Discover the smart alternative to car ownership
Instead of buying a car, what if you could just lease out the car of your choice for regular use? Better still if you are a Company that manages a fleet of cars for your employees, wouldn't it be nice to just lease out the cars and instead of investing your resources in maintenance and repairs, you just pay a monthly price for the lease?
Your car falls under the category of a depreciating asset and attracts at least 15% depreciation per annum. Buying a car is a decision that involves many factors as it's an expensive affair more so if you are corporate. Car leasing in India is already popular in the corporate world and fast catching up with professionals, salaried individuals, entrepreneurs and self-employed individuals.
When you lease a car, you can use the vehicle for a fixed term by paying monthly rental. Generally, it's two to five years. Car leasing in India generally offers two types of leasing contracts.
Why leasing makes more financial sense for businesses and individuals
Allows you the option to buy the car after a stipulated time.
Some of the advantages of leasing your car are:
Although the concept of car leasing is very popular out of India, it's fast catching up! The car lease India market is pegged at US 2.5 Bn, with a fleet size of 350000 cars on the streets.
Major international fleet management companies have already made their footprint in the Indian market with substantial startup investments. Although they seem to face hurdles with the unorganized car resale market in India and also car leasing in India requires a multi-dimensional approach towards customer satisfaction that provides a one-stop solution to individuals who lease cars and corporates alike.
See how car leasing compares to traditional car loans across key factors
| Feature | Car Leasing | Car Loan |
|---|---|---|
| Capitalization | As per Companies Act, 1956 the asset would not be capitalized on the balance sheet hence protecting it. | The asset value will be capitalized on the balance sheet as per Companies Act 1956. |
| Maintenance | Depending on the type of lease opted for the maintenance, repairs and running costs are included in the lease. | The owner of the vehicle is liable for all costs and maintenance repairs related to the vehicle. |
| Payments | Since you are paying for a portion of the vehicle's full value, leasing payments are usually lower than loan repayments. | Since you are paying to purchase the entire car, loan repayments are usually higher than leasing payments. |
| Tax Benefits | According to the Income Tax Act, 1961 the annual lease rental that you pay can be expensed out in the Profit & Loss account which would qualify for Tax benefits. | The interest component of the annual installments that you pay can be expensed out in the Profit & Loss account. There are no Tax benefits associated with Loan as per the Income Tax Act,1961. |
The compelling reasons why leasing makes financial sense
Lower monthly payments free up capital for other business investments and operations.
Full lease payments can be claimed as business expenses, providing significant tax advantages.
Easily upgrade to newer models with advanced features at the end of your lease term.
Many leases include maintenance packages, reducing unexpected repair costs.
Consider these factors when making your decision
Our leasing experts can help you find the perfect solution for your needs.