Quick answer: Rent-to-own lets you drive a car now by paying a deposit and monthly instalments, with the option to own the car at the end of the agreement. It can suit people who cannot get vehicle finance from a bank, but you generally pay more over the full term than you would by buying outright, and you do not own the car until the agreement ends.
Before you sign, compare the total cost, read the fees for late payment and early termination, and check what is included such as insurance, tracking and roadside assistance.
What is rent-to-own for cars?
Rent-to-own (sometimes called a lease-purchase agreement) is a contract where you pay a deposit and fixed monthly amounts for a set term and take ownership of the vehicle at the end. Terms vary by provider, commonly from a few years up to about five. Because the provider owns the car during the agreement, these deals are often used by people who do not qualify for traditional vehicle finance.
New Heights Finance is a finance broker, not a lender or a vehicle dealer. Through our rent-to-own cars referral service, we introduce you to specialist rent-to-own providers. The provider sets the final terms.
Rent-to-own vs bank vehicle finance
Feature
Rent-to-own
Bank vehicle finance
Credit requirements
Often more flexible
Usually strict credit checks
Ownership
At the end of the agreement
Yours, with the bank holding a lien until paid
Total cost
Usually higher over the term
Usually lower if you qualify
Deposit
Fixed deposit, provider-set
Varies, can be low or none
Extras (insurance, tracking)
Often bundled in
Usually paid for separately
Customisation
Typically restricted
Generally allowed
Pros of rent-to-own
Access without a strong credit record. Providers assess affordability and stability differently to banks.
Predictable monthly payments. Fixed instalments make budgeting easier.
Bundled extras. Many agreements include insurance, vehicle tracking and roadside or medical assistance you might otherwise struggle to afford.
Possible business tax treatment. If the vehicle is used for business, the rental may be deductible and VAT-registered businesses may be able to claim VAT. This depends on your circumstances, so confirm it with a registered tax practitioner.
Cons and risks
Higher total cost. Interest and fees are often higher than bank finance, so you usually pay more than the car’s price.
Long commitment. Contracts can run for several years, which limits your flexibility to trade in or upgrade.
Fees in the fine print. Late payment and early termination charges vary between providers, so read every clause and ask for all fees in writing before you sign.
No ownership until the end. If you stop paying, you can lose both the car and what you have paid.
Limited customisation. Tinted windows, custom rims and similar changes are typically not allowed.
Typical requirements and terms
Requirements are set by the provider, but the agreements we refer clients to typically look like this. Treat it as a guide, not an offer.
Item
Typical requirement
Agreement length
Around 60 months, with the option to take ownership at the end
Deposit
Roughly R12,000 to R15,000
Monthly repayments
You should be able to afford roughly R3,500 to R5,000 per month
Driver’s licence
Valid licence held for more than five years
Age
Male drivers usually need to be over 25 for insurance purposes
Record
A clear criminal record
Included
Insurance, vehicle tracking and medical assistance
How to choose the right deal
Compare at least three providers on the total amount payable, not just the monthly instalment.
Ask what happens if you cannot keep paying, including whether you can hand the car back.
Confirm servicing, maintenance and insurance excess costs.
Read the full contract and get all fees in writing before signing.
FAQs
Is rent-to-own cheaper than a bank loan?
Usually not. Rent-to-own tends to cost more over the whole term, but it may be available when bank finance is not.
Do I own the car during a rent-to-own agreement?
No. The provider owns the vehicle until the agreement is completed and ownership is transferred to you.
Can I return the car if my circumstances change?
That depends on the provider’s terms. Ask specifically about early termination and any fees before signing.
Does New Heights Finance provide the cars?
No. We are a broker and referral service that introduces you to rent-to-own providers. The provider sets the final terms, and acceptance is never guaranteed.
Understand the pros and cons of solar equipment leasing
While the upfront cost of solar panels may be too much for some homeowners, the potential benefits are worth it. Going solar can increase home value by 4%, and save you thousands in energy costs. However, giving up ownership means giving up a share of your profits from going solar. Some people find it more advantageous to instead lease their panels, rather than buy them outright. Here are six pros and cons of leasing solar panels so that you can decide whether this is a good investment for your home.
Understand how solar panel leasing works
Solar panel leases provide the opportunity for people in solar-friendly jurisdictions to produce their own electricity without investing their capital. You just pay for it according to a monthly agreement, and there are many pros of this sort of lease that make the cons nearly negligible.
The Pros of Solar Equipment Leasing
There are many benefits to renting, as well as good reasons for leasing. Building tenants often seek out a lease option due to the flexibility and convenience it can provide, especially if the tenant does not enjoy a high credit score or has no collateral to apply for a business loan to cover the upfront costs.
Benefits of Solar Leasing
Avoiding Installation Costs
The average cost of solar installations for a business start at around R500k for a small system, however, the price will fluctuate depending on how much energy your business consumes.
If you don’t want to make a large upfront investment in solar panels, you can instead pay for their use over time.
Avoid Maintenance Costs
Some leasing programs include free installation, maintenance, monitoring, and warranties on the rented panels to make it easy for business owners to enjoy the benefits of solar energy without the above hassles.
Your solar panel efficacy is guaranteed through your lease agreement. When you own solar panels, you will notice higher repair costs once the warranties expire due to prolonged wear and tear.
Potential cons to solar leasing are harder to identify than the benefits. As with any major decision, it is important to have all your bases covered before signing on the dotted line.
It can be costlier
Though you can save money when you lease a solar panel instead of buying one, renting an asset means you’ll pay more over time. The best way to enjoy the most savings with solar panels is to buy it outright. But if that is going to seriously impact your cash flow or you don’t plan on owning the premises past the end of the rental period, it does not make financial sense to buy the panels outright so therefore leasing is the better option.
It can take up to 25 years to pay off a solar power installation and enjoy completely free electricity, whereas with solar leasing, cheaper tariffs are realised much faster.
Tax Rebate
Buying a solar panel system outright does provide more tax incentives for your business but leasing can also be a tax write off because it is a tax deductible expense.
Can Potentially Impact Resale Value of Business Premises
Leases are long-term obligations, so regular prospective property buyers might not like a business property because they don’t want a lease. However, our flexible equipment rental agreements allow for flexible rental periods and terms, so if you are planning to sell and the contract period is ending, the system can be removed if the new owner is not interested in continuing the lease agreement.
Missing out on the ROI
Buying solar panels will help you make a return on your investment when you sell the property. However, the benefits of enjoying solar power maintenance free greatly outweighs this small drawback.
The major benefits of solar leasing certainly outweigh the cons, especially if your business does not have the capital to invest in the upfront costs of solar leasing or you have multiple premises that would make solar ownership unfeasible. Apply for solar equipment finance on our website.
Car dealerships in the 21st century have to promote and market their services to a variety of audiences in order to stay competitive. As the digital age has increased the use of technology, car dealerships have had to adapt to the needs of their customers.
Pre-owned Car Dealership Marketing Ideas
When marketing a used-car dealership, you need to think outside the box but at the same time, be logical about your approach.
Have a strong web presence. This is where most car buyers start their search. Make sure your website is easy to navigate, your inventory is up to date, and you have a strong online presence across social mediaplatforms.
Use targeted advertising. Use targeted ads to reach potential car buyers who are looking for a specific type of vehicle.
Get involved in the community. Sponsoring local events and partnering with local organizations can help expose your dealership to potential car buyers.
Offer incentives. Run promotions and offer incentives (like a free oil change with a car purchase, for example) to get people interested in buying a car from your dealership.
Train your sales staff. Make sure your sal
Today, more and more customers are turning to the internet to research and buy products and services. This is especially true for big ticket items like cars. In order to compete in the online car market, dealers need to have a strong online presence, including a well-optimized website and a robust social media strategy.
One of the most important elements of a successful online car marketing strategy is customer reviews. Online reviews are a powerful tool that can help build trust with potential customers. In fact, according to a study by BrightLocal, 88 percent of consumers trust online reviews as much as personal recommendations.
There are a few things dealers can do to encourage customers to write online reviews:
-Include a request for reviews on your website and in your email signature
-Make it easy for customers to write reviews by providing a link to your review page
-Thank customers for writing reviews and share the positive reviews on your website and social media pages
By taking these simple steps, dealers can generate more online reviews and build trust with potential customers. es staff is knowledgeable about the vehicles you sell and can answer any questions potential buyers may have.
1. Think Local
Used car dealerships should create marketing campaigns that focuses on their specific geographic area. This could include radio ads, billboards, lamp post flyers, adverts in community magazines and handing out flyers at the local car washes, tyre fitment centres and so forth.
It can also be worthwhile to get involved in the local community and start making a name for yourself. Used car dealerships should sponsor local events to create positive associations with the dealership and increase local awareness.
2. Make It Incredibly Easy for People to Find You
First step to reaching your target market is by setting up an optimised Google My Business listing. It is worth hiring a professional SEO specialist to do this on your behalf. A Google My Business listing will help people searching for a used car dealership in their area find you.
You should also have a website that includes clear directions on how to find you and better still a Google Maps pin people can simply click to be directed straight to you on their journey. Make sure your website is mobile-friendly and not important text like your address and contact details is obscured.
3. Develop an Omnichannel Ad Strategy
Used car dealerships should develop an omnichannel ad strategy to connect with potential customers. This should include a mix of digital and traditional marketing methods, such as social media marketing, radio ads, print ads and outdoor advertising.
Used car dealerships should also focus on SEO and online advertising. This can include paid search, social media and remarketing. Additionally, dealerships should consider developing a mobile app to connect with customers on the go, especially if you offer an online catalogue people can browse through.
4. Build Trust with Customer Reviews
When it comes to used car dealerships, word-of-mouth is key. In order to get people to trust you, you need to have a lot of positive reviews from previous customers. This will show that you’re a reputable business that people can trust. Online reviews are a powerful tool that can help build trust with potential customers. In fact, according to a study by BrightLocal, 88 percent of consumers trust online reviews as much as personal recommendations.
There are a few things dealers can do to encourage customers to write online reviews:
– Include a request for reviews on your website and in your email signature
– Make it easy for customers to write reviews by providing a link to your review page
– Thank customers for writing reviews and share the positive reviews on your website and social media pages
By taking these simple steps, dealers can generate more online reviews and build trust with potential customers.
Another way to build trust is to offer a wide selection of vehicles. This will show that you have something for everyone and that you’re committed to meeting the needs of your customers. You can apply for floor plan finance to get more cash in hand to purchase stock for your floor and take advantage of good deals.
Finally, in order to promote and market a used car dealership, you need to provide excellent customer service. This means going above and beyond to make sure that your customers are happy.
5. Compel Shoppers to Come Into Your Store with Irresistible Offers
There are a few things you can do to compel shoppers to visit your store and buy a car. One is to have irresistible offers, such as a free car history report, free oil change or a free vehicle inspection. You can also offer a great selection of cars, so shoppers know they can find what they’re looking for at your dealership. Additionally, make sure your dealership is easy to find and has a friendly and helpful staff. By doing these things, you’ll make it more likely that shoppers will visit your store and buy a car.
Some other practical marketing tips include:
Have a strong web presence. This is where most car buyers start their search. Make sure your website is easy to navigate, your inventory is up to date, and you have a strong online presence across social mediaplatforms.
Use targeted advertising. Use targeted ads to reach potential car buyers who are looking for a specific type of vehicle.
Stay up to date with the latest automotive trends. Keep your inventory current and offer the latest models and features that car buyers are looking for.
Offer financing options. Many car buyers are looking for financing options, so make sure you offer a variety of loan terms and rates.
Offer a used-car buying service to help your customers sell old vehicles and potentially used it as a trade-in for a new vehicle purchased through your used car dealership.
These are some practical and actionable tips any used car dealership owner who is serious about making more profit should investigate further.
There are a lot of dealerships out there. And not all of them are created equal. The key to success is to know your customers and to work with them to find the right car for them. If you’re looking to start a used car dealership in South Africa, there are a few things you need to know first. One of the most important factors to consider is how much it costs to start a used car dealership in South Africa.
Here’s the bottom line. If your goal is to build a reputable brand from day 1, you’re looking at needing around R4 million in capital to get your used car dealership off to a good start, according to TopAuto.
The cost of starting a used car dealership in South Africa can vary depending on a number of factors. One of the most important factors to consider is the location of your dealership. If you’re looking to start a dealership in a major city, the cost will be higher than if you’re looking to start a dealership in a smaller town.
Another factor to consider is the size of your dealership. If you’re looking to start a large dealership, the cost will be higher than if you’re looking to start a small dealership. Some people want to go all out from the get go, while others are happy to start off small from home.
The cost of starting a used car dealership in South Africa can vary depending on a number of factors, so it’s important to do your research before you start. By doing your research, you’ll be able to determine the right cost for your dealership and the right cars to sell.
Breakdown of Costs
The cost of starting a used car dealership in South Africa can vary depending on the size and scope of the business. However, some of the basic costs that are typically associated with starting a business include:
– Business Registration fees start at a couple hundred Rand and escalate upwards depending on the type of business registration and your service provider.
– Licensing fees
– Business Insurance
– Advertising and marketing costs: as a rule of thumb you should invest between 20 and 30% of your profits back into advertising
– Website development costs: a decent website by a professional web designer costs around R10 000, remember you get what you pay for so don’t skimp on quality.
– Staffing costs (may not be necessary as you start out)
– Lot or business premises rental or bond costs
The average cost of starting a small used car dealership in South Africa is around R500,000. This includes the cost of the leasing a premises, initial stock, vehicle licensing and other associated costs.
Inventory
In addition to the cost of starting a dealership, you’ll also need to factor in the cost of inventory. The cost of inventory can vary depending on the type of cars you’re selling. If you’re selling high-end cars, the cost of inventory will be higher than if you’re selling low-end cars. If your target market is students, for example, you’ll be able to acquire cheaper stock and potentially turnover stock faster than if you try sell Porches and Ferrari’s in the millions.
If you find yourself growing exponentially and needing to acquire new stock for your floor, you can apply for floor plan finance. This is specialised finance for used car dealerships to give you the purchasing power you need to make quick buying decisions and capitalise on good deals to make bigger profits.
If you missed our last post covering the steps to starting a used car dealership in South Africa, you can get all the details here.
Quick answer: To start a used car dealership in South Africa you need a business plan, a registered company and tax registration, a business bank account, insurance, a suitable location and enough capital to buy stock. If you will move unregistered vehicles on public roads, you also need a motor trade number from your local registering authority.
Stock is usually the biggest cost, and it is where most new dealers hit cash-flow problems. Floor plan finance, arranged through a broker like New Heights Finance, is one way to fund stock while you grow. Approval is decided by the lender.
Is a used car dealership right for you?
Successful dealers tend to combine product knowledge, an eye for a good deal, strong customer service, sales and marketing skills and the discipline to manage stock and cash carefully. Industry experience helps but is not essential.
How does a used car dealership make money?
Most dealers buy vehicles at a good price and sell at a margin. Many add income from finance and insurance referrals, accessories, parts and servicing. A typical day covers dealing with customers, inspecting and appraising vehicles, handling paperwork, marketing, managing stock and finances, and keeping the lot presentable.
Step-by-step: how to start
Step
What to do
Notes
1. Business plan
Research your market, competitors, target buyers and budget
Decide your niche, such as budget cars, bakkies or a particular brand
2. Register
Register a company and register for tax with SARS
Speak to an accountant about structure and VAT
3. Motor trade number
Apply through your local registering authority if you will drive unregistered vehicles on public roads
Open a business account using your registration documents
Keep business and personal money separate
5. Accounting
Set up software or a spreadsheet to track income, expenses and stock
Affordable cloud tools are available
6. Insurance
Cover stock, premises and customers on your lot
Events such as the 2021 unrest and 2022 KZN floods showed how exposed uninsured stock is
7. Location
Find a lot with room for stock and an office, easy for buyers to reach
Check zoning and lease terms
8. Fund stock
Use your own capital, and consider floor plan finance as you scale
See below
Also make sure you understand your obligations under consumer protection rules when selling to the public, and seek professional advice on any licensing that applies to your business.
What does it cost to open a used car dealership?
Costs depend on your size and location, but typically include the following. Stock is normally the largest item.
Cost
Comment
Vehicle stock
Largest expense and the one that ties up cash
Premises purchase or lease
You can start from home if local rules allow, but a lot builds trust
Renovation and signage
Basic branding and a clean presentable lot
Insurance
Stock, premises and public liability
Marketing and listings
Online listings are usually essential
Salaries
Often later, as you expand
Funding your stock: own capital vs floor plan finance
New dealers often start with their own capital, then find that demand outgrows what they can afford to hold. Floor plan finance funds vehicle stock, with the stock itself as security, so you can hold more vehicles without draining working capital. New Heights Finance is a broker, not a lender, and introduces dealers to specialist lenders. Terms, limits and approval are set by the lender.
How much money do I need to start a used car dealership in South Africa?
It varies widely. You can start small with a few vehicles, but stock, premises, insurance and marketing all need funding. Build your figure from a business plan.
Do I need a motor trade number?
You need one if your business operates unregistered vehicles on public roads, for example when selling, repairing or delivering vehicles. Apply through your local registering authority.
What is floor plan finance?
It is finance used to buy vehicle stock, where the stock is the security. It helps dealers hold more inventory without using all their own cash.
Does New Heights Finance fund dealers directly?
No. We are a finance broker that introduces dealers to specialist lenders. Approval is decided by the lender and is never guaranteed.
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