We take it that you already know the exciting car options that are available out there in the market, and also tempting to drive one home. While you can go for a loan facility and own the car, we suggest you also look at the other attractive option, which is Car Lease, that lets you own a car of your choice without actually owning it. Here are five things that you should know about Car Leasing.
1. No down payment
If you want to buy a new car, it’s likely that the down payment amount would run into Lacs (roughly about 20% of car’s cost). Cash strapped individuals find it hard to make a down payment. The car worth 20 lakh for which you would need to pay about 4 lakh in case of loan, you can drive it home instead just by paying a very small portion of money. You can instead use the free capital and invest it somewhere it appreciates.
2. No Yearly Insurance / Maintenance / Service
Most leasing companies cover the insurance costs as well as the accidental repairs that the car may require during the entire leasing period under operational lease plan. Not only that, it’s all managed by the leasing company, so you do not need to take the car to a service station for periodic service or for repairs, you just need to inform the company about it. Most car leasing companies provide a pick and drop facility so that you can send the car as per your convenience.
3. You pay as per your use
The monthly rental that you pay to the car leasing company is based not only on the kind of car that you go with but it also takes into account the usage that you make. So if you drive less, you end up paying less monthly rental cost. Also, most lease plans come with an option of easy exit plan unlike in the case of loan where you need to pay a foreclosure charge for early payment.
4. Car can still be yours
Naturally most owners use their cars as it belongs to them even after knowing that they would need to let it go after the agreement is over. Most car leasing companies provide you an option of transferring the car to your name at the end of the lease tenure should you choose not to part with it. This is generally done at the cost that’s pre-decided rate that you agreed upon with the leasing company.
5. Tax savings
The expenses that you incur towards car lease can be shown as an operating expense if you go with the operating lease agreement. Company employees avail hardly any tax benefit on the running expenses if they own a car, however with leasing they can attracts more benefits and tax savings making it more attractive.
Car Leasing is an attractive alternative to owning a car for the companies and business owners. It’s a completely hassle free alternative as compared to car owning specially if you are in a city for short term project or plan on staying only for short duration. The idea is very mature and gaining a lot of popularity in India. What goes without saying is that always read the terms and conditions of the lease agreement before getting into it.