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-   -   ARTICLE: Lease OR Loan? Which EMI is better for you (https://www.team-bhp.com/forum/buying-car/20127-article-lease-loan-emi-better-you-16.html)

Now with the all the uncertainty about GAAR, wondering if the car-lease option really makes sense.

Planning to pick up a new Swift Zxi this year. Not sure if we should go for the company lease (finance lease) option that my wife's company provides or to just buy the car ourselves.

The lease option will take care of road tax and insurance. We have the money saved up to purchase the car outright without taking a loan. [We don't need to use that money for a down payment on a flat or any other appreciating asset/investment, as is usually suggested.] Going by our past habits, we'll almost certainly hang on to the car for more than 5 years.

I'm tending towards the outright purchase option.

How do such schemes work? Looks desirable but do I hear a balloon repayment?

http://www.volkswagenfinancialservices.co.in/audichoice

I am in a dilemma with respect to financing for my next car. I have two options:


1. My company provides lease option at 11% and buy-back of 20% for a 4 year lease plan. I bought my old car on a similar plan.


2. My wife has just started a business, on which name we can buy the car with a loan.


I know from experience that the lease plan works out better comparing with a personal car loan. But buying the car on the business' name is unfamiliar territory for me. Can somebody throw some light how these two stack up against the other?


If the difference in savings is not massive, then I am inclined to go with the lease option since the paperwork is very less. Any thoughts?

I'm in a similar dilemma. I have the money saved for a new car but am wondering if it makes sense to buy outright or take a lease. Are there significant tax savings these days after GST?

Well, I guess each person will have a different take based on their personal financial situation and salary breakup. But fyi, we ended up purchasing the car outright since we had enough money saved up.

If your wife's business is Sole Proprietorship you can buy the car on your wife's name with a loan. At the Financial year end the car becomes a capital asset used for business purpose. The EMI, entire operation cost (fuel, maintenance, insurance) and depreciation can be included in the Income tax return.

If the car is purchased on the company's name you have pay more road tax and insurance. At the end the On-road price becomes expensive. Still the expenses can be included in IT return.

Hope this helps to some extent.

Thanks, it helps. In fact, that's what we ended up doing as well. Now makes me wonder why I ever wanted to be a salaried person :)

Hi All,

Need some advice.

I own Ciaz ZXi and lease expires in few months.
In 3.5 yrs car has run less than 20,000 kms and is well maintained. 100% used for city runs and no highway miles. No major issues yet and mileage inside Bangalore city is around 13 with AC usage all the time. Car is mostly used for daily office commute and short weekend trip with family of 3.

In fact, I have no complaints from the car except the build quality.

Option 1: BUY BACK
The Residual Value which comes around 3L. I can buy back to my name and keep using it for next 4-5 years considering the car has still lot of life left. but then, the maintenance & insurance is on me and I do not get petrol allowance of 6K p.m. any more.

Option 2: EXCHANGE
Exchange it for another car @ Truevalue. Exchange value quoted to me was 6.5L and after I pay back the RV, I get 3.5L (profit). Then, buy another car on lease. Problem is there is no Maruti with a good build quality having good resale after 44 yrs of lease completion.

My price band for new car is around 10-11 Lakhs ex-showroom and mostly petrol automatic.

What do you guys suggest ?

I am ok with new Ciaz how it is placed in market; but lack of safety features (with respect to competition) is a deal breaker.
New Ertiga looks good but again build quality is not the best. Plus it would be too big for my needs.
After Ciaz if does not feel good to downgrade to a hatch back. So, it is very much confusing.

I would really appreciate your thoughts and help here.


Thank You.

Hi All,

Need some advice.

I am considering to take an Abarth Punto. Was considering whether it is better to buy it on EMI or take it on my wife's company lease for 3 years. Considering low sales, the lease rental options are coming out in between INR 25,000 to INR 30,000, which appears to be on the higher side. Considering the tax benefits, is it still advisable to go for lease or buying it on EMI is better? Thank You, Jeevan

I assume that you have got the amortization from your wife's company and that gives you 30,000 per month. Considering your wife falls in the 30% tax bracket even after all savings, she can save 324,000 in three years with car lease. There may be a residual value which you may have to pay upon the end of the lease. Add that amount to what you would have paid as 'EMI' for 36 months.

Calculate what you would pay if you took a loan by yourself and compare. This should tell you what you could save.

Thanks. Did just that and considering tax benefits and avoiding the hassle of down payment, routine maintenance or resale, have gone ahead with lease. Documentation completed and delivery is awaited post registration which is expected sometime next week.

I think, you should go for the Option-2 which sounds quite lucrative. You can buy the car back by paying the residual value and exchange the same for any other new car. Why only Maruti, you can also go for other makes as per your preference. It is needless to say that the new Ciaz looks really nice with the new grill and the DRLs.

Avoid maintenance and resale? Can you shed more light on the deal you got? My colleagues had to pay insurance, maintenance, etc but they say it worked out to the on-road price of the car after tax benefit. This is pre GST.

Approximately INR 24,000 per month is the lease rental which includes insurance and maintenance. Haven't opted for buying it back at the end of 3 years, hence no botheration of resale value or change in registration, etc.

Looking for some advice.

As per current employer lease calculation for a small car, it appears that the IT saving of 31% on the car lease allowance is directly offset by the 31% of GST on lease amount.

The IT saving on fuel, maintenance, driver salary etc. seems to be directly offset by the markup of the lease company.

All in all, it seems zero benefit, except for the possible opportunity cost benefit on interest paid for a loan.

Am I missing something here? Thanks.