Car leasing payment plan increase in middle

[pwuser156286997660]

AOA,
I leased a car from Dubai Islamic bank in October 2018, the plan they gave me at that time did not mention an increase in monthly payments but now after 1 year, they have sent a new plan for the next year with increased prices (6.5% increased). is that the case with everyone? They are saying that since Kibor is increased so they had to increase monthly "rent" to adjust the difference.

[pwuser149194267249]

Yeah they are right.
Now bank offer leasing facility with one year KIBOR which means your interest rate (hence your monthly installment), will remain fixed for 1 year and at each anniversary your installment will be revised based on the KIBOR prevailing at that date. I give u my example, i leased my vehicle from Bankislami on Sep-2017, at that time KIBOR was ~6.5%, so my installment was determined on that rate. On 1st anniversary of my lease which was in Sep-2018, KIBOR was ~11%-12%, so my installment was revised to based on that rate. So on a so far.
SO practically, my installment has increased by approx. PKR 4k in Sep 2019 vs Sep 2017 despite decrease in principle. Reason in obviously KIBOR.

[def3nder]

Thats something stupid i guess. when someone lease their car and jis plan pe agreement ya lease hota wohi plan rehna chae hai. revised plan or rates tou new customers ko applicable hona chae hai. why its applicable to existing customers :o and in the end, when someone is going to sell out their car, these extra money will never be getting back. yeh tou zulm hai yar :o Now i get why people are crying and saying they end up giving unlimited installments to the bank

[sleeper]

My father paid about close to 10lakhs (in 5yr instalmnt prog) for 2008 cultus vxli that costed Rs.695,000 then......never will i buy a car on instalments...

[anon35615524]

W.S. Brother I think the bank is right in this matter, as installments / KIBOR rate is fixed for max. 1 or 2 years, especially in case of Islamic banks, and then it is revised every year based on KIBOR rates.

If KIBOR rate increases, installments will also increase, and vice versa.

[anon35615524]

W.S. I cannot say about conventional banks, but Islamic banks never give a fixed payment plan for 20 or 25, etc. Years. Yes, they may keep their ratio / percentage constant (although they can change it too) but KIBOR is purely based on the value set by Govt. So accordingly, banks have to adjust / manage accordingly, and are helpless in this regard.

I think, all such things are also mentioned in the terms and conditions, but we hardly bother to read them.

You may read terms and conditions, and then take action accordingly.

[pwuser149194267249]

There are pros and cons of Bank leasing. Ideally if a person can afford he/she shouldn't opt for leasing. I am not advocate of banks but obviously they are here to make profits so they will always charge you more then their own cost of funds. Secondly there is also a component of insurance (and tracker) in your installment and believe me, insurance is a big sigh of relief if God forbid something happens.

[krafiq]

Generally Bank offers FIXED or FLOATING plan. This needs to be ascertained before signing the documents. If you have already signed a floating rate contact, then it's Banks right to revise the rates. I have never heard a bank revising down it's rates. It's also possible that very few or none of the banks even offer a fixed rate plan over the tenure of the whole lease period.

[Sarkaar]

Bank is at great advantage when kibor increases as when they give you money it was borrowed by them from statebank in old rates. Even then they always have margin of 4 to 5 points over prevailing discount rate.

[aliahmadsabir]

It's correct. My car is leased by Bank Islami and after 12 installments amount has been increased 2700 Rs. I hope if Kibor rate decrease after next 12 months this amount would be reverted.