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-   -   Kia launches leasing options for Sonet, Seltos & Carens (https://www.team-bhp.com/forum/indian-car-scene/280497-kia-launches-leasing-options-sonet-seltos-carens.html)

Kia has signed a Memorandum of Understanding (MoU) with Orix to launch its new ownership program – Kia Lease.



As part of Kia Lease, the company is offering monthly subscription plans for the Sonet, Seltos and Carens. In the first phase, Kia Lease has been launched in Delhi NCR, Mumbai, Hyderabad, Chennai, Bengaluru and Pune.

Customers can lease a Kia vehicle without any initial down payment for a period of 24 to 60 months. The monthly charges also include maintenance and insurance costs. At the end of the lease period, customers will have the option to return and upgrade to a new car.

All-inclusive minimum monthly lease prices:

• Sonet – Rs 21,900
• Seltos – Rs 28,900
• Carens – Rs 28,800

Link to Team-BHP News

If the masses overcome the Indian sentiment of 'owning' a car, this'll be a game changer IMO.

What are the economics of this model? Can someone please analyze the financial aspects, comparing bank loan EMIs versus outright owning the vehicle?

My company has stopped car leasing policy as they do not want to take the burden. I see below statement in ORIX website for individual leasing:

Anyone know how does this work? In the corporate lease case, EMI was deducted from monthly pay and my taxable income was adjusted accordingly.

It only works for Corporate or Business owners, individuals cannot claim this as a tax deduction in their returns.

At these prices, I don't think leasing will make any sense for customers. I'm guessing from the opening post that the ₹21,900 plan is for an entry-level Sonet with a 5 year tenure. The total cost to customer is ₹13.14 lakh.

Now this car costs nearly ₹9.2 lakh on-road in Delhi. If the customer can get 100% financing, the EMI at 10% interest for 5 years will be ₹19,550. Total cost to customer after loan repayment will be ₹11.73 lakh.

I'm sure there must be a mileage limit in leasing plan, but let's assume the customer drives 1 lakh km in 5 years. Insurance cost at ₹14,000 average per year will be ₹56,000. For ease of calculation, let's take service cost of ₹1 lakh spread across 10 services over 5 years. So the total cost including maintenance and insurance comes to ₹13.29 lakh.

Both loan and leasing are neck and neck until you account for resale. After paying off the loan, this customer will be able to sell the car for ₹4.5 lakh (worst case) at the end of 5 years. Thus, there will be a difference of ₹4.5 lakh between leasing and taking a loan.

To conclude, the brand must have terrible resale value and high maintenance cost for leasing to start making sense. I'm sure the calculations will be in favour of leasing if we replace the 9 lakh rupee Sonet in this example with a 22 lakh rupee Skoda.

As expected, these leasing prices are higher than general ownership costs and I doubt if the overall experience can be fuss free. Instead, if Kia or any car company can offer lease at lower prices with used cars, then it makes sense for some of us. I know, it's pretty challenging to maintain the quality of the car/service with used cars but I wish some company could give a try once this insanity in used car market settles down.

It is cheapest when you buy disassembled furniture from Amazon.in:



But when you buy the same fully assembled furniture from a store, it costs you more:



When you buy the same furniture from a store but with a Bajaj Finance loan, it will cost you a lot more:



And finally, when you take furniture on lease/rental from Furlenco, it will cost you a lot lot lot more!



Basically, more business entities you involve in the acquisition of a product, the more you pay. Ditto with car lease/rent. It is not meant to be the lowest cost option. It is guaranteed to be the highest cost option, because Kia will be tying up with a business entity that is acquiring cars on a loan.

You go for leasing/rentals only for the convenience:

- You pay a monthly amount (and not large one time payment)
- You can give it back if bored of it and want something else.

I’ve always thought of the finance plans from BMW and Merc as repackaged lease plans. You pay a bullet upfront for registration etc, pay a relatively small EMI for 4-5 years, and then either return the car to them or refinance it, for the residual value. You end up paying a huge amount extra when compared to the normal bank loans, but keep the EMI smaller.