New research from financial services company, AlphaWealth, highlights the advantages – and disadvantages – of leasing a vehicle in South Africa.<\/p>\n
While vehicle leasing is a relatively new concept in the country, almost a third of consumers choose the option in the US.<\/p>\n
Leasing is seen as a more attractive option over buying a car amid rising interest rates, rising petrol prices, inflation and a generally challenging economic climate.<\/p>\n
South Africans tend to follow a more tradition financing model when it comes to purchasing cars they borrow money from the bank to make the purchase.<\/p>\n
However, according to financiers such as Absa and WesBank, leasing is gaining popularity, especially in the higher-end premium brand market.<\/p>\n
One key difference between leasing and a purchasing is that the motorist will not own the vehicle at the end of the lease term.<\/p>\n
Lease contracts are typically structured for shorter terms \u2013 36 months \u2013 while a vehicle finance contract can be between 12 and 72 months, depending on the buyer\u2019s affordability.<\/p>\n
Dale Scorer, Wealth manager at AlphaWealth, has broken down the advantages and disadvantages that come with leasing a vehicle.<\/p>\n
According to Scorer, there are a few things prospective lessors <\/span> need to know about their deal:<\/p>\n “At the beginning of the lease you need to select your annual mileage and it\u2019s important you get this number correct as any excess mileage will be charged for,” she said.<\/p>\n “It is also exceptionally important that before entering into a lease agreement, you fully understand the terms, early termination policies and price calculations.”<\/p>\n Leasing vs buying: the cost<\/strong><\/p>\n As an example, the group looked at a Mercedes A-Class 200 Automatic<\/strong>, with a purchase cost of R437,450.<\/p>\n Assuming a deposit of 12.75%, proposed km\/annum of 20,000, and a lease and finance rate at prime, a 36 monthly repayment works out at:<\/p>\n At the end of the agreement, a leaser can sign a new contract, return the car and walk away, or settle the guaranteed future value and take ownership.<\/p>\n A purchaser will own the vehicle, or can trade it in.<\/p>\n These are the advantages and disadvantages of leasing, according to AlphaWealth.<\/p>\n The advantages of leasing<\/strong><\/p>\n The disadvantages of leasing<\/strong><\/p>\n Make sure you consider:<\/p>\n “Leasing tends to be a more favourable option if you are the type of person that owns a new car every 3 – 5 years, either before it is paid off or once you can use the trade in for a deposit on a new car,” Scorer said.<\/p>\n “However, if you tend to be hard on cars, if you are ‘accident prone’, if you prefer owning a car debt free, or put a great amount of mileage on your car, leasing is probably not for you,” she said.<\/p>\n Buying vs leasing a car in South Africa<\/a><\/strong><\/p>\n How to build a 1,600 km\/h car \u2013 by the scientists behind it<\/a><\/strong><\/p>\n These are the cheapest cars for sale in South Africa right now<\/a><\/strong><\/p>\n\n
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