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Old 19th December 2012, 18:14   #151
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by Marlon View Post
I understand there are benefits and risks associated with it. Hopefully the I stick on for another 3 years with the new company I am joining ( I have never worked more than 33 months in any company so far in my 8+ yrs of exp )

Can you provide some details about the termination cost.

My other general queries.

1. How will wear & tear be considered. Eg. Tyre Change should I bear the cost ?
2. What happens when there is a part breakdown after warranty?

Termination cost is upfront informed to you at the time of signing the agreement through Optiflex Matrix. Optiflex Matrix is exclusive to ALD and it shows the termination cost at various intervals in terms of months and Kms expired.

If you have opted to full maintenance by ALD, wear and tear, tyre, battery and spares pre & post warranty are taken care by ALD. Not a penny goes out from your pocket during the lease period (except for total loss - am not sure of this calculation).
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Old 12th February 2013, 12:04   #152
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Hi, my company has got a tie-up with a firm called Tranzlease. Apparently they only offer operating lease options - is that beneficial under any scenario?

My limited understanding after reading this thread is that it is not, because the residual value of the car at the end of lease period is quite high in this product? (separately, does any one have experience with this company? Would love some feedback on them)
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Old 18th February 2013, 18:00   #153
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Post Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Hi crazydave,

I opted for Operating Lease with ALD automotive from my company Alcatel Lucent India. I booked an i20 ASTA and obtained the delivery on 15th May 2009. I was supposed to return back the car after 3 years or buy it back from them at the MRV (Market Residual Value). I loved the car. I was involved in minor accidents and the company helped me with the insurance and ensured that I did not have to pay much from my pocket. I had bought the car for around 6.6L but I was asked to pay 4.2L to buy back the car which I felt was too much after 3 years and around 30,000 kms .I was guessing when I bought the car that maybe I would have to pay atleast 35 % of the car value while buying back but it turned out to be different. They took almost a month to set the pricing during which time I did not have the car and finally I decided to give back the car when they told me about the MRV.
I guess its a good option if you do not plan to stay in the same company for more than 3 years or if you plan to upgrade your car every 3 years, otherwise I would suggest you to opt for Finance lease.

Thanks and Regards,
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Old 18th February 2013, 19:50   #154
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by i20maverick View Post
Hi crazydave,

I opted for Operating Lease with ALD automotive from my company Alcatel Lucent India. I booked an i20 ASTA and obtained the delivery on 15th May 2009. I was supposed to return back the car after 3 years or buy it back from them at the MRV (Market Residual Value). I loved the car. I was involved in minor accidents and the company helped me with the insurance and ensured that I did not have to pay much from my pocket. I had bought the car for around 6.6L but I was asked to pay 4.2L to buy back the car which I felt was too much after 3 years and around 30,000 kms .I was guessing when I bought the car that maybe I would have to pay atleast 35 % of the car value while buying back but it turned out to be different. They took almost a month to set the pricing during which time I did not have the car and finally I decided to give back the car when they told me about the MRV.
I guess its a good option if you do not plan to stay in the same company for more than 3 years or if you plan to upgrade your car every 3 years, otherwise I would suggest you to opt for Finance lease.

Thanks and Regards,
Thanks for the response i20maverick. Did your lease provider tell you the MRV upfront or is that only decided at the end of the lease period? In some cars that are seeing heavy depreciation, an operating lease might work out equivalent to a finance lease I guess. Anyways, thanks for sharing your experience
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Old 25th February 2013, 12:15   #155
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by crazydave View Post
Thanks for the response i20maverick. Did your lease provider tell you the MRV upfront or is that only decided at the end of the lease period? In some cars that are seeing heavy depreciation, an operating lease might work out equivalent to a finance lease I guess. Anyways, thanks for sharing your experience
My wife has bought a scorpio under a lease and the residual value is fixed at 25% - we would not have gone in for this if it was not provided upfront given the resale value of the Scorpio.
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Old 25th February 2013, 14:38   #156
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by crazydave View Post
Thanks for the response i20maverick. Did your lease provider tell you the MRV upfront or is that only decided at the end of the lease period? In some cars that are seeing heavy depreciation, an operating lease might work out equivalent to a finance lease I guess. Anyways, thanks for sharing your experience
Hi crazydave,
The issue was that they did not let me know the exact % of the residual value when i opted for it. They had informed me it should be around 30-35 % based on the depreciation for 3 years. It was a surprise for me when I thought of buying back the car.
Regards,
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Old 26th February 2013, 10:42   #157
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by wanderluster View Post
My wife has bought a scorpio under a lease and the residual value is fixed at 25% - we would not have gone in for this if it was not provided upfront given the resale value of the Scorpio.
Thats good to know - that these companies provide a quote for the residual value

Quote:
Originally Posted by i20maverick View Post
Hi crazydave,
The issue was that they did not let me know the exact % of the residual value when i opted for it. They had informed me it should be around 30-35 % based on the depreciation for 3 years. It was a surprise for me when I thought of buying back the car.
Regards,
Thanks for this information. Will definitely not go in for a lease unless the residual value of the car is agreed upon in writing before the lease start
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Old 26th February 2013, 12:43   #158
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

I have the below company lease offer for a XUV5OO W8 (this is couple of months back):

Bank 1:
On Road price: 16,24,676.00
VAT (12.5%) : 1,45,689.00
Less insurance: 50,584.00
Capitalised Amount: 14,28,403.00

Tenure (Months) / Lease Rental / Residual Value
36 / 46136.00 / 20%
48 / 38085.00 / 17%
60 / 32943.00 / 15%

Last edited by m_upreti : 26th February 2013 at 12:45.
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Old 21st May 2013, 15:55   #159
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by ajitkumarlb View Post
I got quote from both Orix & SBI and here is how it compares.

Note: Interest rate on Lease is at 18% not 13% as I had mentioned above.

Even then Lease makes sense!

Attachment 570155
I am not sure if this is the right way of arriving at ownership cost.

1. If in case of loan option you are adding opportunity cost of down payment, there is no reason why you should not be adding the same in case of lease option as even in this case after 3 years you are paying lump sum amount of 3 lacs to buy back the car.

2. In most cases, your company will define the eligibility of benefit in terms of total amount for car purchase. You have directly added and deducted 30% IT tax basis EMI value. What if my limit is 25000 per month. In this case over 3 years my IT tax will be 2.7 lacs.

3. You have already added 4.58 lacs as IT tax paid to arrive at ownership cost in case of EMI option which means you should not deduct 4.79 lacs to arrive ownership cost in case of lease option because you have already accounted for the benefit of Option 2 over Option 1 by adding IT tax to the overall cost

The difference between the 2 options as I see is hardly a lac. Also factor in the fact that in case of lease option you become the 2nd owner and hence you will get lower resale value.
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Old 3rd July 2013, 09:45   #160
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Maybe a silly question but for a finance-leased company car, why does an employee need to pay VAT on the RV (at tenure-end) or on the foreclosure value (if foreclosing)?

Hasn't the leasing company already taken the applicable VAT credit pertaining to the purchase of the vehicle in the normal course of THEIR business? Why should the employee have to pay again?

With Karnataka VAT at 14.5% I urgently need an answer to this!
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Old 31st July 2013, 19:30   #161
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Maybe a silly question but for a finance-leased company car, why does an employee need to pay VAT on the RV (at tenure-end) or on the foreclosure value (if foreclosing)?
I don't understand this either... The ex-showroom price of the car includes VAT, the monthly lease rental as well as the final residual amount also include VAT over and above. Does this mean the government earns VAT twice for the transaction? If that is the case, then they are never going to abolish car leases, come GAAR or anything else!
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Old 28th September 2013, 11:58   #162
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

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Originally Posted by itwasntme View Post
Maybe a silly question but for a finance-leased company car, why does an employee need to pay VAT on the RV (at tenure-end) or on the foreclosure value (if foreclosing)?

Hasn't the leasing company already taken the applicable VAT credit pertaining to the purchase of the vehicle in the normal course of THEIR business? Why should the employee have to pay again?

With Karnataka VAT at 14.5% I urgently need an answer to this!
When a car is sold by a company whose primary business involves automotives VAT is applicable to the buyer in the transaction. I bought a used company car from VW and had to pay VAT on the transaction.
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Old 25th October 2013, 14:30   #163
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Maybe a silly question,

But is it possible to make some downpayment in case of car lease - suppose someone does not want loan for entire amount?
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Old 25th October 2013, 15:39   #164
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Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

yes you can, in my case I did.
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Old 5th November 2013, 17:17   #165
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Originally Posted by ajitkumarlb View Post
yes you can, in my case I did.
Not opposing this statement, but It's a little confusing for me. How can the leasing company accept down payment when the car is registered on the company's name?? Maybe we are missing the details here. In the operating lease, the car ownership is transferred only after the full payment at the end of tenure. In which case, isn't your money spent on down-payment at risk?
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