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Old 24th September 2016, 11:30   #121
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Default Re: Car Lease Options from your Employer

Originally Posted by hserus View Post
Keeping the car on after the lease is what you must not do - you automatically become a second owner on paper though you have retained the car all along.

While the tax benefits are significant you must also take into account that you are actually paying out much more money for the vehicle due to higher than average interest rates at private sector leasing finance providers that companies routinely tie up with, compared to cheaper rates available from nationalised banks / using your own saved money to do an outright cash purchase in which case you will get fantastic deals compared to any financing.
1. The tax benefit is more than the saving from lesser interest rate especially if you are in the 30% tax bracket.
2. You can put the money that you would have otherwise spent for down payment, road tax etc on a FD or bonds or some other savings and get interest on it.
3. If you intend to keep the car for longer duration, you can transfer to your name. Over 6 or 7 or 8 years the difference in second hand vs third hand will be lesser than the tax benefit and interest component you gained over the years.

Main disadvantage of lease is if you switch jobs in between it is a pain. Either you sell it and incur some loss or some lease providers like Sundaram allow you to continue to pay the lease amount month on month after they transfer the car in your name. But you lose the biggest benefit, the tax!
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