Are you in the market for a car? Ever thought about leasing? asks Keith Watson, Managing Director of Ariva.
Most consumers in South Africa – particularly those who may not have a substantial business or finance acumen – look at buying a car as investing in an asset. However, the reality is that the good old days of financing a car and then settling it before the end of contract term and making a profit on the vehicle has all but disappeared.
In truth, very few consumers today ever actually ‘own’ the car they buy as there are still relatively high percentages of consumers selling or trading in their cars in after 36-40 months – and well before the end of their instalment contract term.
These consumers are effectively leasing their car, but from the bank, which also means that the consumer takes on the all additional costs associated with the full cost of ownership, as well as the vehicle depreciation risks. Why then would you want to take on the expense and risks of a depreciating asset – especially when the bank is still the title holder?
If you are looking at getting a new car, perhaps start with asking yourself one key question; “Do you plan on keeping and driving this same car for the next 6-10 years?”
