Car leasing is gaining popularity in India. Multiple companies like Orix and Quiklyz are providing Car lease options in the country. In this article, we will explain car leasing and its pros and cons.
What is a Car Lease?
A car lease lets you drive a car of your choice for a limited period of time. The leasing company will provide you with a car, in full ownership, on a monthly subscription basis. The customer does not need to pay road tax, maintenance fees, or other recurring costs while using the vehicle. However, the customer has to return the vehicle at the end of the chosen rental period.
Moreover, some companies allow the customer to purchase the vehicle from the company at prevailing market rates at the end of the lease term. Car leasing follows a pay-for-usage model, where the customer has to pay for the vehicle only during the term of use. The minimum lease duration is 2 years and the maximum leasing period is 5 years.
What is included in the monthly subscription
- Repair & Maintenance for full tenure
- Pickup and drop facility
- Roadside assistance
- Vehicle insurance
- Road Tax
- Replacement car facility
No down payment
You do not have to pay a down payment to lease a vehicle. Only the monthly subscription amount needs to be paid. This is a huge advantage because a lump sum amount is not needed to own a vehicle.
Flexibility to upgrade
There is an option to upgrade the vehicle at the end of the lease period. The customer can return the vehicle to the company and lease a new model. Moreover, this eliminates the hassle of selling the old vehicle.
The hassle of taking the vehicle for regular maintenance or renewing the vehicle insurance is done by the service provider. Moreover, the company takes back the vehicle and sell it at the end of the lease period. This makes it more convenient for the vehicle to own the vehicle and still have someone else do all the boring work.
Salaried workers can claim tax benefits up to 30% per annum if the rental is claimed as an expense. If the lease amount is deducted from the salary. The total taxable salary will be less compared to the people who haven’t opted for this option.
The customer should send a request for approval to make any alterations or add aftermarket parts. However, if any damage is made to the vehicle due to the alterations, the customer will have to bear the expenses to fix the vehicle.
Terminating the lease in between the lease period is difficult. The customer has to pay a huge amount as a penalty during the termination.
Companies will keep monthly caps on the mileage of the vehicle. if the owner exceeds the allowed distance, the service provider will charge an extra amount.
Car Lease vs Car loan which is better
Buying a car loan is cheaper for a premium or mid-level car, and the customer will be the owner of the vehicle at the end of the loan period. However, leasing provides the customers with benefits like maintenance, insurance, and zero down payments. If you are looking for a long-term commitment, a car loan is a good choice. Leasing is a good option if you want to have a quick and hassle-free purchase.