What’s Up With Car Leasing In South Africa?

3 min readJul 22, 2022

For years South Africans preferred car ownership to leasing — but that trend is rapidly changing as people come to discover the benefits of leasing. But what exactly is car leasing and how does it work?

Car leasing is effectively a type of auto financing that allows you to “rent” a car from a dealership for a certain amount of time. You’ll typically make monthly payments to lease the vehicle, and in exchange the dealer allows you to drive it. At the end of the lease period, you’ll likely return the vehicle to the dealership; or sometimes, you have the option to buy the vehicle.

You’ll typically need a good credit score to lease a vehicle. (Bad score? No worries! We can help). For now, let’s unpack the pros and cons of car leasing.

  • No long-term contracts: Lease contracts are typically structured for shorter terms — anywhere from 3–36 months. A vehicle finance contract, on the other hand, can be between 12 and 72 months (but is typically at 72), depending on your budget.
  • Lower monthly payments: Monthly payments on a car lease may be significantly less than the payment you’ll incur if you’d gone and financed a loan on the same vehicle — it might 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.
  • Less admin: You don’t need to worry about services, maintenance or insurance costs because it’s all covered in your monthly fee.
  • More freedom: With a lease, you have more choice and flexibility -especially when it comes to end of agreement options.
  • No balloon payments: these are scary and not nearly as festive as they sound.
  • Mileage limitations: Oftentimes you will be charged an additional fee if you exceed your annual mileage. The charge will vary according to the vehicle you’ve chosen to lease but this can be limiting if you’re on the road more often than not.
  • Audit process on return: Of course, when you hand the car back after you’ve used it, it will need to go through various checks; at which point you may incur a cost for excessive wear and tear to the vehicle while it was in your possession.
  • Early cancellation penalty: Most car leasing companies hit you with a hefty fee for exiting the short-term contract early.

When is leasing NOT right for you? You might want to consider going the traditional finance route or buying a car outright if any of the following strongly applies to you:

  • If you’re hard on cars and particularly accident-prone
  • If you want to keep the same car for many years to come and don’t predict any changes in your lifestyle in the coming years
  • If you can afford to and prefer to own a car outright with no debt or monthly repayments
  • If you consistently put a great amount of mileage on your car

The beauty of a subscription through FlexClub is that it’s the sweet spot between leasing and buying. You have more flexibility and choice through FlexClub than most car leasing companies. You’re not tied down to any long-term contract and you’re able to pause, swap, upgrade or cancel your vehicle subscription at no extra cost. Experience the free financial freedom of a FlexClub subscription account today.

Originally published at https://blog1.flexclub.co.za.




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