Renting a car vs owning it

2013-05-04 00:00

SOUTH Africa has three kinds of car buyers: the new-car buyer, the used-car buyer, and the person who doesn’t qualify for a loan on a car, but can afford to rent one.

Often, the renter has no choice in the matter, because the banks do not consider the person credit worthy due to a past black listing or, ironically, no credit record.

There are so many people in this segment that two JSE-listed companies, JD Group and Imperial Holdings, last year launched Ariva, a copany that leases wheels to people who cannot get vehicle finance from a bank. Imperial executive director Manny de Canha said at the launch of Ariva that almost half (44%) of all people applying for vehicle finance are turned down, while only one in four first-time applicants get a loan.

It is for the other three people that Ariva’s website states the company is “specifically incorporated to bring affordable motoring to the South African public”.

In the case of a Kia Picanto, an Ariva customer gets to pay about R1 400 less to rent the car compared to buying it, all costs included. The customer pays one month’s rental as a refundable deposit, signs a debit order for a fixed monthly fee and pledges not to drive more than

25 000 km a year. Upon return of the vehicle in a good condition, the customer is awarded a R1 000 cash bonus. Included in the deal are comprehensive insurance and vehicl- tracking services, with 24/7 roadside assistance, all of which gives as much reassurance to the customer as it does to Ariva, which after all is said and done, remains the vehicle owner. When the lease ends, the group also offers a bonus reward and the deposit, plus interest, if the car is returned in good condition.

The company warns, however, that the cost of repairs for any damage, excess mileage and insurance excess, will be deducted from the deposit. With most of the deals signed for 54 months time will tell how much Ariva will be deducting at the end of a contract. A company that has proven itself is Key Group.

The company has been living up to its slogan “driven by you” by letting out cars to customers for several years. The site, states that Key Group Pietermaritzburg in 2012 had won the Customer Satisfaction Index, Dealer of the Year and Top Six Major Dealer of the Year awards. Dion Scannell, Car Rental manager at Key Group, explains that their business model differs from Ariva in that they typically rent out a car from a day to a month, with mileage and daily rates that are slightly lower than what most car rental agencies charge.

It is not cheap on the long run but very popular with business people who fly in for contract work, or families who need to get to a faraway funeral. Key Group requires a deposit between R7 500 and R10 000 on credit cards.

Dion thinks the secret for their success is that their staff pay very close attention to each customer.

“We use a relationship, not a system, when we decide whether to entrust you with our assets. People respond very well when trusted by us when various banks didn’t,” he said.

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