Articles | Buying vs. Leasing a Car in South Africa: Drive More Benefits with Ariva
More and more South African consumers are becoming aware of the downfalls of financing a depreciating asset when buying a new or used car. Among South Africans, the term “car leasing” is often confused with short-term car hire services, corporate full maintenance lease fleets, or it is a completely unfamiliar term. At Merchant West, we empower our clients by giving them broader, forward-thinking financing options, such as our highly innovative and flexible car leasing solution, powered by our private vehicle leasing division – Ariva.
When looking at buying vs leasing a car in South Africa, which option may be the smarter choice for you and your finances?
What is Car Leasing?
Private Car leasing, is the individual consumer-focussed leasing of a vehicle for personal use for a fixed period of time, at a fixed monthly rate. Once the leasing contract ends, the car is returned to the car leasing service dealership where the client may apply for a new vehicle or extend the lease term for the current vehicle. The range of vehicles available for leasing are dependent on the individual service provider, but include a wide variety of new and used brands.
Why Consider Leasing, When I Can Buy My Own Vehicle?
Buying a car using traditional vehicle finance mechanisms can become an expensive exercise which does not often justify your purchase. Traditional vehicle finance structures (Instalment sale agreements) often lead to additional costs along the line, with the original purchase price being affected by inflation, interest rate fluctuations, increasing insurance premiums, and unexpected maintenance bills; all for a depreciating asset. Some of these instalment sale agreements may also include a substantial “balloon payment” structure, which requires the settlement of a large percentage of the original purchase price to be paid in full at the end of the contract, in order to realise full ownership of the vehicle. These costly factors, as well as the fact that you have to do all the painful admin of insurance claims and service planning by yourself, may have you wondering what smarter alternatives are available.
What Are the Benefits of Leasing Over Buying?
Similar to the benefits of asset finance, leasing a car on a vehicle lease agreement is easy and cost effective, and offers many benefits above buying. With Ariva, these benefits include:
- There is no depreciation risk
- You are provided with a single, fixed monthly payment that is not impacted by inflation, interest rate fluctuations or resale value risks.
- For the duration of the lease period, this fixed monthly payment includes:
- A Full Maintenance Plan
- Comprehensive insurance, including 3rd party coverage
- Vehicle tracking and recovery
- 24-hour roadside assistance
- Value add-ons such as service bookings on your behalf.
- At the end of the lease period you have a number of options:
- You can hand the vehicle back without any further obligations, or;
- You can switch the car for a newer or better model, or;
- You can extend the term and continue to drive the car, or;
- You can exercise your option to buy the car at the current market value.
Get more budget-savvy and realise the possibilities of car leasing so that you can make the smart choice and drive with minimum risk and maximum benefits.
Contact Ariva today to find out more about this simple, smart and easy way to get into your new car, at the most optimum financial structure, tailor made for you.
Visit www.ariva.co.za for more information.