Has anyone explored the option of leasing brand new cars ?

[adityapd]

came across an advt in one of the classifieds in Mumbai....about this organisation having its office at Kemps corner which offers leasing of brand new vehicles to individuals / corporates and tourist operators.

The trust will pay for the total OTR price of the car including insurance , registration , etc and even a tourist permit (for tourist operators)

Upon enquiry the details of a deal offered on a brand new Honda city ZX Exi ( OTR price ~ 8,50,000 /- ) was as follows :


Deposit to be paid at the time of taking delivery : 3,30,000 /-
Rent charges per month for a period of 5 yrs : 6,700 /-

At the end of 5 yrs , if you want to keep the car, the trust will keep 50 % of deposit and refund you the balance after transferring car to ur name

or if u aren't interested in keeping the car, the trust will fully refund back your deposit.

Now doesn't this sound fabulous enough ?

a quick calculation will show that actual cost of the car for an individual would work to be 1,65,000 /- ( 50% of deposit) + 60 X 6,700 /- = 5,67,000 /- not bad at all for a car costing 8,50,000 /- .

Just wanted to know whether anyone on this forum has tried out the leasing option and is there any catch anywhere ?

~a

[S600BENZ]

Please give details of this organisation as in name and address.
Thanks

[DCEite]

I think it is a fraud. The company officials will hire some mafia/gunda sought of people to retreive the car from you claiming that the car is in their company's name (with R/c and other legel papers) and you will have no choice but to concede and give the car back, and your initial deposit of 3 lac will never be returned!

[Samurai]

I have leased cars before. Problem with leasing is that you can't mod it.

[GTO]

Upon enquiry the details of a deal offered on a brand new Honda city ZX Exi ( OTR price ~ 8,50,000 /- ) was as follows :


Deposit to be paid at the time of taking delivery : 3,30,000 /-
Rent charges per month for a period of 5 yrs : 6,700 /-

At the end of 5 yrs , if you want to keep the car, the trust will keep 50 % of deposit and refund you the balance after transferring car to ur name

or if u aren't interested in keeping the car, the trust will fully refund back your deposit.

Impossible. Even if they dont return the deposit, the total cost comes to 732,000 (330,000 + 60 EMIs of 6700). Forget the interest, here the principal amount cost of a Honda City EXI is 8,50,000.

Its a Fraud. BHPians better stay away!

GTO

[Samurai]

Originally Posted by GTO

Impossible. Even if they dont return the deposit, the total cost comes to 732,000 (330,000 + 60 EMIs of 6700). Forget the interest, here the principal amount cost of a Honda City EXI is 8,50,000.

GTO, shouldn't you be looking at the NPV of the all the EMIs instead of just the sum total? I am sure that figure will be much lesser.

[tsk1979]

This is definately a fraud as far as individual leasing is concerned.
there is another type of leasing which is in practice in corporate world.
Here is how it works.
Your company a car on a lease, lets say a 4 lakh car(on road). Lets say the monthly instalment comes to about 10000/month for 4 year lease. At the end of lease you pay 40000rs(10%) and the car is yours.
Now if you take car loan the cost of the car is cheaper, but why go for lease? Here's why.
The company will reduce your salary on paper by 10000/month. This means you pay less tak and just pay 1200 perk tax/month. Which means you save around 2000/month in tax.
Also since company shows its giving you a company car they save tax which most mnc's pass on to employee by paying the insurance.

So you get to pay 8000/month which transtlates to 96000/year = 3.84 lakh + 40000 = 4.24lakh. you save about 44000 on insurance costs.

So who loses, the govt.
The rule specifies if you get 100000 salary you pay 30% tak, but if you get a car equivalent to 100000 salary you pay 1200/month perk tax. Good deal eh?

[adityapd]

Originally Posted by S600BENZ

Please give details of this organisation as in name and address.
Thanks

The name's Dr. Babasaheb Ambedkar Pratishthan..something..they claim that they are govt. recognised and their nos. are 23841171 / 23895335 ( miss. Reshma) ...They regularly advertise in the Connect classifieds under vehicles column every Monday.

I think it is a fraud. The company officials will hire some mafia/gunda sought of people to retreive the car from you claiming that the car is in their company's name (with R/c and other legel papers) and you will have no choice but to concede and give the car back, and your initial deposit of 3 lac will never be returned

At the time of taking delivery, they will make you sign some agreement saying that you have chosen to lease the car by keeping a refundable deposit with them.

Originally Posted by GTO
Impossible. Even if they dont return the deposit, the total cost comes to 732,000 (330,000 + 60 EMIs of 6700). Forget the interest, here the principal amount cost of a Honda City EXI is 8,50,000.

GTO, shouldn't you be looking at the NPV of the all the EMIs instead of just the sum total? I am sure that figure will be much lesser.

Before categorising this outright as fraud, it would be nice if someone staying near kemps corner can pay them a visit and ask them to explain the logic behind the numbers quoted.

~A

[MrBoombastic]

If you were to ask me, I would say stay as far away as you can from such deals. Nobody/ No Trust is a Buddha these days and no one does anything for anyone they don't know without a profit when it comes to business at least... Why would these people do something like this for someone anonymous to them at a loss? Think about it.

[Samurai]

Originally Posted by MrBoombastic

Why would these people do something like this for someone anonymous to them at a loss? Think about it.

Why are you assuming a loss? In fact individual lease is always more expensive than individual ownership. Even in USA, dealers prefer lease over loans since they tend to make more money from lease. Not to mention the profit from re-leasing or selling returned cars.

Individuals prefer lease over loan when they want to change cars every 3 years with limited cash flow. With lease one can afford to drive expensive cars without heavy EMIs. The downside is that you don't own anything at the end of the lease.

But Indian leases work differently than US leases. The massive down payment is a wet towel. I guess in Indian context where law enforcement is weak, even a chaprasi would lease a luxury car and default in a month if huge initial down payment is not involved.

[shuvc]

Just wondering ...
From the organisations perspective.
Out of the 8,50,000 ..
they have an assured return of 6700*60 = 4,02,000 + 1,65,000 = 5,67,000
(assuming they shell out 8,50,000 in cash and also sell the car after 5 years).

So they have a deficit of 2,83,000.

Now if they loan out the 3,30,000 and the subsequent EMI's in the 'grey/black' market they'll easily get 20+% return on it - annually. Translates to almost 5 L in 5 years. Double the deficit.
I'm not sure, but if they also claim depreciation on the car price, at the end of 5 years, don't they end up with a profit ?

Also, then again, if they have 8,50,000 they could 'invest' that directly .. confusing .. maybe it's a money laundering method .. but surely there must be some loophole by which they'll make a profit (not necessarily from the person who takes the car on lease).

[hawkeye]

I was recently out looking for a car for my friend here in the US and was offered this deal from a Nissan dealer.

Nissan Altima Sports Edition:
Actual MSRP: $21,000
Downpayment for the lease: $3000
Montly Lease Payments: $210 for 36 months.
Total Cost at the end on 36 months came to around 10.5k.
After the 36 months, you either pay the value of the car and own it or return it back.

Considering this deal we were offered, the Honda City doesn't look like a fraud and I do not see the organisation doing something new.

However, this one was a Nissan dealer and no organisation/trust.

[Beeman]

Since in india this concept has not started as yet. I say one must look for a reputable organisation before considering the same. There are too many people out to make a quick buck now days.

[adityapd]

It is a trust by the name of Pratishthan and has been in operation for almost 5 yrs now...

the procedure is somewhat like this :

1) You sign the agreement and pay 50 % of the initial deposit after which they book the vehicle for you

2) After taking delivery of the vehicle you can pay the remaining 50% within a period of 6 months.

3) You pay the monthly lease rentals every month for 5 years, 3 years, 4 years , etc depending upon the option selected.

4) At the end of 5 yrs u have an option either to buy the vehicle from the trust by foregoing 50% of ur deposit or give back the vehicle and claim ur deposit back

I do not think this is a fraud since the sansthan is claiming depreciation on the vehicle and passing on the benefit to you which is a GREAT ADVANTAGE for salaried car owners who can't claim depreciation benefit like businessmen.

here are some of the indicative prices for some of the cars for a 5 year period

Refundable Deposit monthly lease rental ( 5 yrs.)

Honda City ZX Exi 3,30,000 /- 6,750 /-
Scorpio CRDe 3,20,000 /- 6,500 /-
Esteem Lxi 2,00,000 /- 3,500 /-
Esteem Vxi 2,30,000 /- 4,300 /-
Swift VX 2,00,000 /- 3,500 /-
Swift ZX 2,25,000 /- 4,200 /-

~A

[Mad Monkey]

my company leases most of its vehicles ...
we use leaseplan ,GE or Orix
we only go for operational leases

we have not paid a deposit and just pay monthly Emi's

the leasing company handles all the maintance , servicing and repairs of the vehicles and provide a replacement vehicle . they also handle the insaurance and registrastion .

lease period is 5 yrs after which the vehicles go back to the lease company