Car lease calculator

Car lease calculator

Graphical Analysis


In this blog, We will be going through calculation to understand how leasing a car can be beneficial than loan or even cash. Lease should be preferred over cash if you fall in 30% income tax slab.

Supposed you wanted to buy Ford Aspire Titanium. Now let’s understand the cost of owner ship of car in case of lease over various term i.e. 3 years, 4 years and 5 years.

Assumption for car lease calculation,
1. Car’s cost on road price is around Rs 1000000 (excluding insurance)
2. Residual value after 3 years is 30%, 4 years is 25% and 5 years in 20%. It varies from company to company.
3. Income tax slab consider is 30%.
4. FD interest calculation is with systematic withdrawal plan. i.e. FD is used to pay EMI and keeps reducing.

Now, I will explain the calculation a bit from the excel attached.
1. Lease interest rate @14%
2. Term in months(60 months i.e. 5 years)
3. Residual value = Rs 2,00,000 [ 10,00,000 (car cost) @20% ]
4. Total amount = Rs 13,80,000 [ 10,00,000(car cost) with 14% (interest) for 5 years ]
5. Actual Payable = Rs 11,79,995 [ Rs 13,80,000 – Residual cost after 5 years]
6. Monthly EMI = Rs 19,666 [ 11,79,995 (total amount) divided by 60 months ]
7. Tax save yearly = Rs 70,800 [ yearly EMI x 30% ]
8. Total tax save = Rs 3,54,000 [ 70,800 (tax save yearly) x 5 (years) ]
9. Ownership cost = Rs 10,26,000 [ 11,79,995 (payable amount) + (2,00,000) residual value – 3,54,,600 (saving on tax) ]
10. Interest from investment in FD is @8% simple interest = Rs 2,08,000
11. Actual ownership cost = Rs 8,17,500 [ 10,26,000 (ownership cost) – 2,08,000 (interest on FD) ]

2019 car lease quotation from lease company

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PrAkAsH

Eyeing investment. Please note that the views given in this website are meant for reference and guidance of the readers to explore further on the topics and take informed decisions. These should not be construed as investment advice or legal opinion.

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