Ask the Mechanic: Can I go for car leasing or outright purchase?

Hello Juliet, the decision to lease, finance or outright purchase as a means to own a car will depend on your individual preferences and financial fortunes. Leasing gives you the benefit of driving a new car with all the latest technology while making lower, manageable monthly payments compared to financing for outright purchase. Leasing protects you against depreciation or loss of value of the car, which is usually 15 to 20 percent per annum from the day you drive out of the showroom. Vehicle leasing also protects you against depreciation as well as low resale value.

However, car leasing also comes with some disadvantages. For example, you do not get to own the car at the end of the lease. It also has restrictions on mileage (return the car at 50,000kms) or how and where you can use the car. The car leasing arrangement can also restrict how fast you should drive. You may be required to limit time of use, such as not driving beyond midnight outside the country. The leasing arrangement may require that the car has a tracking device fitted to monitor where you go and how you drive.

This can prove intrusive. Leasing may not save you money if you still have uncontrolled running costs such as fuel. Depending on how you drive your new car, the insurance premium may increase the cost during lease renewal due to accidents or risks such as theft of costly parts. Outright purchase avoids leasing charges and interest on payments.

However, money is tied in the car. Consider the pros and cons of car leasing against your budget, financial position and aspirations for the car you want to buy. This will guide you as you choose whether you want to lease a car or out rightly purchase to own.