BMW long-term rentals now offered in South Africa

PhreakBoy

PhreakBoy

Executive Member
Joined
Aug 26, 2008
Messages
7,231
Splinter said:
It's not offered as an option.

Though the thought of spending approximately R17000 a month on something and not owning anything at the end of the day (depreciating asset or not) makes me feel nauseous.
Click to expand...

On the 320i you're looking at R18,894 per month for a 1yr/20,000km lease or a total annual cost of ownership of R226,727.

Let's assume insurance is R1,000 per month or R12,000 per annum, reducing the cost of ownership to R214,000.

New price on that vehicle is R829,000. Would the depreciation in 1 year be more or less than R214,000?

Looking on cars.co.za - you can find 2021 models for around R700,000 (meaning the person that traded it is possibly got around R650,000) which implies a cost of ownership of R179,000 per annum.

So, I think there is some merit in going the long term rental route.

Does anyone know what the VAT implication is? Can you claim back 15% on that R18,894?
 
Affieplaas

Affieplaas

Senior Member
Joined
Jan 12, 2020
Messages
614
PhreakBoy said:
On the 320i you're looking at R18,894 per month for a 1yr/20,000km lease or a total annual cost of ownership of R226,727.

Let's assume insurance is R1,000 per month or R12,000 per annum, reducing the cost of ownership to R214,000.

New price on that vehicle is R829,000. Would the depreciation in 1 year be more or less than R214,000?

Looking on cars.co.za - you can find 2021 models for around R700,000 (meaning the person that traded it is possibly got around R650,000) which implies a cost of ownership of R179,000 per annum.

So, I think there is some merit in going the long term rental route.

Does anyone know what the VAT implication is? Can you claim back 15% on that R18,894?
Click to expand...
This is in terms of section 17(2)(c) of the Value-Added Tax Act:

"… a vendor, shall not be entitled to deduct from the sum of the amounts of output tax and refunds contemplated in section 16(3), any amount of input tax in respect of any motor car supplied to or imported by the vendor… and any derivative of "supply” shall be construed accordingly”.

In terms of section 1(1) "supply” includes performance in terms of a sale, rental agreement, instalment credit agreement and all other forms of supply… It is therefore not limited to a sale (or purchase as you say).

SARS confirms this interpretation when they say (in the VAT404):

"As a general rule, an input tax deduction may not be made by a vendor if a vehicle falling within the definition of a "motor car” is acquired, even if it is used in the course of making taxable supplies and regardless of the mode of acquisition. For example, the motor car could be acquired by way of outright purchase, importation, instalment lease agreement, operating rental agreement or casual hire.”

So even if the nature of the contract that BMW offers is a rental that includes VAT, a VAT vendor may not claim the VAT back even if the car is used in a business to make taxable supplies.
 
P

Pandarye

Well-Known Member
Joined
Aug 31, 2015
Messages
384
Zukat said:
Agreed, but why is leasing so popular in the USA then?
Click to expand...
For the same reason that there are probably many people in SA who will flock to these deals despite how bad they are. lack of common sense and a need to appear "wealthy" by driving a flashy car.

That being said. I think there are circumstances where leasing might be an attractive proposition to me if it was an option offered on a more reasonably priced vehicle.
 
S

Splinter

Honorary Master
Joined
Oct 14, 2011
Messages
30,829
PhreakBoy said:
On the 320i you're looking at R18,894 per month for a 1yr/20,000km lease or a total annual cost of ownership of R226,727.

Let's assume insurance is R1,000 per month or R12,000 per annum, reducing the cost of ownership to R214,000.

New price on that vehicle is R829,000. Would the depreciation in 1 year be more or less than R214,000?

Looking on cars.co.za - you can find 2021 models for around R700,000 (meaning the person that traded it is possibly got around R650,000) which implies a cost of ownership of R179,000 per annum.

So, I think there is some merit in going the long term rental route.

Does anyone know what the VAT implication is? Can you claim back 15% on that R18,894?
Click to expand...

You estimate on insurance costs seems a bit low.
 
Brawler

Brawler

Honorary Master
Joined
May 23, 2006
Messages
11,472
Quite pricey.
I've been thinking of getting a fun car/bike for a short period, like a year or two, and then passing it on (I already have two reliable normal cars that I am happy with keeping longer-term).
Of course, it will cost me money, and I am ok with that but I don't want it to bankrupt me.
I took a look at BMW charter and it's a bit much.
The 240i is not available but a 135i is at R20k pm. That is R240k per year which is nuts.

The alternative is something like this.
www.cars.co.za

2016 BMW 2 Series M235i Coupe Auto

Used BMW 2 Series M235i Coupe Auto for sale in Kwazulu Natal, car manufactured in 2016 (ID:8113955)
www.cars.co.za www.cars.co.za
Keep it for 15-20k KM and sell. I wonder what I could get for it next year with 90k km on the clock? I guess the risks are something goes wrong and get an R100k bill.

Edit: I see this is a WBC example that I would not touch.
 
N

neoprema

Honorary Master
Joined
Jan 12, 2016
Messages
10,820
I like this idea, i've never wanted to own my car I just want to pay something every month for a nice one and when i'm tired of it after a year or 2 give it back.
 
MaisonP

MaisonP

Senior Member
Joined
Nov 9, 2020
Messages
676
Brawler said:
Quite pricey.
I've been thinking of getting a fun car/bike for a short period, like a year or two, and then passing it on (I already have two reliable normal cars that I am happy with keeping longer-term).
Of course, it will cost me money, and I am ok with that but I don't want it to bankrupt me.
I took a look at BMW charter and it's a bit much.
The 240i is not available but a 135i is at R20k pm. That is R240k per year which is nuts.

The alternative is something like this.
www.cars.co.za

2016 BMW 2 Series M235i Coupe Auto

Used BMW 2 Series M235i Coupe Auto for sale in Kwazulu Natal, car manufactured in 2016 (ID:8113955)
www.cars.co.za www.cars.co.za
Keep it for 15-20k KM and sell. I wonder what I could get for it next year with 90k km on the clock? I guess the risks are something goes wrong and get an R100k bill.
Click to expand...
The only things that go on these 235i's are the Oil filter housing gasket, other than that, they solid cars if you service them.
 
marco79

marco79

Expert Member
Joined
Sep 18, 2008
Messages
4,228
Who only drives 20k km a month?

Rent me a car I can drive, not a car that must be parked most of the year.

I guess this is how they catch you. After you've driven more that the allowed kilos, they change it to a traditional finance deal or they have a huge pay in penalty to get out of the rental deal.
 
Brawler

Brawler

Honorary Master
Joined
May 23, 2006
Messages
11,472
marco79 said:
Who only drives 20k km a month?

Rent me a car I can drive, not a car that must be parked most of the year.

I guess this is how they catch you. After you've driven more that the allowed kilos, they change it to a traditional finance deal or they have a huge pay in penalty to get out of the rental deal.
Click to expand...

20k pm :D
I presume you mean per year. AFAIK that is considered average. Anything more is high milage.
I do around 15k KM per year (even before WFH). Wife's car even less.
 
Dan C

Dan C

Honorary Master
Joined
Nov 21, 2005
Messages
36,651
Brawler said:
20k pm :D
I presume you mean per year. AFAIK that is considered average. Anything more is high milage.
I do around 15k KM per year (even before WFH). Wife's car even less.
Click to expand...
With WFH, I do about 2k per year
 
S

Splinter

Honorary Master
Joined
Oct 14, 2011
Messages
30,829
Brawler said:
Quite pricey.
I've been thinking of getting a fun car/bike for a short period, like a year or two, and then passing it on (I already have two reliable normal cars that I am happy with keeping longer-term).
Of course, it will cost me money, and I am ok with that but I don't want it to bankrupt me.
I took a look at BMW charter and it's a bit much.
The 240i is not available but a 135i is at R20k pm. That is R240k per year which is nuts.

The alternative is something like this.
www.cars.co.za

2016 BMW 2 Series M235i Coupe Auto

Used BMW 2 Series M235i Coupe Auto for sale in Kwazulu Natal, car manufactured in 2016 (ID:8113955)
www.cars.co.za www.cars.co.za
Keep it for 15-20k KM and sell. I wonder what I could get for it next year with 90k km on the clock? I guess the risks are something goes wrong and get an R100k bill.

Edit: I see this is a WBC example that I would not touch.
Click to expand...

WBC?
 
marco79

marco79

Expert Member
Joined
Sep 18, 2008
Messages
4,228
Brawler said:
20k pm :D
I presume you mean per year. AFAIK that is considered average. Anything more is high milage.
I do around 15k KM per year (even before WFH). Wife's car even less.
Click to expand...
Yes, I mean 20k km per year.

I drive about 4k to 6k km per month. Wife less that 1k km per month.
 
You must log in or register to reply here.
Top