BUYING VS LEASING

More motorists are choosing to rent a car, as opposed to buying one. We zoom in on this new phenomenom

Buying a car may be relatively easier than purchasing a house, because there are none of those dreaded transfer costs to factor in. But is it worth the hassle? Leasing a car is slowly becoming popular among those who want the convenience of a whip, sans the monthly repayments (and car insurance and maintenance plan) that come with it.

Ghana Msibi, executive head of WesBank Motor, says he understands why there’s a rise in car leasing. “Consumers are becoming more financially savvy and understand that a car is a depreciating purchase. Most finance deals are done over 72 months, yet hardly any customers keep their cars for that long,” he explains.

SOME OF THE ADVANTAGES OF LEASING INCLUDE:

1. You can drive a new car more regularly. A normal sales contract is limiting, because you drive that car until it’s paid off. By renting, you can reduce the term of a contract, allowing you to select a newer model should you wish to.

2. Affordable instalments, as you only pay for the time you use the car. 3. A shorter financing contract. 4. Car insurance can be built into your lease contract, reducing car-related debit orders.

However, there are disadvantages to this method. Msibi cautions: “There is no car ownership when the contract ends.” Rental contracts also have Ts&Cs, which you must adhere to, or you’ll be charged additional levies, he adds. Some limitations include a cap on how many kilometres you can drive the leased car for, and a termination fee that you must pay upfront, should you decide to return the car before the lease expires.

Msibi also shares that there’s no set cost on leasing a car. Each case is treated individually. “Your credit profile, value of the car you want to rent, and interest rates are considered before a car is leased to you,” he adds. Because the value of a car depreciates, leasing might be the most financially-savvy option.

If you’re interested, Msibi suggests approaching a bank, reputable car dealer or manufacturer to tailor-make a contract for you.