Deciding whether to lease or buy a car? Learn about the key differences, pros, and cons to help you make the best choice for your budget and driving needs.
The debate between buying and leasing a car is always a hot topic, especially when everyone’s looking for ways to save. Making the right choice depends on your budget and what suits your lifestyle. We’re here to break down the pros and cons of each, so you can figure out which option works best for you.
First, let’s clarify the difference between leasing and buying:
- Leasing a car is essentially like renting it for a specific period, usually a few years, with no ownership at the end.
- Buying a car means you’re paying to own it, either upfront or with monthly payments, and as you pay it off, you own more of the car, i.e., building equity.
The upfront costs of buying a car vs. leasing a car
When buying a car, there’s often a deposit involved. While you don’t always have to pay one, most people put down around 10% of the car’s price to make their monthly instalments a bit lighter. For example, if you’re eyeing a car that costs R300,000, expect to pay about R30,000 upfront. But don't forget extra fees like registration, licensing, and sometimes even a delivery charge. There’s also the option of a balloon payment, which means you pay a big chunk at the end to keep those monthly payments lower. Just be mindful to read the contract with a fine-toothed comb.
If you’re thinking about leasing, your initial payment is usually smaller. Instead of a big deposit, you might only need to put down the equivalent of a few months’ lease payments. If the lease costs R5,000 a month, you're looking at roughly R15,000 upfront. Some leases include perks like maintenance or insurance in that payment, which can save you more money right off the bat.
Which option is easier on the wallet when it comes to monthly payments and long-term?
When you buy a car, the monthly payments are usually higher because you're paying off the full value of the car (plus interest). The upside? Once the loan is paid off, the car is yours — no more monthly payments, just ongoing costs like insurance, maintenance, and fuel. Plus, after several years, you can sell the car and recoup some of that money. However, older cars tend to need more upkeep, so you’ll need to budget for maintenance down the line.
Leasing, on the other hand, usually means lower monthly payments since you’re only paying to use the car, not to own it. This can free up some cash in your budget every month, but you never actually stop making payments. Once the lease ends, you either start a new lease or buy a car, leading to more long-term costs. The bright side? You’re often driving a newer car under warranty, which means fewer surprise repair bills.
How much freedom do you have when it comes to mileage, customisation and maintenance?
When you buy a car, you have full control. You can drive as much as you want with no mileage limits — perfect for long road trips or daily commutes. You’re also free to customise your car however you like, from new rims to upgraded sound systems. And once it’s yours, you can sell or trade in the car whenever you’re ready. However, keep in mind that after the warranty expires, you’ll be responsible for all maintenance and servicing costs, so it’s important to budget for that.
With leasing, there are a few more limitations. Leases often come with mileage caps, typically between 15,000 to 25,000 kilometres per year. Exceeding these limits can lead to additional fees, which can add up if you drive a lot. On the plus side, maintenance and servicing are often covered under warranty, meaning fewer unexpected repair bills. Leasing also makes it easy to switch to a new car every few years, but you won’t be able to modify the car, and you never actually own it.
Pros and cons of buying a car
Pros:
- You own the car once it’s paid off.
- No more monthly payments after the loan.
- Drive as much as you like, with no mileage limits.
- Customise your car however you want.
- You can sell it later and get some money back.
Cons:
- The value of the car drops over time.
- You’re responsible for all maintenance and repairs once the warranty expires.
- Interest adds up, increasing the total cost of the car.
- Selling the car can be time-consuming.
Pros and cons of leasing a car
Pros:
- Lower monthly payments.
- Drive a new car every few years.
- Repairs are often covered under warranty.
- Get the latest tech and safety features.
Cons:
- You don’t own the car at the end.
- Mileage limits could mean extra fees.
- Always making monthly payments.
- Lease agreements can be complicated.
So, what’s the best option for you?
Deciding whether to lease or buy a car depends on your lifestyle, driving habits, and financial situation.
- Leasing is great if you want lower monthly payments, like driving a new car with the latest tech every few years, and don’t want the hassle of selling an old car.
- Buying is the way to go if you want to own your car, drive as much as you want, customise it, and eventually have an asset you can sell or trade-in.
No matter which route you take, you can always choose who insures your new ride. Get a car insurance quote from Naked in as little as 90 seconds and buy right from the dealership floor if the price works for you.
