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Guys,

I saw this add in today's TOI about owning Merc at half the price :Now, lease a Merc at 50% of price - The Times of India

Any idea why the trend of individual lease is not prevalent in India. I would like to discuss this topic. Is it a realistic option in India?

I would never buy an i20 if I could afford a Jetta at the same EMI. Is there a catch or is the plan actually as simple as it is being made to sound?

MODS: Please merge the thread if you find it irrelevant or there is a similar discussion going on on other threads.

Hey Abhi,

Do check this thread out, it might have your answer: http://www.team-bhp.com/forum/buying...etter-you.html

This is almost as bad as renting a car for 3 years. He pays 50% of the cost of a merc just for owning it for 3 years. I don't think this concept will work in India. Who would pay 15L just to drive around for 3 years in a c class? Can as well buy a used merc at 50% of the cost. At least we are left with the asset for ourselves. Not sure how many would take to this individual leasing policy.

I do not see any merit in the case. Why would you want to pay for something that isn't yours?

Also you do not get a choice to keep the car post 3 years that happens with some other lease types. It is a good business for DFS or other car companies as their product is moving and they have market share. However it's called fleecing in most countries as you are paying half of the amount of the car for just running it with your own fuel bill. Does that make any sense to you?

This however is good for companies as they can manipulate net profits showing payouts for company leased cars and fuel bills but for individuals it's no sense at all. Cheers!

This scheme might be a boon for those who have good cash reserves and want to enjoy the thrill of a supercar like SLS or SL65 AMG. You pay 80-120L, and run the car without fear of ruining the clutch, or any other mechanical issues, since it is in warranty and MB pays for the fixes if any.

As long as you dont take it tracking or get into an accident, its much better than paying twice, then fighting with insurers/service stations in case some mechanical failure occurs and having to pay for road tax/insurance/maintenance package for 3 years.

Any supercar that is not rare has massive depreciation, and if its been to the service station more than couple of times, it is pretty much useless, which means their is no loss of second sale $ involved.

Do we not get an option to buy out the car at the depreciated value at the end of the fixed tenure? Maybe at 50% the cost. Are such schemes usually available for 5 yrs. I say this coz 5 yrs is good lifetime for a car. After that, you can decide to either buy it or return it back.

This would not work with 15 lakhs upfront. Rather, for the Merc it should be an initial down payment of say 3 to 5 lakhs and then monthly 20k or so. Finally at the end of the lease you have the option of buying the car.

This is the way it works in the US.

Here's a recent example from the US - A Merc C300 sport sedan is available for lease on 3800$ initial at signing and a 33 month $349/month lease.

Cheers

I doubt they will resell it to the same buyer at the 50% rate (or whatever price is applicable after 3 years depreciation). They might offer it at depreciated rate + some 20% extra to fleece the customer some more :D You would have lost 15L (e.g for a 30L c class). If they give you the car for 15L again after 3 years, with them paying the servicing/maintenance costs, what do they gain apart from seeing more of their cars on the road? This policy may be ok for someone who wants to blow up money and have a good time but at 50% for 3 years it is way too steep, at least in India. Maybe 20% would work?

Thanks for that information. This is interesting. What is the total cost of the C300 sport sedan itself?

That is the car is theirs for a rental of 15350 in 3 years. What's the value of car on road? What is the prevalent interest rate?

I think its around $ 40K

Interest rates are pretty low in the US. Around 1 to 2 %.
You can buy the car at the end of 3years at 10% of the price.

Generally, you do not buy and get into a new lease. That way you have a brand new car.

And that is the reason it works in the US and not here. Here they give you a buy back at 50% as mentioned and other lease companies take it to 35 to 40% range making it worthless expense. Thus a college student buys a Civic in US and here a well to do executive.

Lease is a good option for companies as they can claim the monthly lease payments as an expense and hence, get a 30% benefit (or whatever tax bracket they are in), when filing taxes. To the individual owner however, lease isn't as sensible an alternative. I would have definitely considered lease, if it weren't for my fascination with pre-worshipped cars.

Yup, sure do. Most leasing companies give you the option of higher payments + lower buyout option at the end of the tenure, or vice versa.

Depreciation and thus, tax benefits. Even though you are using the car, it's registered in their name. Mercedes / their financing arm will avail of full tax benefits on the car (running into lakhs of rupees). Sorry to say, but your post is factually incorrect.

totally forgot the tax benefits part. Thanks for clearing those misconceptions of mine. Absolutely no issue in correcting me GTO, i am thankful for that :D in fact i googled up more now, on how the whole thing works in the US

So if the residual value of a Merc after 3 years is 50% (quoted by Mr. Siddarth Nair, MD of of Daimler Financial Services India (DFS) in this TOI article) of the cost of the new car, we should be able to walk into a Merc showroom and bargain a pre-owned 3 year old Merc for 50% of the cost of the new car????!!!!!

Regards
Ram

You will get it even less for a petrol one ;)
This news must have some unexplained edits.