[vinair]

Great news for people who do love the concept of leasing!

Mahindra forays into the leasing with Orix and ALD as leasing partners!

More info - https://www.livemint.com/Auto/pE6zzM...99-per-mo.html

[Jaggu]

Originally Posted by vinair

Great news for people who do love the concept of leasing!

Mahindra forays into the leasing with Orix and ALD as leasing partners!

More info - https://www.livemint.com/Auto/pE6zzM...99-per-mo.html

Not sure if folks know about it, but Maruti also has similar offering. I remember Maruti rep meeting me a while back and discussing the option for my previous organisation.

Lease works for high salary folks who likes to keep changing vehicles every few years and this one just fits in nice I guess.

[octane1002]

For an XUV, that'd be ~ 4 Lakh annually.

5 years = Cost of new XUV with goodies OTR

[mmxylorider]

Originally Posted by octane1002

For an XUV, that'd be ~ 4 Lakh annually.

5 years = Cost of new XUV with goodies OTR

Exactly! I hope M&M are thinking about the Indian mentality when introducing such schemes. If we are paying, we expect ownership. Now, if they were to offer shorter term leases with restrictions on distance driven, vehicle condition on return - similar to how it is in other countries, it might just work.

[roy_libran]

From what I understand of the leasing model, currently into my 3rd operating lease (ALD -> Avis -> Tranzlease) -

- Leasing cost will always be more than the EMI because of similar inherent interest rate plus added profit and risk margins. GST load is a further extra
- Any and every add-on (service option) not only costs more, but also attracts additional GST
- The cost benefit really stacks up when 'Fringe Benefits' can be encashed which necessarily has to happen through an employer
- The cost benefit is very difficult to realise as the lease rental goes up i.e. with more expensive vehicles
- The operating leases become particularly inflexible as you add in options
- Vehicle customisation is a big No-No. Forget those Alloys, Wheel Upsizes, HU Change, Speaker upgrade...
- Mid-term breakage is particularly expensive
- I have learnt that the maximum risk-benefit balance comes from a No-Frills, short tenure lease with guaranteed low residual value
- BUYER BEWARE!


Footnote - Finally in my 3rd lease relationship, I opted for a 3 yr. operating lease without maintenance or services of any form, no kilometre restrictions, with a 23% YoY depreciation rate for a fixed RV. The only mandatory plus was a Zero Dep insurance, for which I have to pay a monthly additional GST. By my calculations, I end up enjoying a car AND making (a little extra) money if I am able to keep the relationship for over 2 years and buy the car out when terminating the contract (mid or end term). Even if I exit before 2 years and am able to buyout the depreciating asset, I'll still not end up in a loss in all likelihood.

[rajshenoy]

33K per month translates to price of a new car at the end of 5 years.
Does anyone have more details on this ? Also interesting to know what will be the chart for residual value for varying lease tenure.

Wondering if this makes sense for buyers

If i buy a brand new XUV at say 20L OTR, i might expect at least 10L when i sell the car after 5 years. I don't expect much maintenance cost in the first 5 year(say 50K) and insurance could be the only big ticket item here which can cost over 2L over 5 year leasing period.

[drsnt]

The PSU my wife works has recently leased 75 Amaze Petrol at 13500 INR per month all inclusive for period of 5 yrs. Kilometers are restricted at 1000 per month. I dont know which variant yet. To me it seemed better deal than buying a new car as it includes maintenance and insurance also.

[GTO]

This makes some sense for corporates & businessmen who can write off the monthly lease as an expense and get 25 - 30% net tax benefit. Therefore, I would have a KUV100 for under 10 grand a month and an XUV500 for <25,000 net.

Another appeal for businesses is there is no down payment required, thus freeing up capital for investments.

Unfortunately, as has been the case with leasing in India, this will appeal to businesses only. In countries like the USA, leasing is damn cheap. So cheap that 70% of entry luxury cars are leased. You can get a 3-Series for $360 / month or an Accord for $249 / month.

We're going to need pricing like that for leasing to ever take off in India. Until then, a majority of car sales will be purchase via the EMI route only.

[HKap]

Originally Posted by GTO

This makes some sense for corporates & businessmen who can write off the monthly lease as an expense and get 25 - 30% net tax benefit. Therefore, I would have a KUV100 for under 10 grand a month and an XUV500 for <25,000 net.

I'm no tax guru but I always thought that businesses can claim tax benefits on EMI as well. And of course depreciation in case of ownership of the vehicle. If you lease a vehicle then its the leasing company that claims depreciation... me thinks..

I could be completely off on this.

[mmxylorider]

Speaking from US perspective, in most leases, the down-payment, total lease cost and the residual value is slightly higher than upfront payment or in some case identical to cost if financing is not interest free.

Additionally, lease terms are equal to manufacturers warranty coverage timeframe. This permits the leasee to exit or continue with the same vehicle by purchasing at residual value. This works out best for high value cars where one gets to drive fancy vehicle worry free.

Don't know why this cannot be replicated in India.

[superbhikari]

Lease on a XUV will cost Rs. 20 Lakhs for a period of 5 years. That means Cost of Insurance, Maintenance, RSA is complementary when compared to fresh purchase purchase. This translates to around atleast Rs. 5 Lakhs + Tax benefits. So you literally pays cost of vehicle in 5 years in installment at 0% interest. Resale value of a 20 Lakhs XUV after 5 years and 80,000 kms is Rs. 5 to 7 Lakhs. Leasing seems good for who can extract tax benefits. Also, better not to own a Mahindra vehicle beyond 6-7 years. They do age well and quick plus Mahindra after sales is not as competent either to keep the vehicle trouble free for long. This is as per my experience.

[GTO]

Originally Posted by HKap

I'm no tax guru but I always thought that businesses can claim tax benefits on EMI as well.

On the interest component, yes, but not the entire EMI (i.e. not the principal amount).

Another benefit that businesses get from buying a new car is depreciation.

Originally Posted by superbhikari

Lease on a XUV will cost Rs. 20 Lakhs for a period of 5 years.

19.80 lakhs to be precise.
4.95 lakhs tax benefit @ 25% (5.94 lakhs for those in the 30% bracket)

Net cost to me is ~14 or 15 lakhs. And that includes insurance & maintenance etc. which is easily 2 to 2.5 lakhs in total.

So, as a businessman, I'm looking at owning an XUV500 for 11.5 - 13 lakhs over 5 years. Which is a fair deal. And that's not even counting the opportunity cost of the downpayment. Let's say, instead of putting 5 lakhs as the downpayment, I put it on a fixed deposit (safest form of investment). It'll make 2 lakhs over 5 years? Now you can see why corporates / businessmen might be tempted by this.

[vvrchandra]

Can an individual opt for this car leasing scheme. What are the prerequisites for this leasing scheme. Thanks in advance.

[GTO]

Originally Posted by vvrchandra

Can an individual opt for this car leasing scheme.

That's precisely the talking point of this thread. Mahindra is now actively promoting leasing to individuals. In terms of prerequisites, you will need the usual stuff (e.g. credit worthiness, documentation) and there will be a cap on the annual km that you can drive.

[StarrySky]

Originally Posted by GTO

19.80 lakhs to be precise.
4.95 lakhs tax benefit @ 25% (5.94 lakhs for those in the 30% bracket)

Net cost to me is ~14 or 15 lakhs. And that includes insurance & maintenance etc. which is easily 2 to 2.5 lakhs in total.

So, as a businessman, I'm looking at owning an XUV500 for 11.5 - 13 lakhs over 5 years. Which is a fair deal. And that's not even counting the opportunity cost of the downpayment. Let's say, instead of putting 5 lakhs as the downpayment, I put it on a fixed deposit (safest form of investment). It'll make 2 lakhs over 5 years? Now you can see why corporates / businessmen might be tempted by this.

Wouldn't this make sense for salaried individuals as well? If I get XUV at 20L with 5L down payment, I will be paying about 3.7L as interest in 5 years (at 9%), insurance and maintenance about 2L. Add in the opportunity cost of 2L and my total cost for the 20L car in 5 years is 27.7L or 7.9L more than the 5-year lease plan. What would be the resale value of my 20L XUV 500 after 5 years? Would it get me more than 8L? Even if it will get me 1L more, leasing may still be worth it for the peace of mind it offers.