basis 
• Use Same Car by Buying Back the Residual Value 

and Top of it are Benefits in terms of Corporate Lease Rentals which are deductible from Taxable Income to reduce Final Tax Liability

So yes

• No DownPayment in Owning Brand New Car
• No Recurring Insurance Premium
• No Service Maintenance
• If Car turned Accidental or repair taken more than 5 days (replacement car provided as per Contract)
• No Worries of Depreciation, Resale

all you have to pay are Pre Defined Lease Rentals to Buy the Car.

Buying Vs. Leasing

To Explain Better - here is Real Life Scenario Explained as comparison against Buying Hyundai Creta Sx and Leasing the Car

Pls note above Lease Rental is Real Life Quote shared to a Corporate Employee including all applicable Charges, Taxes without any Residual. Details:-

Lease Rental Calculation

Here is Detailed Quote for Car Lease as shared by Leasing Company to the corporate Employee for Hyundai Creta Sx without any Buy-Back / Residual.

No Residual Value applied

Comparison of Car Buying Vs Leasing

* - Presuming you are earning 15 Lakh pa as Net Taxable Income as Corporate Lease Rentals can be reduced from Taxable Salary on Pre Tax Basis

Now - there are 2 More considerations in above:-

• In Case of Leasing - You have 5 Lakh Amount too left as Upfront Down Payment been Saved, which you can invest depending on your Risk Appetite to earn Returns in Stocks, Mutual Funds for 10% to 25% Returns or Safe Instrument like Fixed Deposit where 8% to 9% Returns are there. For someone who is Informed of Financial markets - can easily earn 2% per month or 24% Annually as net return on average in NIFTY Option Selling.

• However, as in Case of Leasing - you are not the Owner of Car, So When you buy car on Loan - you can actually sell that car in Second Hand Car Market

So Factoring Same:- In Car Rental

However, in case of Car Purchase

While in Case of Car Purchase - you can sell Car and thus that amount can be figured off

More Details on Car Lease Contract

• (*) Beneficial if you are in Job and earning more than 15 Lakh per annum as Annual Taxable Salary, so as to get 30% Reduction
• You are not the Owner of Car, but Leasing Company is Owner of the Car - but Brand New Cars are given to Lessee.
• Lease Contract is defined as per expected average annual Usage. In Specified case is 10,000 Kms per year
• If you break Lease Contract due to any reason (except Death) - hefty amount as penalty will be due to leasing company as its a Legal Contract
• You need to frame in similar leasing contract with new company if you shift job.
• You can not Modify Car or Accessorize Car if buying Car on Lease (if seek any change, you need Leasing Company approval)
• Pls Check Contract in Detail for any hidden Term which may impact Lease Experience.