Go Back   Team-BHP > Team-BHP > Team-BHP Advice > On buying a car


Reply
 
Thread Tools Search this Thread
Old 8th August 2015, 12:52   #196
Senior - BHPian
 
vnabhi's Avatar
 
Join Date: May 2007
Location: DC -> DC
Posts: 5,022
Thanked: 1,023 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Guys
A question on perquisite tax when an employee quits his job before the lease period ends:

A friend has put in his papers and is getting his relieving order in Sep end. He had a 4-year lease for his Beat tdci, out of which he has completed 3. His monthly installment was around 15800, and he's been asked to pay around 2.2 lacs for foreclosure, including VAT. But someone from HR also advised him to get the car ownership transferred in the name of a cousin or friend with a different address, in order to avoid perquisite tax.

He is in a dilemma now, as he does not know how much the perquisite tax will work out to be. He was given a ballpark figure of 55 K, though he is not sure. Is there any such tax to be paid if the car is transferred to to his name, or to his spouse? If yes, how is the amount calculated? The lease in question is a Financial lease and not an Operating lease that most companies offer. In short, the residual value is only around 6000 rupees at the end of the lease period.

Last edited by vnabhi : 8th August 2015 at 12:54.
vnabhi is offline   Reply With Quote
Old 13th August 2015, 18:35   #197
Newbie
 
Join Date: Sep 2014
Location: noida
Posts: 13
Thanked: 3 Times
Default LeasePlan

Hello everyone,a thing that really amazes me is how would car lease plans work out in India,I know mercedes has gone about it and failed,many startups have also gone the same way,so bhp'ians response is what I really desire.
How about a 5year leased swift or a scorpio or a honda city,straight by the company?
You don't pay for the maintenance,only premium insurance and how would the government and manufacturers react??
All responses would be appreciated
Thank you
Dhruv Budhiraja
Nuts over BHP
dhruvritzed is offline   Reply With Quote
Old 14th January 2016, 16:39   #198
BHPian
 
Thilak29's Avatar
 
Join Date: Apr 2011
Location: BLR>PTR
Posts: 308
Thanked: 233 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Quote:
Originally Posted by kumaranna View Post
My two cents on car lease.
I need some expert advice.

The organization I recently joined offers car on lease, when inquired I was told that I just need to submit a proforma invoice and fund will be released for initiating purchase. While EMI is calculated 14% of interest rate will be considered and I need to pay the outstanding amount (inclusive of interest) if I decide to separate from organization during the lease period. At the end of the lease term, company will offer NOC and I need to get ownership transferred to me.

I see that the EMI will reduce taxable income and offer benefits of fuel, maintenance expenses, driver wages through FBP.
However in comparison to bank loan (@9.85 ROI),for an amount of 9 Lakhs I end up paying 64 thousand more in interest for a tenure of 3 years.

So in order to break even, overall tax benefits alone must be at least 1800 rupees per month!

How do i choose between these two, is there something more to it than what meets the eye?

Last edited by Thilak29 : 14th January 2016 at 16:42.
Thilak29 is offline   Reply With Quote
Old 16th January 2016, 09:49   #199
BHPian
 
PADAS's Avatar
 
Join Date: Apr 2015
Location: Bangalore
Posts: 66
Thanked: 49 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Quote:
Originally Posted by Thilak29 View Post
I need some expert advice.

The organization I recently joined offers car on lease, when inquired I was told that I just need to submit a proforma invoice and fund will be released for initiating purchase. While EMI is calculated 14% of interest rate will be considered and I need to pay the outstanding amount (inclusive of interest) if I decide to separate from organization during the lease period. At the end of the lease term, company will offer NOC and I need to get ownership transferred to me.

I see that the EMI will reduce taxable income and offer benefits of fuel, maintenance expenses, driver wages through FBP.
However in comparison to bank loan (@9.85 ROI),for an amount of 9 Lakhs I end up paying 64 thousand more in interest for a tenure of 3 years.

So in order to break even, overall tax benefits alone must be at least 1800 rupees per month!

How do i choose between these two, is there something more to it than what meets the eye?
Pros:
- Tax saved per month - ~30% of the EMI [Assuming you fall in the top tax slab]
- Fuel/Service cost/maintenance cost reimbursement. If within FBP, this too will yield some IT savings.
- Usually in car lease, companies bear the cost of registration/yearly insurance.
- Other frills like special offers from insurance companies for corporates, etc (like free towing, etc). Some companies reimburse accessories cost as well.

Cons:
- Higher interest rates
- Usually there is a VAT+ST on the monthly lease amount
- Scrap value to be paid at the end of lease (in % of purchase value. Can vary based on company policy)
- Terms of exit. Might prove costly if you exit early (within few months of lease) . Few companies may recover the registration / insurance costs prorated.
- Resale value - You become second owner if you transfer it at end of lease (though you have used the car all along). Any further sale makes it third owner. But you always have an option to sell it at end of lease and transfer to new owner instead of transferring to you.

In my computations, I have always found car lease making sense from a total cost of ownership point if you plan to stick with lease for more than a year.

Hope this helps !
PADAS is offline   Reply With Quote
Old 16th January 2016, 21:00   #200
BHPian
 
Thilak29's Avatar
 
Join Date: Apr 2011
Location: BLR>PTR
Posts: 308
Thanked: 233 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Quote:
Originally Posted by PADAS View Post
Hope this helps !
Thank you so much.
You provided some new insights which I was unaware of. Can you please elaborate scrap value payment ? At the end of the period since ownership is anyway transferred , is scrap value way of making money , as throughout the deal rules expect commitment of taking ownership anyways.

Last edited by Thilak29 : 16th January 2016 at 21:13.
Thilak29 is offline   Reply With Quote
Old 17th January 2016, 09:13   #201
BHPian
 
PADAS's Avatar
 
Join Date: Apr 2015
Location: Bangalore
Posts: 66
Thanked: 49 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Quote:
Originally Posted by Thilak29 View Post
Thank you so much.
You provided some new insights which I was unaware of. Can you please elaborate scrap value payment ? At the end of the period since ownership is anyway transferred , is scrap value way of making money , as throughout the deal rules expect commitment of taking ownership anyways.
I believe thats an accounting thing. Technically the car is company's asset and you are just using it. So for the company, its a sale /transfer of its asset at the end of lease term and there should be a value in the books. I have seen this value varying from 1% to 15% depending on company policy. So you may want to check on this with your HR for details.
PADAS is offline   Reply With Quote
Old 7th February 2016, 14:10   #202
BHPian
 
quadmaniac's Avatar
 
Join Date: Dec 2007
Location: Hyderabad
Posts: 310
Thanked: 15 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Hi experts,
I am looking to lease my next car, and Orix is one of the possible lease companies. Upon seeing https://www.orixindia.com/salesandlease.aspx one thing grabbed my attention:

"Automatic Transfers – We offer a unique facility to transfer your company car lease to your individual capacity in case of separation from your employer. This facility enables you to save cash by not opting for the foreclosure option and give you the flexibility to continue the lease in your individual name for the balance period."

Does anyone have any idea about this? What's the catch here?
quadmaniac is online now   Reply With Quote
Old 17th March 2016, 12:25   #203
BHPian
 
drsingh's Avatar
 
Join Date: Mar 2011
Location: Ludhiana
Posts: 609
Thanked: 391 Times
Default

Has anybody made use of Maruti's N2N lease option for Corporate /self employed users?

I'm unable to find any cost estimate or review of the service online.

Requesting forum members to share their experience/knowledge regarding the same.

Or any information regarding any other way to lease vehicles of any manufacturer in India for self employed individuals.

Thanks.

Last edited by drsingh : 17th March 2016 at 12:27.
drsingh is offline   Reply With Quote
Old 20th June 2016, 19:32   #204
BHPian
 
hrishig's Avatar
 
Join Date: Apr 2007
Location: Pune
Posts: 371
Thanked: 9 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

There is a problem. The lease companies are not giving the residual value in writing. So at the end of the tenure if you want to purchase the car on your name the leasing company will decide the car price. So if you buy innova / swift with lease you may have to pay more compared to jetta/ punto at the end of three years if you want to purchase the same car though you have already paid principle + interest of almost same amount. Anybody else facing such problem?
hrishig is offline   Reply With Quote
Old 3rd July 2016, 20:14   #205
BHPian
 
Join Date: Oct 2007
Location: Pune
Posts: 168
Thanked: 43 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

I am looking for an advice on Car Lease. Recent change in policy at my work means that I, now, can get a car under company's Car Lease scheme. Now, I own a 3.5 year old Punto Emotion Diesel. I like this car a lot!
Although I was not planning to buy a new car, this change in circumstances mean, a car buying 'keeda' is beginning to make some noise in my head!
Some research and browsing on TBHP got me hooked on to S-Cross 320 (1.6L Diesel).
Now, I am looking for some guidance / advice from fellow bhpians on how to proceed! I know this is a stupid question. But, your advice could also be - don't be a fool and keep driving Punto. But, some proper advice would be very valuable to sort out 'locha' in my head!
Please help!!
dmplog is offline   Reply With Quote
Old 25th July 2016, 18:57   #206
BHPian
 
ptaneja's Avatar
 
Join Date: Jun 2008
Location: South Pole,Mars
Posts: 419
Thanked: 193 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Quote:
Originally Posted by hrishig View Post
There is a problem. The lease companies are not giving the residual value in writing. So at the end of the tenure if you want to purchase the car on your name the leasing company will decide the car price. So if you buy innova / swift with lease you may have to pay more compared to jetta/ punto at the end of three years if you want to purchase the same car though you have already paid principle + interest of almost same amount. Anybody else facing such problem?
True. Lease companies would not produce any residual value in writing(this scheme is called Market Value). But on rough estimate, expect about 55% of the car value or so after 3 years. Best solution in this case would be to let go of the car after 3 years.

Here in my company, a leasing company is providing a new scheme - Fixed Residual Value - but it costs a bomb. The ratio they keep is 65:35 - that is after 3 years, you'll have to pay 35% of ex-showroom cost. (this is in writing)

Following is the quote/price breakup for a Celerio ZXI AMT -

Ex-showroom Price - 510,160
Discount - 28,000.00
Net Price - 4,82,160
Insurance - 14,788
Road Tax - 27,833

Rental on Base Price - 11209.04
Security Deposit: 0.00
Down Payment: 0.00
Fleet Mgmt Services - 4458
Vat / Lease Tax - 1471
Service Tax - 646
Total Lease Rental - 17785

So after three years, you'll pay -
17785 * 36 = 6,40,206
35% of Showroom Cost = 178556
So total payout = 640206 + 178556 = 8,18,762 !!!

An extra 3Lacs+ !
Pay to government in form of taxes ( and assume that a streetlight on next flyover belongs to you) or payout in terms of EMI
ptaneja is offline   (1) Thanks Reply With Quote
Old 26th July 2016, 15:16   #207
BHPian
 
hrishig's Avatar
 
Join Date: Apr 2007
Location: Pune
Posts: 371
Thanked: 9 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Well said. The other type of lease ( finance lease ?) was boon , but haven't seen that recently in any company. It was offered by GE finance and was best for employees.
hrishig is offline   Reply With Quote
Old 26th July 2016, 16:03   #208
BHPian
 
Join Date: Dec 2009
Location: Bangalore
Posts: 298
Thanked: 182 Times
Default Re: ARTICLE: Lease OR Loan? Which EMI is better for you

Quote:
Originally Posted by hrishig View Post
There is a problem. The lease companies are not giving the residual value in writing. So at the end of the tenure if you want to purchase the car on your name the leasing company will decide the car price. So if you buy innova / swift with lease you may have to pay more compared to jetta/ punto at the end of three years if you want to purchase the same car though you have already paid principle + interest of almost same amount. Anybody else facing such problem?
The leasing firm that my company is tied up with has a fixed residual value. Employee has to choose either 1% or 10% initially and only need to pay this amount at the end of the leasing period. Add to it, the monthly rentals change as per the RV selected.
samabhi is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
ARTICLE: How to get the lowest EMI & the best Finance Deal GTO On buying a car 192 9th September 2016 10:02
The Cheap Loan or the Smart Loan - SBI Advantage Car Loan keyur Indian Car Loans & Insurance 199 10th January 2016 12:49
Car Loan - EMI - Varying Interest Rates torquarius Indian Car Loans & Insurance 4 15th February 2011 18:08
Car Loan (EMI's) transferrable?? rohanverdes1 Indian Car Loans & Insurance 3 6th October 2009 16:39
Lease or loan? Pro's and Con's of each. Rtech Indian Car Loans & Insurance 16 4th October 2006 16:50


All times are GMT +5.5. The time now is 08:56.

Copyright 2000 - 2016, Team-BHP.com
Proudly powered by E2E Networks