Surprising Benefits of Leasing a Car in SA

Leasing a Car in South Africa Has its Benefits and its Drawbacks

Leasing a car is a big step just like buying a car outright is a big step. You’re still investing in a vehicle. The only difference is that it does not belong to you. There’s a good deal to break down when you’re choosing a lease-to-own car, also known as rent-to-own.
  
As new cars arrive with heavy price tags, South Africans start to feel it. Even the pre-owned car market is feeling it. You get to a point in your life where unaffordable monthly payments and the interest rates take the fun out of car shopping. But, as the car market changes, there might be a solution for you afterall.
 
There is a big difference between buying a new car and renting-to-own. From discussing how a lease works, what the benefits of renting-to-own are, and how to lease a car in South Africa, the goal is to understand what option would work best for you as a car owner. 

How Does a Lease-to-Own Car Work?

How to Lease a Car in South Africa

As a car loving country that South Africa is, a lot of people are opting to change ownership far more frequently. 

A lease-to-own or rent-to-own agreement is a type of financing that allows an individual to use a vehicle for a specific time period (which is normally set according to the financial provider). 
Depending on your agreement and how much you still owe, you can opt to buy the vehicle at the end of the contract. Until then, your provider owns the vehicle for the lease period. Think of it as an alternative to traditional car ownership. 

A car lease agreement will outline the terms and conditions, which includes the duration, mileage restrictions, and monthly payments. You might also be required to make a down payment or pay a “drive-off fee.” 

Once you return the vehicle, someone will come and inspect for damage. 

Leasing a Car vs Financing 

To Buy or Lease a Car 

The million-dollar question on most prospects' minds is whether to buy or lease a car. The answer is pretty straightforward, the way you go about owning a vehicle comes down to budget and overall financial behaviour.

Most people will opt to finance their car, especially if it’s fairly new. The more luxurious the car, chances are that it’s financed, not always, but most of the time. 

The difference between leasing and financing are like apples and oranges. So, this is a good time like any to use your lifestyle as a benchmark for leasing or financing a vehicle. For example, if you meet the credit requirements and really want the car then and there, financing is an option. However, if you’re the type of person who enjoys driving new cars every few years and don’t want the depreciation attached, leasing is a good way to go. 

The Benefits of Leasing a Car

At the very end of your agreement, you can choose to return it and lease another vehicle, or you can pay the remaining value of the car and make it yours to keep. 

Other benefits include: 

• Affordable: You won’t have to pay off the full amount. Instead, you can pay a deposit and regular lease payments. 
• Flexible: You have access to newer vehicles every few years without the commitment to a vehicle long-term. 
• Predictable: Fixed, monthly payments are set throughout the agreement, making it easier for you to budget in other areas. 
• Avoid depreciation: The risk that comes with ownership is not an issue with leasing, unless you decide to buy the car at the end of your lease.
• Tax rebates: If you’re using the vehicle for business, you can claim back on tax the leasing costs. To explore options, it’s best to have a chat with your financial advisor. 

The Downside

There must be a slight downside to this, right? There are a few to consider.

• You have to deal with mileage limits which means you’re limited to the amount of miles you drive each year that comes with an additional cost. This is not ideal for frequent drivers or those who travel long-distances. 
• Additional costs and fees might be included in the agreement.
• You cannot customise or make any changes to the car. 

The Bottom Line: Is it Worth It?

Is it worth leasing a car? Well, several things come to mind. Ask these questions: 

Do you drive long distances or on the road frequently?

Are you conscious about your monthly spending?

How important is driving a new car to you?

Whether you’re a business owner or individual that’s trading in for something less long-term, leasing to own might be the best option for you. However, if you’re set on owning a vehicle from the get-go and have the credit to finance a vehicle, buying outright or financing is a safer option.