This is a new option in SA – it’s a lot like a long-term car hire agreement between you and the financial institution, but instead of owning the car at the end of it, you give it back.
The monthly payment on a lease is often lower than on a car loan, with most lease agreements lasting for two to three years. If you choose to return the car after this period, you can lease a new one for another two or three years.
If you want to keep the car, you can pay the residual still owing on the car or get it financed.
There’s some admin involved too. At the beginning of the lease you need to declare how many kilometres you’ll drive each year. If you go over that, you’ll have to pay for the difference.
When you return the car, it will get checked with a fine-toothed comb for dents, scratches or any other damage. You will need to pay for whatever the auditor doesn’t see as fair wear and tear – the expected damage on a car over a certain amount of time.
If you own a business, you can claim tax benefits against your car lease. This makes a big difference when your business makes use of more than one car.
This may be a good option if driving a new car every few years is important for you. It might work out cheaper than buying a car and trading it in for a new one before the end of your finance agreement. But if you’re going to put a lot of mileage on the car or you’ll be taking it on rough roads, this probably wouldn’t be your best choice.