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This is a wrong perception. Leasing usually works out cheaper for a Vehicle owner than buying a vehicle outright or through Loans. This is because when you compare, Vehicle ownership under a loan or outright, a Vehicle is purchased & used for a period of 3 to 5 years and then ultimately it is sold; in certain cases, based on the choice of the individual the vehicle can be retained for a longer period but ultimately it is sold.
Whereas under leasing, the same is also true – i.e. you can hold the vehicle as long as you desire; the Acquisition cost of the vehicle is itself reduced by the estimated resale value of the vehicle and thus lease rentals on a vehicle will always be lower as compared to loan.
To conclude, under both loan and lease, an individual buys the vehicle and then sells it subsequently – under leasing, the timing of sale is changed to lower the EMI per month. This results in substantial savings per month through increased available take home salary which invested in a safe and secure way will result in greater financial benefit or lower cost or alternatively, can be used to buy the vehicle at end of the lease period.
No. Leasing is subject to VAT (currently at 12.5% in general – varies with state to state) however, the VAT included in the purchase price of the vehicle is deducted as a result of which the impact is nullified i.e. the VAT included in the ex-showroom price of the vehicle is deducted from EMI and then VAT is charged to the customer on the reduced EMI – impact is that customer pays only one interest component and there is no double charge of VAT.
The above approach/VAT treatment may vary with state to state, please talk to the Magma Auto lease team for more detail.
3 to 5 years. Most beneficial being a 4 year lease.
Yes. The Lessee must pay the Outstanding Acquisition Cost or Net present value of the future lease payments as per the agreed Terms & Conditions.
The usual payment method is through an irrevocable standing order instruction on the Lessee’s bank account or Post Dated Cheques to transfer lease rents to Magma Fincorp Ltd.
The Lessee. Insurance costs can be included in the Lessee’s monthly payment.