Mobility Blog

How to avoid down payment hurdles while getting a new car

How to avoid down payment hurdles while getting a new car

Having to pay a down payment while getting a new vehicle can block off cash that could otherwise be used for revenue or wealth building. For an enterprise looking to procure a fleet, the amounts allocated towards down payment could be vast. As for employees looking to buy a car, they may have to dig into precious savings. In nearly all cases, down payments can come with a significant burden.

Where eligible, car leasing for businesses and employees is one of the very best alternatives to avoid the burden of a hefty down payment.

Corporate fleet vehicles

When organisations procure vehicles for business use, a significant amount of capital gets parked towards funding a depreciating asset. Especially in the case of a loan from a bank or financing institution. The ownership of the procured vehicle (called Hypothecation) lies with the bank of the finance organisation until the loan amount is completely paid off.

Once a down payment for procuring fleet vehicles has been allocated, these funds become unavailable for other productive business activities which may require capital investments or expenditure. While having vehicles at the disposal of the enterprise will add to efficiency and direct transport control, the opportunity cost of the amount put aside as down payment may point to seeking alternate solutions. Many times, such solutions come in the form of renting vehicles over a period of time. However, since renting a car is more suitable for shorter durations, it may end up being an expensive affair over the long run. For most businesses, such a solution may not be optimal.

There is a viable solution though, in the form of corporate car leasing, which could be suitable for most businesses. An enterprise fleet could range from a handful of vehicles (to ferry management to and from locations) or many cars (for field personnel). Leasing brings businesses the advantage of having a fleet at their disposal, without the hassles of having to maintain or resell it at the end of the lease tenure. 

For service-led businesses, ALD Pro enables better mobility for field staff, sales or service representatives.

Salary packaged cars for employees

For an employee at a corporate, having to shell out a down payment may pinch even more. Most employees may wish to commute to and from work and between meetings or on-site visits in their own vehicle. Besides the convenience, flexibility and control, this also provides employees with a sense of pride. 

Normally, an employee may consider selecting a vehicle and then approach a bank or financial institution for a loan. With most vehicle loans, and depending on the individual’s financial background, a significant down payment amount may be required to be fronted by the individual employee as part of the loan process.

For those employed with corporates that have a tie-up with a car leasing partner such as ALD Automotive, driving home a brand-new car is a far simpler process. An employee only needs to check their eligibility as per company car policy, the kind of vehicles available at their position, and then follow a simplified leasing process towards vehicle usership.

With a salary packaged car lease such as ALD Ugo, employees get all the benefits of having their own car, while the employer pays the monthly lease rentals from their pre-tax salary. This means the employees can avail significant tax benefits of up to 30%! What’s more, employees also get the advantage of value-added services such as maintenance, insurance, relief car and many more!

Enterprises can partner with ALD Automotive to deploy a car lease policy within the corporate, to give employees the advantage of driving a personal car, without the hassles of owning one. 

Explore ALD UGO, a tri-party corporate car lease contract between an employer, an employee, and ALD Automotive.

No down payment, only upsides

In most car leasing scenarios where the financial profiles of the enterprise or employee meet the requirements; there is no requirement of a down payment. They only need to pay a fixed monthly lease rental, determined at the start of a lease term. Even third-party services like insurance, vehicle maintenance and roadside assistance are included in this easy monthly sum.

Contact us for more information about vehicle leasing for enterprise requirements or for employees.