Lease Appreciation Module Plutus Consulting

What is Lease?

A contract by which one party conveys land, property, services, etc A contract by which one party conveys land, property, services, etc. to another party for use for a specified time, usually in return for a periodic payment Monthly Lease rental is calculated on the estimated market value at term end Lease rental also includes cost of services viz. Insurance, Maintenance & Repairs and other value-added services Residual value

Customer pays fixed monthly lease rentals and is insulated against any unexpected expenses during the lease At the end of lease, the asset is returned back to the lease company Residual value

3. Our Prospects

Businessmen Self Employed Lease Purchase Motivators Private Limited or Proprietor Interior Decorators, Fashion Designers, Chartered Accountants, Doctors, Architects, Property Dealers Lease Purchase Motivators Asset for business use Off balance Sheet No maintenance worries Tax Saving Lease Purchase Motivators Zero Down payment Off Balance Sheet No surprise costs No maintenance worries Tax Saving

4. Different modes of car acquisition & comparison

Let’s look at three customers… ATUL Proprietor Bought a car by paying cash upfront ABHAY Director Financed his car via a Bank Loan ALOK Proprietor Leased his car

Included Ex-showroom price Insurance Road tax & Registration charges ATUL Purchased a Car Worth 10 Lacs on Cash Included: Ex-showroom price Insurance Road tax Registration charges Included Ex-showroom price Insurance Road tax & Registration charges

Cash Payment: Pros Financial Benefit Convenience No Interest Paid No Paperwork Hassles Immediate Ownership

Cash Payment: Cons Negative impact on cash flows Responsibility and risk of resale at the end of the usage Cash used in savings / business (Opportunity cost) on initial Payment money Opportunity loss on Car Cost of 10,00,000 @15% rate of return = INR 1,50,000 P.A. which translated into INR 7,50,000 over 5 years

on Bank Loan, paid 2.5 lacs cash down and financed 7.5 lacs ABHAY Purchased a Car on Bank Loan, paid 2.5 lacs cash down and financed 7.5 lacs Down Payment included: Ex-showroom price- Loan amount Insurance Road tax Registration charges Bank Processing fee (3000-5000 INR) 1 EMI Rest amount to be paid as EMIs

Finance Process Customer walks in the showroom Makes down payment at the Dealership Bank makes payment to the Dealership Sales Consultant analyzes the need Loan approved by the bank Car is handed over to the customer Customer finalizes the car Customer applies for loan Customer pays EMI to bank

Finance Process: Pros Financial Benefit Convenience Only part payment initially Rest to be paid in EMIs Tax Benefit on Interest Paid Depreciating Car Value Recurring Expenses Convenience Deferred payments

Finance Process: Cons Need to arrange the funds for down payment Bank Processing fee 3000-5000 INR Responsibility and risk of resale at the end of the usage Impact on the borrowing capacity (Credit limit) Opportunity cost on initial payment money Opportunity loss on down payment amount of INR 2,50,000 @15% rate of return = 37,500 P.A. which translates into INR 1,87,500 over 5 years

Monthly Lease Rental includes components for: Alok Leased a car worth 10 Lacs No down payment Monthly Lease Rental includes components for: Car funding Insurance Registration Road Tax Maintenance

Lease Process Sales Consultant reaches out to the customer Lease company pays to dealership Car is handed over to customer Benefits of Leasing explained Customer Signs the agreement Customer pays fixed lease rental SC understands customer needs and qualifies him for lease Documents collected by Sales Consultant for Credit Appraisal

Lease Process: Pros Financial Benefit Convenience No Down Payment Lease rental booked as expenses Off-balance sheet asset hence no impact on borrowing capacity User only pays for the usage period No risk on maintenance – Fixed budget covering all expenses Convenience No risk related to the resale of the car No risk on maintenance and damage repair Ease of budgeting Fixed monthly payments and no unpleasant surprises

Lease Process: Cons Does not suit customers who necessarily want to use the car for more than 5 years Limited Awareness in the retail market

5. Benefits of Leasing

Intact Credit Worthiness Zero Down Payment Helps customer grow their business with greater liquidity by acquiring vehicle with zero up-front cost Intact Credit Worthiness Lets the customer enjoy credit worthiness as, unlike loan, lease is an off balance sheet expense No Surprise Cost Fixed monthly rental that includes the cost of vehicle, accessories, road tax, maintenance & insurance No Maintenance Cost Customer sit back and enjoy the drive while we take care of all cost hassles associated with maintenance

Pay for What You Use Added Convenience Zero Resale Hassle Easy Upgrade Lets the customer enjoy significant cost savings as lease rental is calculated based on their usage and not the complete value of the vehicle Added Convenience Customer get the benefit of host of services like pick and drop facility, replacement vehicle, 24*7 roadside assistance Zero Resale Hassle Customer can focus on their business & avoid botheration of resale of their vehicle as we’ll take care of it all Easy Upgrade Customer can simply upgrade to a new vehicle of their liking by renewing the lease at the end of the lease period

Thank You! To know more contact us at: 9001497800, 9811282642, 120-4232229 deepak@plutus.net.in