Car ownership in India is still considered a status symbol and for some people, it is the way to go. But for others, considering the financial aspect and the hassles that come along with car ownership, it is definitely not the preferred way to meet their needs for mobility. This is where leasing comes into the picture which offers all the advantages of owning a car but without all its disadvantages. So, before you choose to buy a car or lease, it is important to understand the key differences that will help you make the call.
Lately, there has been a change in people’s mindset, who is gradually putting off their car-buying decisions. But why? It is because car owners are realizing that in addition to the convenience of smooth mobility, they get weighed down by associated problems attached to this ownership such as down payments and committing to loan repayments on a depreciating asset instead of investing them for better returns, hassles on its maintenance, dealing with failures just outside the warranty period, insurance claims, breakdowns, unforeseen risks, changing regulations, repeated haggling to get things done, et al.
Due to these factors, consumer’s mobility preferences are gradually changing and they are now focusing more on mobility experience rather than car ownership. Apart from this, Deloitte’s 2019 Global Automotive Consumer Study also highlighted that more than half of India’s millennials questioned the need for purchasing or owning a car.
Moreover, the coronavirus pandemic added further impetus to this trend. It led to a tectonic shift in the way people move from one place to another. With social distancing becoming the new normal, people are prioritizing safe personal mobility like never before and keep themselves away from all shared mobility options as far and as long as possible. In addition, the economic slowdown is another reason why many do not prefer to buying a car for themselves and locking down finances for the next few years. In such a scenario, car leasing is gradually emerging as a preferred alternative to buying. Against this backdrop, let’s have a look at a few advantages of leasing a car over buying.
Lower Monthly Payments
In simple words, leasing a car is somewhat similar to renting an apartment. It involves no conventional financing such as a heavy down payment at that too at significantly lower outflows of up to 37% for 3 years and up to 20% for a 5year term. This is because you are not paying the full value of the car but only for the part that you use. In addition, all the other costs towards registration, maintenance, and related hassles leading to indirect costs that get incurred are all part of the leasing agreement. Leasing can be done for periods from one year onwards to 5 years making it a go-to choice over buying a brand new car.
Flexibility in terms of choice
The biggest traction for users is flexibility and leasing offers that you can opt for any car which is under a private registration as per your choice for the duration and kilometers as per your need and use it all across the country just like you own the car. . Your needs and requirements change and leasing offers flexibility to rewrite the contract based on your usage, exit or extend or even switch to another car. There are short terms solutions also offered which specifically caters to individuals with frequent inter-city job transfers or are deployed in another location on short projects or assignments thus eliminating the need to keep shifting the car from one city to another as well as for expatriates who are always on the move.
Eliminates other financial hassles and related risks
Another advantage that leasing a car provides is that it eliminates all hassles while in its usage like unexpected failures especially just outside warranty, maintenance & insurance claims, loaner car for mobility when the leased car is not available, haggle to make things happen at every step each time every time, regulatory compliances, and finally realizing the right resale value of the car and compliance on its disposal.
Lastly, it is indeed true that some of the reasons for the sudden spike in demand for car leasing is the growing need for a solution that provides safe personal mobility without the strings of ownership attached and is more economical, provides flexibility as well as privacy.
The players in this segment are investing heavily into the latest tech and integrating the best-in-class features powered by AI and ML algorithms to not only ensure the safety of customers but push the pedal to provide the best overall experience for users. This model will continue to evolve and grow into more flexible plans in the years to come.
In conclusion, considering the way Indian customers view owning a car the adoption rate for car leasing is moving faster than expected. These trends are already visible globally as well and In fact, the global automobile rental and leasing market is expected to reach a valuation of $492.6 billion by 2025. Thus, the car rental industry offering the subscription or leasing model are well on their way to transform the existing solutions of mobility and their future certainly looks promising.
Author: Sunil Gupta, MD & CEO, Avis India
Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.
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