on 23, Oct 2018

I am sure most of us have a dream car in our minds which we are not always able to afford.

Especially if you have a 9-5 job, accumulating so much money to buy a new car can be really difficult. At that times we turn to loan or emi options. Sometimes a car loan can come with a very high interest rate.

Also if your car gets damaged, the loan won’t cover the servicing charges. Sure you have car insurance, but won’t the amount of monthly instalments increase if you claim it? No matter what car you buy, servicing the car regularly is a must. So even if your car is in a good shape it's going to be a little bit heavy on your pockets!

Even when you are able to afford the service charges and decide to buy a new car, you're buying both an asset and a depreciating asset. There's no car that will be worth more in the future than you've paid for it (usually with the loan, which means principle plus interest of five years or more).

Stuff like collectable Ferraris is an exception.

But the price of it is of course in crores. Even if you are a vintage enthusiast, you have to wait for that vintage value of the current car to develop for almost 30 years! So you buy an asset that you won't own free-and-clear for half a decade, but in the time that you work on that goal, you still have to pay the insurance and the upkeep.

So what other options do we have?

What if I tell you that there is an option that lets you drive a car with free servicing of the said car for the time period you want! That too with the amount similar to what you will pay for your loan or EMIs?

So what exactly is it?

Leasing a car is something that got recently popular here in India. Initially, it was popular in companies that required a lot of cars for the transportation of clients. In this new era, car leasing got such tremendous demand that cars can also be leased even for personal use.

Now, there are some people who like to own a car and take care of it, regardless of the amount it costs. If you are one of those car leasings Is not for you and buying a new car is something you should consider. But if you want a car just for transportation and you love to drive the newest model available in the market, car leasing is something you should definitely go for!

It won't cost much to maintain the car (except for occasional car wash) and after the lease is up, you can buy the car for reduced cost or go for a new lease for a new set of wheels.

So if you want to know more, keep reading, because this article will cover almost everything you need to know about leasing a car.

How to lease a car?

As mentioned earlier, car leasing can let you drive your dream car with the amount you would pay as your monthly emi instalments, with the inclusion of free services. That’s not all, in case of accidental damage or if the car stops working, the company will replace the current car with a new one! You can lease a car for your personal use or for a family member and you can even lease multiple cars for your company as well.

Typically, To lease a car you will have to pay a down payment, about 20% of the amount of the car you choose followed by monthly payment till the term of the lease. But mynewcar.in lets, you lease the car with zero down payment! The amount of lease you pay per month can vary from the model and the type of car you choose. You can lease a car for a minimum a year to up to 5 years maximum.

If you do not want to pay for service every month then you can opt for a package that does not include services, the amount will be a bit lesser but you will have to take care of the servicing on your own for the time you have leased the car.the insurance is covered in the cost whether you opt for fleet management services(including car services, maintenance etc.) or the regular one. Leasing a car has mileage limits. You should choose a plan based on your transportation needs, as an increase in the number of kms may be charged extra.

Mynewcar.in lets you lease the car of your dreams with just a few clicks.

Leasing a car on mynewcar.in - Know the Process:

  1. The "Buying Tools" on mynewcar.in provides you with an option of ‘Leasing’.

  2. Once you click on it, you will have to fill the vehicle details including the brand, model, variant of the car. Also, the fuel type and transmission have to be provided. So keep all that info handy. You will have to provide the city you will be driving the car in.

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  1. Lease calculator lets you calculate the lease of the given model for the number of months you will be leasing the car for. you can lease the car from 12 months to up to 5 years.

  2. Your personal details have to be provided such as name, address and mobile number for documentation purposes.

  3. You may upload your lease documents if you have any.

  4. After filling out all the details you can ask for lease quotes of the car you have selected.

Still not convinced? Here are some advantages of leasing a car:

Leasing can be more appealing than buying. Monthly payments are usually lower because you're not paying back any principal. Instead, you're just borrowing and repaying the amount that the car depreciates in the time you have it, plus finance charges. Here are the major advantages of leasing:

car_lease_vs_buy_india

  • You drive the car in its most trouble free years.

  • You can change the car every few years and choose the latest model.

  • Monthly payments are usually very low. Less down payment is required. Mynewcar.in provides leasing of a car with zero down payment.

  • You can drive a higher-priced, better-equipped vehicle than you might otherwise be able to afford.

  • You're always driving a current model vehicle and one that's usually covered by the manufacturer's warranty, which may include free oil changes and other scheduled maintenance. Repairing cost is not a factor.

  • You don't have to worry about fluctuations in the car's depression value or go through the hassle of selling it when it's time to move on.

  • There could be significant tax advantages for business owners.

  • In the end, you just drop off the car at the dealer.

Some things have to be considered before leasing a car. Let’s take a look at a list of things to watch out for while leasing a car:

Do’s:

  • Decide a type of person you are. If you are a person who wants to own and modify the car, then car leasing is not for you. But if you want a car just for transport and love to drive different/latest cars then, you should definitely go for a car lease.

  • Record your per monthly mileage and choose a lease plan according to your need.

  • Learn as much as possible about the car you will be choosing. Know everything about its mileage and performance.

  • Always choose the latest model to lease a car.

  • Make sure you have a constant cash flow every month, enough to pay the lease amount.  

  • Always read the contract of your lease carefully.

  • Choose a car with a high resale value.

  • Opt for a car lease with zero down payment.

  • Test drive the car before leasing it with a test driving tool.

  • Do ask a lot of questions about the contract to clear every doubt.

Don’ts:

  • Do not terminate the lease early. You may have to pay an early termination fee which can be really high.

  • Do not go for a lease with a down payment or security deposit. If you do opt for a plan with security deposit try to include it in the monthly payment you will be paying.

  • Do not accessorize or modify the car.the company may charge you a penalty and if that is not applicable it'll be not a smart choice financially either since you're going to be paying for equipment that you'll only use for 2 or 3 years. You're essentially buying this stuff for the next person that owns the vehicle.

Types of car leasing Available for you.

If you plan to lease a vehicle in the future, your first step is to determine which type of new car lease will work best for you.

The most common types of vehicle leases are:

  • Closed-end leases.

  • Open-end leases.

  • Subvented leases.

  • Single-payment leases.

  • “Option to buy" leases.

Closed-End Leases: Also sometimes referred to as a “walk-away" lease, a closed-end lease is the most common type of consumer lease.

The features of a closed-end lease include:

  • Agreeing to a lease contract for a fixed number of years.

  • Returning the car to the dealership at the conclusion of the lease.

  • Keeping up with required vehicle maintenance.

  • Maintenance and repairs are usually performed at the dealership for no additional expense.

  • Failure to keep up with scheduled maintenance may result in additional fees at the end of the lease.

  • Staying within the predetermined mileage in the leasing contract.

  • Going above mileage restrictions can result in additional charges.

  • A closed-end lease is a popular option because monthly payments are usually low for consumers with a good credit history.

Open-End Leases: Less common than a closed-end lease, an open-end lease is often used by businesses or individuals who travel frequently.

The details of an open-end lease include:

  • No mileage restrictions. Most closed-end leases have mileage restrictions.

  • Any additional mileage usually incurs a charge every extra km.

  • Monthly payments may be higher than a closed-end lease.

  • Requires you to pay for the depreciation of the vehicle at the end of the lease if it is below market value.

  • Market value is the predetermined value of the vehicle at the end of the lease contract.

  • Excessive wear or mileage may cause a vehicle to depreciate faster.

  • If the leased car doesn't depreciate, you may not be required to pay additional fees.

  • This option can be a riskier option for some buyers because the end price is unknown.

Subvented Leases: A subvented lease is a special lease offered by the finance company associated with a particular manufacturer. These leases are often offered when automakers need to move inventory quickly, or for particular models in low demand.

The features of a subvented lease include:

  • Low interest rates.

  • May only be available to consumers with excellent credit scores.

  • Low estimated depreciation.

  • This lowers the monthly payment.

  • Though you may not always be able to find the particular model vehicle you're looking for, if you qualify, subvented leases can save you a lot of money.

Single-Payment Leases: If you have enough cash upfront and would rather lease than purchase, a single-payment lease might be a good option. With a single-payment lease:

  • You pay the entire sum of the lease when the lease contract is signed.

  • Gets rid of monthly payments.

  • May help to eliminate most of the monthly interest.

  • Finance rates are significantly lower.

  • You are approved for a lease much easier.

  • You may be able to negotiate a lower purchase price.

  • Paying up front is less risky for the dealer, so you may get a better deal.

  • You know all the costs up front.

“Option to Buy" Leases: Some new car leases have an option to purchase at the end of the lease contract. In order to purchase the vehicle, you'll need to:

  • Make sure the “option to buy" price is negotiated and listed in the lease contract before you sign it.

  • Determine whether the negotiated price is higher or lower than the vehicle's market value.

  • If the vehicle's worth has depreciated considerably during the lease, the buyout price you negotiated may be higher than the market value at the end of the lease.

  • If this is true, you may get a better deal by purchasing a similar used vehicle elsewhere.

  • Pay cash or finance the buyout price.

  • If you decide to finance, shop for the best interest rate.

  • Often, the dealership will offer you financing for lease-to-own vehicles. Before agreeing to this, make sure you can't get a better deal with a different lender.

A table to differentiate between buying up front, auto loan and leasing of a car: 

Leasing a car

Buying a car

Auto loan

You do not own the car. You must return it when the lease is over unless you decide to buy the car.

You own the vehicle.

You own the vehicle.

Monthly payments are lower since you are only paying for a car’s depreciation during the lease term.

Since the payment is one time you do not have to pay any instalments.

Monthly payments are typically higher cause you are paying off the entire purchase price.

kilometres are tracked and you will have to pay an extra fee if you exceed the limit.

Kilometres are not tracked. But higher kilometres means lower trade-in value.

Kilometres are not tracked. But higher kilometres means lower trade-in value.

The leased car must be returned in its original condition.

You are free to make any customization.

You are free to make any customization.

You will have to pay a fee if the car is not returned in the desired condition.

Excessive wear and tear will lower the value of the car when its sold.

Excessive wear and tear will lower the value of the car when its sold.

At the end of the term, your car must be returned. You may purchase the car or lease a new one.

They won't be any payments later so you can sell the car whenever possible.

At the end of term (typically 5 years), you will be free of all the future payments. You may have to build an equity on the car for your next vehicle.

Since you do not own the car, selling is not an issue. You just have to return the car and pay the charges at the end of the term.

You will have to trade-in or sell the car on your own.

If you want to get a new car you will have to wait until the loan is paid. You will have to trade-in or sell the car on your own.

You can lease the car for a year to maximum 5 years.

You own the car.

The loan typically is of 5 years.

Can drive a new model every year

It will be costly to own and maintain soo many cars.

Car loan has limitations.

Maintenance cost, insurance is included.

Maintenance and insurance are not included.

You will have to pay for maintenance and insurance on your own.

So to lease or to buy, it all comes down to what kind of person you are and what are your expectations from this new car. You have to decide which of the financial solution will suit your needs and lifestyle better. 

For the latest auto news, new car hot deals, new car launches and car advise, follow mynewcar.in on Twitter and Facebook.


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