Is renting a car a more affordable option than buying?

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  • One of the benefits of leasing a car is that you can change up your ride more regularly because of the shorter financing period. 
  • The downside of leasing is that there is no car ownership after the contract ends. 
  • Another limitation is that there is a cap on how many kilometres you can drive.  

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.

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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 because 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.

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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.

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