Leasing a car may be a better option than buying. It all depends on personal, career or lifestyle choices.
"Leasing may work for a person who wants to drive a new car every few years, with benefits such as safety and maintenance included," said Nicholas du Toit, of Pace Car Rental.
"You should also consider it if you don't want to own a car, but want the flexibility of using a car only when you need one," added Raymond Selokela of Around About Cars.
Additionally, at the end of the lease contract, you can sign a new contract, walk away or settle the remaining value of the car to own it.
However, this may not be the ideal option for you if your prefer to own a car debt-free and are accident prone, noted Alpha Wealth, a financial services company that conducted research in 2016 on leasing versus buying a car in South Africa.
Here are leasing pros to consider:
1. Monthly payments may be significantly lower than than loan repayments. "It may actually cost less to lease a new car over a short period of time than it would cost to buy the same car and trade it in," Alpha Wealth noted.
2. It may be more cost-effective as there are no balloon payments or trade-in and resale risks, pointed out du Toit.
3. Service and maintenance are included for the duration of the lease. "You don't have to physically look after the car. Any reasonable damage does not come out of your pocket," Du Toit told HuffPost SA.
4. You have the opportunity to drive a new car more frequently as lease contracts are structured for a shorter period.
Here are some cons:
1. You will always have car repayments.
2. You select your annual mileage prior to driving off with the car -- and should you exceed the mileage limitation, you will be fined per additional kilometre driven.
3. The inspection process of returning a leased car is very strict. Any damages not considered "normal", you will be charged for.
4. Getting out of a lease can be very expensive. This is why Alpha Wealth advises that, before entering into a lease agreement, you clearly understand the terms and conditions of the leasing process, including early termination.
Selokela believes short-term rental and leasing car companies are the future. "If we had an efficient public transport system in South Africa, we'd probably see more and more people renting out cars on the short or longer term because it's cheaper, reliable and you are not paying for one depreciating car for six or seven years."