Hyundai Motor is the latest automaker to jump on to the car leasing bandwagon in India. Vikas Jain, National Sales Head, Hyundai Motor India, says that the biggest pull for customers is flexibility. “The young working population is not keen on parting ways with their savings for down payment of a car. They don’t shy away from EMIs but don’t want to be tied down with ownership. Leasing model satisfies all their needs,” he says. Mahindra & Mahindra, Skoda and Fiat are the other automotive giants that offer car leasing services to retail customers.
In a car leasing scheme, you can own a car by paying a fixed monthly fee, without having to worry about down payment or the hassle of resale when you want to switch to another model. The minimum lock-in period is two years, with the maximum leasing tenure being five years.
Looking at the costs
Compared to buying, leasing works out slightly expensive over the long term. The base petrol variant of Hyundai Elite i20 is available for Rs 9,813, inclusive of GST, for a period of five years. This doesn’t include maintenance and insurance costs. You will pay Rs 5.88 lakh over the leasing tenure. If you buy the same variant through a loan, 80% financed at 10% interest, you will have to make a down payment of Rs 1.22 lakh along with EMIs of around Rs 11,000 per month. Resale value of this model after five years is Rs 3.36 lakh at 30% depreciation. The total cost that you bear after deducting the resale amount will work out to about Rs 4.46 lakh, which is nearly Rs 1.43 lakh less than the leasing cost. But, if you do not have enough savings to make a down payment, you can opt for the leasing model.
Leasing vs subscription
The leasing model is cost-efficient compared to subscription schemes offered by platforms like Zap and Revv. In a four year subscription, monthly charges are higher for the first 12 months than in the remaining 36 months. This pushes up the overall cost that the customer has to bear over the subscription tenure. Apart from the costs, cars under the subscription scheme come with a commercial license plate, which is not the case with leasing a car. A non-commercial plate keeps the personalisation aspect of owning a car intact. However, subscription offers a more flexible lock-in compared to leasing, minimum being that of six months.