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


Reply
  Search this Thread
534,365 views
Old 13th March 2009, 16:04   #46
Distinguished - BHPian
 
condor's Avatar
 
Join Date: Jun 2006
Location: Speed-brkr City
Posts: 15,835
Thanked: 15,941 Times

@appuchan : the 10% residual value is also good. Other companies I know of quote upto 25% for a 3 year lease, and 20% for a 4 year lease.
condor is offline  
Old 13th March 2009, 19:07   #47
GTO
Team-BHP Support
 
GTO's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 70,237
Thanked: 298,102 Times

Quote:
Originally Posted by condor View Post
@appuchan : the 10% residual value is also good. Other companies I know of quote upto 25% for a 3 year lease, and 20% for a 4 year lease.
The quotes I've seen had varying residuals. Of course, the monthly payments varied according to the residual as well. I saw options ranging from 10 - 35% residual at the end of the term.
GTO is offline  
Old 13th March 2009, 19:25   #48
Distinguished - BHPian
 
condor's Avatar
 
Join Date: Jun 2006
Location: Speed-brkr City
Posts: 15,835
Thanked: 15,941 Times

@GTO, yes. Companies did offer their employes a residual value as low as 10%, till about a year back. Sometime in early 2008 / late 2007, this changed to a minimum of 20%.

Any one recall any changes in regulations / intrest rates / market conditions that could have triggered this ?

Yes, the monthly payments wild depend on the RV.
condor is offline  
Old 14th March 2009, 14:24   #49
Senior - BHPian
 
MileCruncher's Avatar
 
Join Date: Jan 2009
Location: MH01
Posts: 4,224
Thanked: 569 Times

Can an individual go for a lease plan ? If yes, are there plans available for 5 years?
MileCruncher is offline  
Old 14th March 2009, 19:19   #50
GTO
Team-BHP Support
 
GTO's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 70,237
Thanked: 298,102 Times

Yes to both your questions, Milecruncher.
GTO is offline  
Old 15th March 2009, 04:20   #51
Distinguished - BHPian
 
Sahil's Avatar
 
Join Date: May 2004
Location: Bombay
Posts: 6,290
Thanked: 7,579 Times

Is this feasible for business owners if you plan to sell your cars every 3 to 5 years?
Sahil is offline  
Old 15th March 2009, 07:12   #52
Senior - BHPian
 
MileCruncher's Avatar
 
Join Date: Jan 2009
Location: MH01
Posts: 4,224
Thanked: 569 Times

Quote:
Originally Posted by GTO View Post
Yes to both your questions, Milecruncher.
Thanks GTO . Guess need to get in touch with LeasePlan guys see how it works.
In the west one's get an option to go for something called PCP wherein you have an option of making a balon payment at the end of the term to buy the car but the maximum term for that is about 36 months. There is also another option called long term rental for 2 years with insurance and maintenance paid for at almost the same as EMI.
MileCruncher is offline  
Old 3rd April 2009, 00:15   #53
Newbie
 
Join Date: Dec 2008
Location: Bangalore
Posts: 4
Thanked: 0 Times

i have a car with company car lease program. if i want to withdraw out of it and not opt to take the car, how would it work? i am just 9 months old in the lease program. the lease years are 3 years.
jags_bhandary is offline  
Old 3rd April 2009, 11:14   #54
BHPian
 
Join Date: Nov 2008
Location: New Delhi
Posts: 175
Thanked: 94 Times

thanks for the article GTO!! I am considering this option now...

But tell me whom do i have to approach in order to buy a car on lease?
Do i understand correctly that i have to approach the leasing company, for example Orix?
eternalck is offline  
Old 3rd April 2009, 11:23   #55
BHPian
 
Join Date: Nov 2008
Location: New Delhi
Posts: 175
Thanked: 94 Times

i got it after further reading all of the posts... thanks.
eternalck is offline  
Old 3rd April 2009, 12:19   #56
GTO
Team-BHP Support
 
GTO's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 70,237
Thanked: 298,102 Times

Quote:
Originally Posted by Sahil View Post
Is this feasible for business owners if you plan to sell your cars every 3 to 5 years?
It is beneficial ONLY for companies & entrepreneurs. Two reasons:

1. You write off the monthly lease as a cost (deduction in taxable income and thus 30%)

2. No capital locked up in a car (no down payment). Hence, you could use it to expand your business.

3. Maintenance is entirely the leasing companys headache (beats the BSI too ).

4. Most leases give you the option to buy the car at the end of the lease. Now, if you don't want to retain the car, simply opt out. However, here is what I recommend : The amount you can retain the car for is generally LESS than its market value. Thus, even if you want to dispose her off, buy it from the leasing company and sell it yourself.

Quote:
Originally Posted by jags_bhandary View Post
i have a car with company car lease program. if i want to withdraw out of it and not opt to take the car, how would it work? i am just 9 months old in the lease program. the lease years are 3 years.
Would depend on your employers policies. But generally, you cannot opt out of a lease without penalties.

Quote:
Originally Posted by eternalck View Post
thanks for the article GTO!! I am considering this option now...

But tell me whom do i have to approach in order to buy a car on lease?
Do i understand correctly that i have to approach the leasing company, for example Orix?
Yup, get in touch with the leasing organisation directly.
GTO is offline  
Old 3rd April 2009, 18:44   #57
BHPian
 
Join Date: Nov 2008
Location: New Delhi
Posts: 175
Thanked: 94 Times

But GTO does it mean that i have to stay at my present company for the time of the lease? If so, then sadly it won't be possible for me to go this way, as i am planning to change in a year or so.
eternalck is offline  
Old 5th April 2009, 20:28   #58
BHPian
 
Join Date: Mar 2009
Location: New Delhi
Posts: 30
Thanked: 0 Times
Hire Purchase Is Any Given Day Better Than Leasing

Quote:
Originally Posted by GTO View Post
Chances are; you hadn’t even have considered the lease option on your next car (until you finish reading this article). Lease plans basically exploit tax loop holes to make owning a car much cheaper for you.
------------------------------------
Lease Plan
@GTO, I am in a little bit of conflict with your installment calculations. See, as per my calculations, a 4.5 Lacs Loan @ 12.5% (10.5%-11% for nationalised banks in which case EMI would be lower) for 36 months with 1 emi in advance entails an EMI of INR 14900 which works out to be much cheaper than your calculation of 16800. So, this makes leasing less attractive.

Additionally, any given day a Hire Purchase with a recognised bank/NBFC is better than dealing with a private leasing firm like Orix. That is why these people never got big in India. Their credit appraisal and customer management processes are not perfect. Their cost of funding is much higher than scheduled commercial banks because of which leasing is at a higher ROI. Am not really sure how and what kind of arrangement do they have with credit bureau like CIBIL.

Additionally, if I go as per your quotes for leasing, a lease with an installment of INR 17400 for 36 months resulting in total outpay of INR 626400(-)hire purchase outpay of INR 536400. [b]A difference of INR 90000 in favour of Hire Purchase[b]. Couple that with handicap of ownership serial 2 at the expiry of lease and you are sure to loose additional money in terms of resale of leased vehicle. In such a case, leasing becomes a very very unattractive option.

Depriciation Calculations:

LEASING: Total Outpay INR 626400*.3367=INR 210909 over a period of 3 years.
HIRE PURCHASE: Ex showroom Price= 5 lacs
Depriciation Y1= 500000*.15=INR 75000
Y2= 425000*.15=INR 63750
Y3= 361250*.15=INR 54188
Grand Total= INR 192938 over a period of three years
Interest Admissible as expense over 3 years= INR 86400
Tax saved@33.67%= INR 29000
Total for HP option= INR 220000

As such, Hire purchase is a far better option than leasing in India.

Note from the Team-BHP Support Team: Please avoid quoting an entire large post. It inconveniences our small screen & mobile readers.

Thanks.

Last edited by Jaggu : 5th April 2009 at 20:48. Reason: Please avoid quoting an entire large post
prateekool is offline  
Old 6th April 2009, 10:18   #59
GTO
Team-BHP Support
 
GTO's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 70,237
Thanked: 298,102 Times

Quote:
Originally Posted by eternalck View Post
But GTO does it mean that i have to stay at my present company for the time of the lease? If so, then sadly it won't be possible for me to go this way, as i am planning to change in a year or so.
Policies vary from employer to employer.

Quote:
Originally Posted by prateekool View Post
@GTO, I am in a little bit of conflict with your installment calculations. See, as per my calculations, a 4.5 Lacs Loan @ 12.5% (10.5%-11% for nationalised banks in which case EMI would be lower) for 36 months with 1 emi in advance entails an EMI of INR 14900 which works out to be much cheaper than your calculation of 16800. So, this makes leasing less attractive.
Prateek, the calculations you see in the opening post are from a time when interest rates were different (look at the post date). Get a fresh quote from Orix & leaseplan to see todays rates.

Quote:
Additionally, any given day a Hire Purchase with a recognised bank/NBFC is better than dealing with a private leasing firm like Orix.
I've seen the contracts and can confirm they are solid / straightforward. Plus, we've had many BHPians take the lease option and ending up fully satisfied. Orix is a global player, not a local fly-by-night operator. Lastly, we cannot blindly generalise *recognised banks* as the better option. As an example, search through the forum for ICICI complaints.

Quote:
That is why these people never got big in India. Their credit appraisal and customer management processes are not perfect. Their cost of funding is much higher than scheduled commercial banks because of which leasing is at a higher ROI. Am not really sure how and what kind of arrangement do they have with credit bureau like CIBIL.
Unanswered questions for sure. I'd love to get more indepth information on these concerns.

Quote:
Additionally, if I go as per your quotes for leasing, a lease with an installment of INR 17400 for 36 months resulting in total outpay of INR 626400(-)hire purchase outpay of INR 536400. [b]A difference of INR 90000 in favour of Hire Purchase[b].
As I have reiterated earlier, Lease makes the MOST sense for entrepreneurs & businessmen. Reason :

1. The tax benefits more than make up for any difference in outlay.

2. No money locked up in a depreciating asset (an automobile); money that could be used for the business.

3. Option to buy the car at the end of the tenure. And maintenance is entirely the headache of the leasing organisation.

Again, whether lease or loan is better for you entirely depends on your occupation & financial situation. The point of this article is to let BHPians know of another option which would have otherwise never been considered. I'd say it is more beneficial for atleast 50% of the businessmen out there (small or big).
GTO is offline  
Old 6th April 2009, 23:43   #60
BHPian
 
Join Date: Feb 2009
Location: Noida
Posts: 30
Thanked: 8 Times
In a case of theft or total damege ?

As far as I know, in case of theft of total loss of vehicle; one gets nothing back from the insurance company and all of it goes to lease provider.
neosmart is offline  
Reply

Most Viewed
Thread Tools Search this Thread
Search this Thread:

Advanced Search

Copyright ©2000 - 2024, Team-BHP.com
Proudly powered by E2E Networks