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Bank Loan or Lease - which is better ?

Discussion in 'Insurance & Loan Reviews' started by bnzjon, Nov 12, 2010.

  1. My employer has an agreement with Leaseplan and ALD automotive for leasing of cars for its employees.

    Received a quote from ALD automotive (leasing company).

    Car : Linea Tjet
    Exshowroom : Rs. 903,604
    Regn + Tax : Rs. 96,860
    Total : Rs, 1,000,464

    Insurance for 1st year : Rs. 23,000

    The quote is as below (per month) for 48 months/60,000 kms:
    Finance EMI : Rs. 19,355
    Fleet Management Charges : Rs. 1396 ( full maintenance)
    Insurance+Insurance disallowances : Rs. 2200
    VAT on Finance EMI (12.5%) : Rs. 2,419
    ST on Fleet Mgmt/Insurance (10%) : Rs. 400
    Education Cess (3%) : Rs. 12
    Total Monthly outgo (pre tax) : Rs. 26,184

    Post tax, the monthly outgo will be Rs. 18,329

    On the whole, I pay Rs. 879, 782 (post tax). This is excluding tax benefits on Fuel reimbursement and Driver salary.

    I have an option of buying back the car at the end of 48 months at Market determined value (or) handover to the lease company.

    Better than a Bank Loan, what say ?
  2. royj

    royj Esperto

    Messages:
    1,306
    Trivandrum
    I think this will be good if you are a company as there is no capital investment.
    A better approach will be to compare the monthly outgo for both options for the lease period and the final pay out get the car back from leasing company at the end of the lease period and compare the total cost at present value. Some one who specializes in finance will be able to give you the exact details for doing this analysis.
  3. Ravi

    Ravi Staff Member Janitor

    Messages:
    6,001
    Bangalore
    Grande Punto 1.3
    I believe buying through lease will be better financially. Thats why companies offer to its employees.
    But normally there will be some catch, like you have to serve your organization for min. 4 years.

    EDIT - Am i seeing one more T-Jet owner in line ::D . :wow
  4. Yes Ravi, the only catch is that i need to be in the same company for the entire tenor.
    I have an option to exit with a fee for foreclosure (or) pay the balance emi to the lease company & transfer the car to my name.

    I am looking at selling off my existing Linea 1.4 FIRE and upgrade to the TJet. Chennai being a diesel market and with FIATs old image still intact, the resale value is very very low. There's lot of family pressure (esp wifey) not to sell the existing car.

    If all goes well, TJet would be in my stable very soon :dance
  5. geeash

    geeash

    Messages:
    40
    Chennai
    i second your wifey !!. i belive you should still persist with the car and we can both sell of the car after the end of my loan tenure and get a t-jet simultaneously!!
  6. Ashwin, you should test drive the TJet to know what a beast it is.
    Awesome power ::T

    You will fall in love the moment the iginition is turned on :drinks
  7. donzerus

    donzerus Timido

    Messages:
    15
    Chennai
    bnz,

    Since the car would be in the name of the lessor, in the unfortunate event of car being lost/totalled, then the insurance amount would go only to the lessor and not to you. Get this clarified with Leaseplan

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