1. Lease Appreciation Module
Plutus Consulting

2. What is Lease?

3. 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

4. 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

5. 3. Our Prospects

6. 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

7. 4. Different modes of car acquisition & comparison

8. 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

9. 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

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

11. 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 rate of return = INR 1,50,000 P.A. which translated into INR 7,50,000 over 5 years

12. 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 ( INR)
1 EMI
Rest amount to be paid as EMIs

13. 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

14. 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

15. Finance Process: Cons Need to arrange the funds for down payment
Bank Processing fee 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 rate of return = 37,500 P.A. which translates into INR 1,87,500 over 5 years

16. 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

17. 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

18. 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

19. 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

20. 5. Benefits of Leasing

21. 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

22. 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

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