Vehicle scrappage policy: Leasing is a cheaper option than buying a car on loan now

Cars older than eight years would be required to pass a fitness test. Every time you renew your fitness certificate, you will be charged a green tax of 10% to 25%. Keeping an automobile in good working order is becoming more expensive.

Prime Minister Narendra Modi announced the vehicle scrappage policy on August 13 in an effort to get polluting and outdated cars off the road. Commercial cars over 15 years old and personal vehicles over 20 years old will be eligible for scrapping, according to the regulation.

Cars older than eight years would be required to pass a fitness test. You will not be able to drive the car on the road if they fail this exam. If your automobile passes this test, you’ll be paid a ‘green tax’ (approximately 10% to 25%) every time you renew the fitness certificate, which is good for five years. Holding on to older automobiles, in other words, may become a more costly proposition.

What is car leasing?

You get to drive a brand new model from the manufacturer’s portfolio when you lease an automobile. Depending on the city and model, car firms offer leases ranging from 12 to 60 months.

Leading car manufacturers in India, including Mahindra & Mahindra, Maruti Suzuki, Hyundai, BMW, Volkswagen, and Skoda, have been leasing vehicles with little or no down payment.

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A Maruti Suzuki customer, for example, can lease a WagonR, Swift, Dzire, Vitara Brezza, Ertiga, Ignis, Baleno, Ciaz, XL6, or S-Cross. The lease comes with a variety of mileage options ranging from 10,000 to 25,000 kilometres per year, as well as 12- to 48-month lease terms. In Kochi, you can hire a Wagon R for Rs 12,513 per month and an Ignis for Rs 13,324 per month (including taxes). The lease is for a four-year period.

“A lease allows a consumer to drive a brand-new car without having to pay for it outright. According to Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki India, “the customer must pay an all-inclusive monthly charge that thoroughly includes maintenance, 24*7 roadside assistance, and insurance for the entire tenure.”

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Car leasing appeals to millennials, according to Suvajit Karmakar, CEO and Whole-Time Director of ALD Automotive India, a car leasing company. Millennials are more likely to change cars every three to five years.”

According to Sunil Gupta, MD and CEO of Avis India, car leasing in India is less than 1%, compared to roughly 45 per cent in countries like the United States. Over the next ten years, he anticipates India’s car leasing sector to rise by 15-20 per cent.

According to Adhil Shetty, CEO of BankBazaar.com, because the vehicle scrappage policy is designed to discourage people from owning cars for extended periods of time, leasing a car will become more appealing than buying a used automobile.

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