If you’ve ever tried to decide between renting and buying a car in South Africa, you’ll know it’s about as easy as choosing a restaurant with a group of hungry friends. Both options have their pros and cons, and the right choice depends on your lifestyle, budget, and how much you actually like dealing with car maintenance and financing paperwork.
To help you decide, we’ve put together a straightforward guide comparing the costs, benefits, and potential downsides of renting versus buying a car in SA.
The basics: What’s the difference?
When you buy a car, either with cash or through financing, it’s yours to keep (or sell). You’re responsible for everything, from the insurance and maintenance to the licensing, and that weird noise it makes when you turn left.
Renting a car, which is also referred to as leasing, means you get to drive a car for a fixed monthly fee without actually owning it. Most rental agreements cover maintenance, insurance, and licensing. At the end of the lease, you simply return the car and either lease a new 1 or walk away.
So, which 1 wins? Let’s see how they stack up.
Upfront and monthly costs: The financial reality
Look, whether you’re thinking of buying or renting a car, there will be a few costs that you need to add up before you make your choice.
Let’s review the numbers if you buy:
- Upfront costs: Usually requires a deposit, typically 10% to 20% of the car’s price. On a R250,000 car, that’s between R25,000 and R50,000.
- Monthly payments: Varies based on your loan term and interest rate, but for a R200,000 car over 5 years at 10% interest, you could pay around R4,250pm.
- Car insurance: Comprehensive cover is a must if financed, costing anywhere from R500 to R10,000 per month.
- Maintenance: Out-of-pocket unless you have a service plan.
And here are the numbers if you rent:
- Upfront costs: While a deposit could be needed, it’s usually lower than buying (often around 1 or 2 months’ rental).
- Monthly payments: A fixed monthly fee that includes insurance, maintenance, and sometimes even tyres, so for a R200,000 car you might pay R6,000pm.
- Car insurance: Included with your rental fee.
- Maintenance: Covered by the rental company.
From a purely price point of view, it does look like renting is less demanding upfront and simplifies your budget. That said, if you get a good deal on financing then buying could cost less per month.
Depreciation (the silent wallet killer)
If you’re buying, it’s worth knowing that cars tend to lose 15% to 20% of their value each year. This means that after 5 years, a R300,000 car could be worth less than R150,000. Since you own the car, you absorb this loss. Doesn’t that just hit you deep in the feels of your wallet.
But if you opt to rent, the loss of value is the rental company’s problem. This makes renting a smart choice if you love that new-car smell every few years without worrying about resale value.
We’d say that if you’re deciding on a winner, the renting route takes this round.
Got commitment issues
Selling a car is a hassle, and early repayment on financed cars might include penalties. Plus, good luck explaining your scratched bumper to prospective buyers. If you’re renting, then you might have a bit more flexibility. You can return the car at the end of the lease without worrying about selling it or losing money on depreciation. Some leases even allow you to upgrade or switch cars every 24 – 36 months.
The thing is, some rental agencies have strict rules about how you treat and use the car, so if you go over the agreed mileage, then either you’ll be expected to pay for the car or pay a huge penalty.
Long-term costs
While monthly payments might be lower, owning a car long-term can lead to hefty costs, like maintenance bills. For example, after the service plan expires, you’ll have to pay out of pocket for everything from brake pads to engine parts. Renting is no shortcut, though, as you’ll be paying higher monthly payments to cover insurance, maintenance, and licensing.
The winner? Buying is cheaper long-term if you can handle the maintenance costs. There’s always the king’s warranty cover and other extended plans on the market to get around that, though. Of course, renting could be better if you value convenience and budget predictability.
Tax benefits (the cherry on top)
When you buy a car, you can’t claim these costs as a tax deduction unless you’re self-employed or use your car for business purposes. Even then, you’ll need a logbook and proof of expenses. It’s a whole thing. But renting? Well, rental payments are tax-deductible for businesses, which makes this a smart choice if you’re a freelancer, entrepreneur, or self-employed.
So, what’s the verdict
We’d say that you should look at buying if you drive a lot and plan to keep the car for more than 5 years, if you want lower long-term costs and don’t mind dealing with maintenance and depreciation, and if you can afford the upfront payment and higher maintenance bills after the service plan expires… Or a warranty policy (ours are flipping affordable).
Renting is an option for the mense who want lower upfront costs and fixed monthly payments, the benefit of driving a new car every few years without worrying about selling it, and are self-employed and want to take advantage of tax deductions.
At the end of the day, the real deciding factor is you. You have to go with what you can afford and what you want to do. All that we can do is give you the info, and remind you that whichever route you choose, we’ll be there for you with car insurance that you can be sure-sure about.
If you want us to be there for you, WhatsApp us on 0860 50 50 50 or click here for a commitment-free quote.