S Viswanathan, founder & CEO of Chennai-based Inspace Technologies, was recently in the market for a new high-end SUV. But unlike his last SUV, a Ssangyong Rexton that was bankrolled by an auto loan, this time he picked up a Rs 28.5 lakh Hyundai Tucson SUV (2018 version) on a five-year lease from OTO Capital, an automotive leasing startup. All he had to do was shell out Rs 2.85 lakh (10 per cent refundable security amount) as upfront payment for the car in addition to the monthly lease rental of Rs 50,000.
Leasing the SUV made perfect financial sense to Viswanathan, 45. “Why should I invest in an asset (a new car) which is depreciating? I compared the bank rates with the leasing rates. The asset is with them (lessor) which is okay. But the good thing is liability is not in my (company’s) books. It is only coming as an expense for me per month,” he says.
Viswanathan explains that since the car will be an expense in his company’s books, he stands to save Rs 2 lakh per year in income tax benefit as well, which will add up to Rs 10 lakh over five years. “My book value after five years is only Rs 8-8.5 lakh. I can give the car back or continue the lease for another year. Furthermore, I can sell the car in the market if the price is going higher than the book value,” he adds.
While the tax efficiency of a leased car in the hands of the lessee is an important factor in favour of leasing, there is a growing shift in consumer preference for leasing a vehicle rather than owning one due to a host of factors. For one, in times of economic and regulatory uncertainty, it makes sense to keep one’s liabilities low.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Is Leadership Without Hierarchies Possible?
LEADERSHIP IN THE current era is more challenging than ever before.
The Rise and Evolution of Coffee Culture in India
AS A BANGALORE native, South Indian filter ‘Kaapi’ has always been a significant part of our tradition.
The Daily Ground Goes Desi
Success in Tier-2 and Tier-3 cities hinges on several key factors, with one of the most important being the ability to offer high-quality products at an accessible price point
Cracking The Indian Code
TARUN JAIN, CEO of Tim Hortons India believes in creating an experience at cafes by blending global quality, local flavours and affordability
Making Coffee the New Chai in India
Affordable, great-tasting coffee made fast-abCoffee is reshaping how India drinks coffee
Scripting A New Era Of Coffee In India
From a bootstrapped startup to international expansion, NOTHING BEFORE COFFEE is brewing its way to the top by challenging the giants of the coffee industry with innovation, personalisation, and sustainability
"Driven By A Younger Demographic, Coffee Culture Is On The Upswing"
SUNIL D'SOUZA, Managing Director and CEO of Tata Consumer Products, discusses the company's strategic growth in India's booming coffee market, focusing on premiumisation, innovation, and expanding consumer experiences both at home and in cafés, in this exclusive conversation with BW Businessworld's Tarannum Manjul
Fresh Brew, Big Ambitions
From startups to stores, Beanly's Samayesh Khanna and Rahul Jain elevate India's coffee culture by making freshly brewed coffee a daily delight
"On Track To Become India's Top Café Chain"
In an exclusive interview, RAJAT AGRAWAL, CEO of Barista Coffee, shared insights on the company's current market position, expansion strategies, and its response to growing competition
"Ensuring A Seamless Coffee Experience Outside The Cafe Is The Next Big Thing To Watch Out For"
In an exclusive conversation with BW Businessworld's Resham Suhail, Third Wave Coffee CEO RAJAT LUTHRA and its Co-founder AYUSH BATHWAL delve on how they are navigating the competitive landscape, going beyond retail and tapping changing consumer preferences