The urge to lease

During my last stint in Kuwait, I directly purchased a Jeep Renegade with cash. This time around, I am looking for options to change cars often without incurring much loss.

Being a doctor that works two shifts, 4 hours in the morning and 4 in the evening, it is highly unlikely that I would be driving a lot in Kuwait.

But I reside in Jahra. Much of what is happening is a minimum 25 km away from me. So that means bombing at 120 km per hour (at times between cameras more than that) in 15-20 minutes to get to Riggae first to have some happening time. With the recent heavy rain lashing Kuwait roads, it is fair to say there is not much road left.

So sedans easily get deleted out of my choice for a ride. Having used cabs for the last two months, I have understood, an accident occurring on 80 route is at a bare minimum of 1 per day. So safety concerns are vital when choosing a ride.

Hence the interest to cash in on an SUV. Mini SUVs average between 5k to 10k KWD. Whilst full fledged 4×4’s begin at 11k and spiral upwards. The easiest option to enjoy some quality rides without effectively getting bored is to Lease it.

What is a Lease?

  • At no point of time do we own the vehicle.
  • We get a brand new car
  • Small downpayment
  • Short term usage of vehicle 14 months or 26 months
  • Limited total km usage – 35 k to 70 k.
  • Company takes the vehicle back at completion of term.
  • During usage, it follows all norms of a newly purchased vehicle. Complete insurance. Free maintenance.
  • Don’t have to worry about value depreciation of vehicle.
  • Don’t have to bother about sale of vehicle.
  • Permits changing to another ride at the end of the term.

Is it affordable?

My firm deals with Kuwait Finance House. So I have opened a Bank account there. Being a doctor, the salary account makes me automatically eligible for a car loan. Also means, I do not need a guarantor should I opt to lease a vehicle.

Let us take the example of a car that is being leased. A Toyota Fortuner 6 cyclinder 4×4 on road in Kuwait costs 11500 KWD. If I put a downpayment of 499 KWD, my loan amount would be 10896 KWD. If I opt for a 60 month EMI, I need to shell out 205 KWD every month.

Instead, if I lease the vehicle for 14 months, I make a downpayment of 499 KWD. Pay an EMI of 169 KWD for 14 months, or 149 KWD for 26 months with a mileage cap of 30k and 60k respectively.

So effectively at the end of 14 months, using auto financing, I would have shelled out a total of 499 KWD + 14 x 205 KWD = 3369 KWD

If I lease the vehicle for 14 months, I would have shelled out a total of 499 KWD + 12 x 169 KWD = 2527 KWD.

Effectively I save around 842 KWD and I have the luxury of changing cars at the end of it all. I am gonna write up more on this soon as I see how effective this turns out.

Of course I have kept my options open on what ride I want to buy, but nevertheless looks like its gonna be leasing rather than financing!

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