Anyone here opted for Corporate Car Lease ?

[Souvik]

Would be curious to understand the terms and conditions of the Lease with focus on tax benefits, residual value of the asset to buy at end of lease tenure, and estimated monthly costs.

What happens to the lease if you change the organization midway ?

 

[NewUser]

As per my limited knowledge, there are tax benefits for corporate car lease.
Basically, if you buy a car on EMI(without car-lease), you pay EMI after taxes i.e., after taxes, you get a net salary from employer, and you pay EMI from the in-hand salary.
With corporate car lease, the EMI will be deducted from your salary first, then remaining salary is taxed. So, effectively your taxable salary reduces(similar to 80C, 80D etc). Another advantage is that there's no down payment.

Not sure about the residual value of the asset, but the company and the broker have fixed rule for it. You can either buy the asset on the proposed amount after the lease period expires or start another lease for another car(people usually buy the car because the price becomes like ~20% of the original car value after say 4 years).

Estimated monthly EMI depends upon your salary and your risk appetite. you can't take a Mercedes in lease with ₹20K monthly salary. In my previous org, the lease payment could be up to 25% of the base salary.

Companies have different rules for dropping lease midway. In most cases, you either need to transfer the car to your name by paying remaining amount or find some other employee to carry the lease.

I am planning to take a car on company lease in late 2022 or early 2023. Will update this thread with details then.

 

[anirbanm]

Check his videos.

 

[Souvik]

As per my limited knowledge, there are tax benefits for corporate car lease.
Basically, if you buy a car on EMI(without car-lease), you pay EMI after taxes i.e., after taxes, you get a net salary from employer, and you pay EMI from the in-hand salary.
With corporate car lease, the EMI will be deducted from your salary first, then remaining salary is taxed. So, effectively your taxable salary reduces(similar to 80C, 80D etc). Another advantage is that there's no down payment.

Not sure about the residual value of the asset, but the company and the broker have fixed rule for it. You can either buy the asset on the proposed amount after the lease period expires or start another lease for another car(people usually buy the car because the price becomes like ~20% of the original car value after say 4 years).

Estimated monthly EMI depends upon your salary and your risk appetite. you can't take a Mercedes in lease with ₹20K monthly salary. In my previous org, the lease payment could be up to 25% of the base salary.

Companies have different rules for dropping lease midway. In most cases, you either need to transfer the car to your name by paying remaining amount or find some other employee to carry the lease.

I am planning to take a car on company lease in late 2022 or early 2023. Will update this thread with details then.

You're right, corporate lease is out of pre-tax salary, so saves on taxable income. Of late I changed my workplace and came to know more about the lease process. A secondary lease kicks in once the primary lease expires, to make the residual value of the car to zero. The problem is when you buy it on lease, the car is registered in your organization's name and not yours, so once lease expires, there can be more trips to the RTO.

In my organization, if an employee leaves midway through the lease, the employee has to either pay the residual cost of the car to the organization or transfer the lease to some other employee.

I plan to lease a car sometime next year, only for tax benefits.

 

[Wealth is my birth right!]

Would be curious to understand the terms and conditions of the Lease with focus on tax benefits, residual value of the asset to buy at end of lease tenure, and estimated monthly costs.

What happens to the lease if you change the organization midway ?

Nice topic for the employees who have this option
Just my scenario I decided for a model of 15lac but corporate brokerage tie up guy says max slab 13.25lac to my grade so talks going on that I requested to consider agency to take the slab for ex showroom price and excess I pay from my pocket but they need HR approval for such special scenarios let’s see how it ends

 

[Souvik]

Nice topic for the employees who have this option
Just my scenario I decided for a model of 15lac but corporate brokerage tie up guy says max slab 13.25lac to my grade so talks going on that I requested to consider agency to take the slab for ex showroom price and excess I pay from my pocket but they need HR approval for such special scenarios let’s see how it ends

Firstly, Congrats for that machine in advance! In hindsight, 15L for a depreciating asset like a car might just burn your hard-earned money quicker, assuming a car's life span is 15 years.

In my case, what I realized is that a corporate lease anyways incurs interest like a bank loan (while I had cash to invest and avoid making banks richer), and if I happen to change my job/company before lease expiry then foreclosure is another challenge. Also, with a lease the car gets registered in company's name and not my name, so getting RC transferred with RTO to my name would be another challenge after lease expiry or foreclosure.

Also, my MNC employer refused to give me BH series for corporate lease as the car was supposed to be registered with company's local address proof, and so my leased car's mobility across India was restricted especially if I land up in a place like Bangalore for my next job where traffic cops have all 12-month targets at outsider's expense.

The only benefit out of the lease was tax deductions, and maybe a subtle/soft car loan in exchange for many handicaps. So, I opted for Spinny and went for a 2022 registered Hyundai i10 to simplify life.

 

[Wealth is my birth right!]

Firstly, Congrats for that machine in advance! In hindsight, 15L for a depreciating asset like a car might just burn your hard-earned money quicker, assuming a car's life span is 15 years.

In my case, what I realized is that a corporate lease anyways incurs interest like a bank loan (while I had cash to invest and avoid making banks richer), and if I happen to change my job/company before lease expiry then foreclosure is another challenge. Also, with a lease the car gets registered in company's name and not my name, so getting RC transferred with RTO to my name would be another challenge after lease expiry or foreclosure.

Also, my MNC employer refused to give me BH series for corporate lease as the car was supposed to be registered with company's local address proof, and so my leased car's mobility across India was restricted especially if I land up in a place like Bangalore for my next job where traffic cops have all 12-month targets at outsider's expense.

The only benefit out of the lease was tax deductions, and maybe a subtle/soft car loan in exchange for many handicaps. So, I opted for Spinny and went for a 2022 registered Hyundai i10 to simplify life.

Wow its good decision
Is it nios version?
BTW 15lac budget I plan to keep for next 10yrs to get best VFM
Thanks for the inputs 👍

 

[Souvik]

Wow its good decision
Is it nios version?
BTW 15lac budget I plan to keep for next 10yrs to get best VFM
Thanks for the inputs 👍

Thanks, yes I got a nios, it's a basic, decent machine.

Cheers to your decision!