Basis the most up-to-date marketplace reports accessible on the Indian car market, it is estimated that about twenty to 25 percent of all new automobiles acquired are purchased on a cash payment basis and the remaining seventy five to 80 percent are funded by numerous mode of financing such as Automobile loans, Auto hire, operating leases etc. Undoubtedly the form of funding preferred by the majority indian automobile owners is a basic vanilla vehicle loan, though car leasing is also becoming the financing means of choice for the corporate sector, particularly in large cities.
Government banking institutions, public sector banks, transnational banks, non banking financial corporations and international leasing companies are the chief players offering an assortment of varieties of financing and financing schemes for vehicles. These schemes differ to some extent in different regions. Another source of financing a automobile purchase is by taking a Individual loan as a short time measure to fund the automobile purchase. To appreciate how the equated monthly instalment is calculated keeping in mind the rate of interest charged by the private dealer's funding format, a precise quantity of familiarity with accounting jargon and accounting process is required. Quite a few auto dealers quote a flat rate of interest that seems to be optically a good deal lesser than the genuine rate of interest bieng paid by the consumer as computed on the reducing balance basis. In case of small tenure of 3 years or less for a auto loan, the flat rate of interest can be nearly half of the actual rate of interest bieng paid by the purchaser when computed on the base of the reducing balance method. Infact this is an often recurring tradition to draw gullible consumers. It is advisable for the car customer to get hold of quotes from various financial institutions and loan companies & only then to make a decision from where they desire to avail the auto loan. There is no such thing as a free lunch or promotion schemes which claim of a zero % financing scheme. These are all mostly sale and advertising gimmicks to appeal to buyers. All banking institutions and finance providers use funds available with them & deploy the same in diverse asset classes - car loans bieng one such asset class. It stands to reason that a car loan in that case has to happen at a higher rate of interest than what is offered by banks on cash deposit made by the customers. Customers should also be wary of various costs and charges that are to be paid upfront for taking a automobile loan. This is another area where the expenses differ dramatically between diverse finance institutions and in different sources of vehicle loan. An additional precaution that public wishing to take a automobile finance must be wary about is the fact that the intermediateries arranging the car finance all get paid and accordingly it helps to shop around for the best deal. Automobile rental is an additional means of auto financing that is especially prevalent in the west & is only currently becoming widespread in india. A car lease in simple terms is a car hire. Unlike a car rental which has connotation of bieng something offered for a short period a automobile lease is generally three years but can be anything between six months & sixty months. The other key attraction in a car lease vis-a-vis conventional car funding is that in the case of a automobile lease the upkeep, and additional car related administrative issues are all handled by the automobile leasing corporation consequently allowing the company lessee to focus on its main business. another major attraction of a car lease is that it is more income tax efficient in contrast to a plain vanilla vehicle finance as the total month to month fee can be expensed out. The last key benefit of car leasing is that the customer does not need to become mixed up with needing to sell of the leased car at the end of the lease period. Therefore the risk connected with residual worth of the vehicle are totally with the leasing business and this is the chief motive that large corporate and high net worth individuals in india are nowadays choosing to finance their automobile acquisitions through a auto lease.
No comments:
Post a Comment