Car lease calculator
|GST Setoff Rate||0.29||0.29||0.29|
|GST Rate on Lease Rental||0.29||0.29||0.29|
|Net ex-Showroom Cost||599900||599900||599900|
|Regn: Life Tax 14% , Registration chasrges, No plate char||83986||83986||83986|
|RV Exl Taxes||111004.9519||111004.9519||138756.1899|
|Net Rental per monrth||21170.3499||17234.4163||14455.3531|
In this blog, We will be going through the calculation to understand how leasing a car can be beneficial than a loan or even cash. The 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 ownership of the car in case of lease over various term i.e. 3 years, 4 years and 5 years.
The 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. The income tax slab consider is 30%.
4. FD interest calculation is with a 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) ]