Ok, I lied. The truth is, not only did I get my car (Renault Kwid automatic) for free, I am also getting paid to keep the car. I can’t stop gloating when I think about it. And if you are patient enough and read the whole article, you will find out how I even get my fuel for free 😛
New Car for free? There is one catch!
Of course there is a catch! So this is not for everybody. It applies to people working for corporate companies that have a Company Lease Vehicle scheme or those with their own businesses. What I am going to outline is my experience in getting a car and how I got back more than the value of the car, effectively making the car free for me.
What is Company Lease Vehicle scheme? How does it work?
Company Lease Vehicle (CLV) scheme is offered by most companies (some companies offer it only to their senior management). In this scheme, the employee (you) get to choose and buy a car. The car is purchased and registered under the the companies (your company) name. It is paid for by a auto financing company (car loan), the EMI for this is taken from your salary.
For the time you have the vehicle under the loan, it will be in your company’s name. Once your EMI’s are done, then you can transfer it to your name.
The EMI you pay for the car is Tax free. There is a small perquisite you need to pay if you are using the car for personal purposes. Additionally, as per your company policy, your company will be giving you a tax break on the money you spend on fuel and driver (only for official purposes), maintenance of the car, insurance for the car etc.
How I got the car lease:
I fall under a grade which is allowed to take a car on lease. After going through the company policy on this, I applied for it. My company asked me to pick a car. I went to the Renault showroom and selected my Kwid. The invoice was generated in my company’s name and within 2 weeks paid for by the company (through the Auto loan partner). From the following month, I had to start paying the EMIs for the car.
Cons, just two of them:
Tax Perquisite levied on a free car:
The car will be for official purposes only. If you are using it for personal purposes (like I do), then you will need to pay a small amount (about 10% of the interest saved, this varies per company) as tax. This still works out to be good, refer to my table below, where I still make money.
Car under company’s name:
The car during the time of the lease will be in your company’s name. So, when you pay the lease off, and transfer it back to your name, you technically become the 2nd owner. There is a work around. You can sell the car (like I plan to) before the lease ends, and instead of transferring the car to your self, transfer it directly to the new buyer.
How it worked out for me:
|(a) On Road Price of my Car||RS.4,60,000|
|(b) Tax Savings for 4 years (factoring tax perquisite) (@20% tax slab)||Rs.1,36,160|
|(c) Tax savings on Transport, Fuel, Insurance and maintenance allowance for 4 years (@20% tax slab)||Rs.1,20,000|
|(d=a-b-c) Value of my car after above two deductions||Rs.2,38,840|
|(e) After 4 years, I can sell the car. Very conservative resale value of a 4 year old Renault Kwid Automatic car||Rs. 2,75,000|
|(f=e-d) After getting to use the car for 4 years, money I get back||Rs.71,160|
Not just the car, how to get the Fuel for free?
Is this all? Of course not. While driving to and fro from office I car pool. Meaning, I take riders who are going the same way as me and they pay me a small amount. This covers my fuel expenses. As such, I get the car for free and my fuel for free :). Read more about my car pooling experiences and Quickride, the app I use for this.