Do I really need to buy a car?

Estimated reading time: 10 minute, 59 seconds.

12 February 2018 | Megan MacDonald

Advice on buying a car or rather using alternative transport in South Africa With the growth of apps like Uber and Taxify, is it really worth buying your own car? Here’s how you can decide which transport option best suits your budget and lifestyle.

Buying a car is a big decision which shouldn’t be made impulsively. In fact, apart from your home, it may be one of the biggest purchases you make in your lifetime.

There are many different ways to get around South Africa in 2018. From public transport, to ride sharing apps (like CarTrip, uGoMyWay and Findalift), taxi services, or leasing or owning your own car, it can be hard to choose which option best suits your budget and lifestyle.

Here’s a list of some of the options (other than public transport) available to you, as well as tips to help you evaluate which option suits you best.

Ride sharing

Ride sharing apps like CarTrip, uGoMyWay and Findalift offer people an affordable option for daily travel (such as commuting to and from work). Drivers can offer lifts in the direction that they’re travelling, to help them pay towards the running costs of their vehicle. Passengers can book a ride, along with anyone else heading in the same direction, and together split the cost of the drive. Having three or four passengers per ride dramatically decreases the cost of the trip for everyone, including the driver, and is good for everyone’s carbon footprint. If you’re happy with the group you’ve been travelling with, you can form a permanent carpool arrangement.

Taxi services

Apps like Uber and Taxify give people another relatively affordable (depending on your budget) option for travel, especially for those who aren’t to keen on sharing a trip with a group of strangers. Admittedly, you’ll be paying extra for the added convenience of riding alone, so this may not be an ideal option for getting to and from work if you’re travelling long distances or in heavy traffic.

Apps like these are, however, excellent for young people who spend a lot of time out and about at night. Apart from being convenient and relatively affordable, taxi services offer a safe, sober ride home.

A combination of ride sharing and taxi services is great if you’re a young professional, looking to keep your travel costs as low as possible. It can be limiting because you can’t just jump in your car and head to the shop for an emergency carton of milk, but if you plan your trips wisely and don’t mind sharing trips, it can relieve the stress of taking on rental fees or car finance debt.

Leasing

Leasing is basically a long term rental agreement with a bank (or another financial institution) or a car manufacturer. You’ll sign a contract for a specific length of time (usually between 12 and 72 months), during which period you’ll take temporary ownership of a car. This option is usually better suited to short term rentals as at the end of the lease agreement, you have to hand the car back (unlike buying). Leasing is a good option when interest rates are on the rise, however, if you plan to keep your car for three years or more, you should definitely consider buying instead, as your car will eventually be an asset.

One of the perks of leasing is that your monthly fee usually includes insurance fees and maintenance - both of which would be additional costs to a vehicle owner.

Leasing is more common in businesses than in a personal capacity, as it’s cost effective for fleets, and sometimes results in tax benefits for a company.

Buying

Buying, if you’re going to keep your specific car for at least three to five years, is a good option for individuals, as your car becomes an asset once the finance is paid off. It also gives you independence - so if you’re regularly on the go or often find yourself making a spontaneous trip to the gym, it can be handy to have your own set of wheels.

Pros	Cons
Ride sharing (e.g. CarTrip, uGoMyWay or Findalift)
You don’t need to worry about your credit history or apply for finance. You’re not tied down to a loan or any monthly rental fees. It’s cheaper than running your own vehicle, which costs money each year in fuel, maintenance, licensing, insurance and tolls. With ride sharing, you could pay as little as R20 for a 30km commute - so you’d be looking at around spending only R5 000 to R6 000 per year. You won’t have the stress of having to drive yourself around (e.g. worrying about accidents and insurance). If you travel a lot (for business or pleasure) you won’t have to worry about leaving your car standing at home for weeks on end while you’re away.	Certain jobs require you to have your own vehicle. You’re reliant on your driver, so you may have to tag along while other passengers are being dropped off or collected.
Taxi services (e.g Uber or Taxify)
You don’t need to worry about your credit history or apply for finance. You’re not tied down to a loan or any monthly rental fees. You’re not sharing your ride, so won’t have to make stops for other passengers. You won’t have the stress of having to drive yourself around (e.g. worrying about accidents and insurance). If you travel a lot (for business or pleasure) you won’t have to worry about leaving your car standing at home for weeks on end while you’re away.	Certain jobs require you to have your own vehicle. You’re not sharing the cost of your trip with other passengers as you would be with ride sharing, so the cost per trip will be higher. Travelling long distances or during peak traffic hours will be particularly costly.
Leasing
Having your own car means you’re fully independent to come and go as you please. You can lease a car for a short period. Certain jobs require you to have your own vehicle. You can discontinue your lease if you can’t afford it anymore. You won’t need to worry about trying to sell the car. You can upgrade your rental at any time. You’ll pay less on your monthly rental than on monthly installments of a loan for the same model, allowing you to lease a car that you couldn’t normally afford to buy. If you own a business and are leasing fleet vehicles, you may receive tax benefits. If you travel a lot (for business or pleasure) you won’t have to worry about leaving your car standing at home for weeks on end while you’re away.	Leased vehicles are subject to mileage limitations. If you exceed your annual limitation, you’ll be charged an additional fee per kilometer travelled. You’ll be subject to an audit process upon returning the vehicle, where they evaluate any damage to the car. You’ll have to pay extra for anything that isn’t considered fair wear and tear. You’ll need be responsible for certain monthly costs (like petrol). You’ll need to have somewhere safe to park your car overnight. When leasing, you’ll always have monthly rental fees to worry about. Breaking a lease early can be expensive.
Buying
Once you’ve paid off your loan, your car is an asset - meaning the car is yours to keep. You can use and enjoy it for as long as you want, and you won’t owe any monthly rental fees. You car can be sold for cash or traded in as a deposit on a new car when the time comes. Owning your own car means you’re fully independent to come and go as you please. Certain jobs require you to have your own vehicle. Individuals don’t get tax benefits from leasing (unlike business fleets) so it makes sense for an individual to opt for buying, as the car will become theirs once the finance has been paid in full.	Buying a car is a big financial commitment which often requires a long term loan (e.g. 60 months). You’ll also need to factor in additional monthly costs like car insurance, petrol and maintenance, as well as annual licensing fees. You’ll be driving the same car for a long time. You’d need to trade it in and buy a new car if you wanted a more modern model. You’ll need to have somewhere safe to park your car overnight.

At the end of the day, you need to make the right decision for your particular budget and lifestyle. Owning a car, just like owning a house, comes with certain responsibilities (like remembering to pay your licensing fees every year and taking out insurance), but also some major benefits, like independence, and owning an asset. If you choose to buy a new car, we can help - here is a handy guide to buying a new car.

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