Is leasing or subscribing a car in India a good option or not?

Both subscription as well as leasing cars is an idea that has recently caught not only the fancy of automobile makers in India but also that of the customers.

By: | Updated: October 9, 2019 12:30 PM

A full five years ago, if we told you that you can lease or subscribe to a new car, you will call us mad. Hola! The scene has dramatically changed in the last few years. It was Mercedes-Benz India who first started the lease pattern. Leasing as far as a luxury and might we add, expensive vehicles makes sense. However, even makers like Hyundai, Mahindra, Nissan with the Kicks, Volkswagen with the Tiguan and Maruti too have caught on with this trend. MG, the recent entrant in to the Indian market also has a subscription program with Myles. While it is easy to mix subscription and leasing (they differ only by a few yet significant points), we got to the root of this matter and have simplified it for you.

Leasing

Leasing is for a short fixed term. One like a contract marriage that peope usually do for getting citizenship. A bad attempt at humour here but then you get the point. Manufacturers will bind you in a contract for minimum of three years and then you end up paying per month whatever the package that has been agreed upon. For example, the CLA Sport rental, at the current on-road price of the vehicle will start for the customer from Rs 98,000/month, subject to conditions. If one wants to include insurance as well as the maintenance package, then it will cost them Rs 1.23 lakh. At the end of the three year term, the customer has to return the vehicle. Other mass car makers mentioned here too have a similar rule, however one has to mostly return the vehicles after the term has ended. Few will allow you to purchase the car at a pre-determined price. This is because lease vehicles are white plate registered, meaning for personal use. The transfer here to the new owner is easier.

Good bit here is minimal paperwork, a refundable security deposit and no downpayment. However, a credit check is run on the customer before the contract is signed. It gives the manufacturer an overall idea of the credit worthiness of the customer.

The not-so good bits include the fact that you will end up getting a used car. Lease cars, if someone hasn't bought them at the end of the term, are usually put back into the pool for others to use. So weathered upholstery as well as few not-so aesthethic bits could be a part of the deal.

Subcription

As far as subscription goes, the minimum term is 13 months. Few like Mahindra will allow a customer now to subscribe through Revv. In this process, the customer goes to the Revv website or to a physical store. He chooses the vehicle and Revv places the order for him. After the necessary checks, the brand new vehicle is delivered to the customer within a month. There is no downpayment here and the customer has to pay pre-determined EMIs. The first EMI is taken in advance even before the vehicle is delivered to the customer. The latter can also opt for a maintenance included package. The registration as well as insurance amount is included in the EMIs.  Subscription customers are those who usually want to flaunt their vehicles. Moreover, they have the flexibility to change the vehicle as often as they want, by paying an additional amount if the new car is of a higher value. However, this can happen only within the particular manufacturer's folds, for example a Mahindra user cannot switch to a Hyundai car within the same subscription time frame.

Mahindra XUV300 7-seater in the works

The not-so good bits is the penalty one has to pay if they opt out of the subscription before the contract ends. These subscription vehicles will be with a commercial plate and more often than not, the company (Revv, for example) will not want to sell the cars as well. The cars are then put in to the self drive fleet. So, a customer at the end of his contract term cannot buy his subscribed car.

The good bit is residual value of the vehicle is something which a subscription or lease customer will not have to worry about. So, which side are you on? If you've leased or subscribed recently, do let us know how was the experience.

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