How to lease a car in India?

Car leasing is a contract where an individual is allowed to use a car for a certain period of time in exchange for a lump sum of money or periodical rentals. The main thing to notice here is that the car user does not get ownership of the car, he just only has the possession and right to use it. After the lease period is over, the user has to return the car according to the terms and conditions. Many people do not know, but the concept of car leasing is not limited to foreign countries, and you can very much lease a car in India. Car leasing is an excellent option where you can save yourself from the depreciation hit and an immediate large purchase expense. There are many options for a car lease in India now. Let us understand the concept better in this article.

“Always frightened to open mail from ING Car Lease (no fines included)” by Tijs is licensed under CC BY-NC-SA 2.0

Types of car lease

The main type of lease in India is the wet lease and dry lease. A wet car lease is a contract where the lender will take care of your full insurance for the full tenure plus maintenance and accident repairs along with providing other services. There is no down payment required, and there is also an offer for a buy-back of the vehicle at the market price. The customer gets the option at the end to buy the car or give it back to the company. In the case of the dry car lease, the overall structure of the lease is similar, but you miss out on the benefits like the maintenance and accident repairs plus other features which are there on wet-lease. So you will have to bear the cost to maintain the car plus the buy-back option, unlike wet-lease, is available only at a predetermined value. In terms of duration, there is an open-end and closed-end lease. The only difference between them is that in the case of a closed-end lease, you will have to return the car at a predetermined time, but the open-end lease gives you an option to extend the duration.

Advantages and disadvantages of car lease

The biggest advantage of a car lease in India is that you end up saving a lot of money in the long term. You do not have to take the massive depreciation hit that a new car owner has to face in the initial 2-3 years of ownership. On top of that, you will avoid upfront payment of car value or higher value loan EMI as compared to a lease. The lease amount you pay for a vehicle is eligible for tax relief and helps you save a large amount on your taxes. You also do not have to worry about the maintenance cost and insurance costs. Now coming to the downsides, you do not get the same freedom as owning your own car as there are mileage restrictions or the distance that you can drive during the lease period. Sometimes, if you are not careful, then you can pay extra fees hidden in the fine prints. Also, not to forget the anxiety to arrange or buy the next car at the end of the lease period.

Car brands providing leases in India

In the last few years, the interest in car leases in India has seen an upward trend and several car companies are providing car leases in India now. The major ones are Hyundai, Volkswagen, Toyota, etc. almost all of them have options for both wet and dry lease and the duration is between 4-5 years. You can lease a car starting with Rs 6000 and going up to 6 digit figures. Companies like Toyota are also providing the bulk of fleet car leases for the commercial owners, and you end up saving a huge amount on bulk leases. 


A car lease in India is relatively a new term and if you are interested in having a car leased, then you should be very careful about entering the contract. The lease contract, most of the time, has hidden terms and conditions and if you are not careful enough, then these terms can bite you back in the future. Do not shy away from taking legal advice before going in for the contract. Also stay away from the schemes that are too good to be true and look for a plan that suits your needs and requirements, instead of being attractive on paper. With proper planning and homework, you can actually save a lot in the long term with a car lease.