Auto major Hyundai Motor India Ltd (HMIL) on Thursday said it was partnering with ALD Automotive India for vehicle leasing service, a business idea which many companies dealing with vehicles — be it selling vehicles or renting it — are incorporating in their revenue models.
Car or vehicle leasing is currently the talk of the town in the auto industry. Here are a few FAQs about car leasing:
What is car or vehicle leasing?
Vehicle or car leasing allows a consumer to use the car for a fixed period of time for a fixed amount. The idea is similar to that of a rental but the duration is longer than that of a rental, usually more than six months. In some way or the other, the consumer has temporary ownership of the vehicle.
Why are companies opting for this model?
For auto firms, leasing is a way of increasing their profits. The firms can re-lease cars or sell it through vehicle remarketing once the original lease has expired.
What's in it for consumers?
For the buyer, the lease payments are likely to be lower than the payments they make on their car loan. When leasing a car, the sales tax is due only once in a month and not immediately on the entire price which is in the case of applying for a car loan.
Vehicle leasing also gives consumers an opportunity to lease many different kinds of vehicles. Once the leasing expires, the consumer has many choices to choose from, for his/her next lease.
Which companies offer lease option?
Cars or vehicles are usually leased via car leasing companies such as Orix, ALD Automotive, JMD Car Leasing, among others.
However, recently, car companies and car rental services seemed to have adopted the idea in their business model as well.
Along with Hyundai, the FCA Group, which offers Fiat and Jeep vehicles in India, also got into a partnership with the car leasing company Orix. ZoomCar, a car rental app service, also came out with its leasing service ZAP subscribe.
Some auto firms such as Maruti Suzuki has its own car leasing service. Such firms are not in partnership with any car leasing companies and consumers can lease Maruti cars from the company itself.
However, in the case of Maruti, not every consumer is eligible to lease the car. The firm places conditions of N2N car leasing, that is only firms can apply for the leasing of the car as compared to ZoomCar's ZAP subscription.
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