Car ownership is one of the 5 Cs in Singapore. It costs a lot of money to buy and maintain a car in Singapore – with the cheapest new cars selling for around $150,000.
For many who want to drive, renting a car can be an alternative to buying one. Intuitively, many of us would think that leasing a car will be many times more expensive than buying a car, especially when considered over the span of a 10-year COE.
Read Also: Cheapest Cars That You Can Buy In Singapore
Renting A Car In Singapore Is Relatively Competitive!
The cost of renting a car in Singapore is surprisingly competitive compared to other similarly expensive countries that are somewhat closer to Singapore – mainly Australia and Japan.
We looked at booking.com to get a somewhat fair comparison of how much it would cost to rent a car in Singapore, Japan and Australia. While prices on the portal would be mainly for tourists, it’s also fair in a sense that even the Singapore-listed rentals are for tourists.
Nevertheless, this exercise is just to see how much more expensive it is to lease a car in Singapore, given that it is so much more expensive to buy one here compared to the other cities.
As not all 3 cities offer the same cars for rent, we narrowed the search to a large car in each city, from the airport.
According to booking.com, the cost of leasing a Mazda CX-5 in Singapore is just over $1,000 for a week.
Source: booking.com
In Japan, it costs about $917 to rent a Toyota Prius. While these cars are listed as large cars, it should be noted that they carry fewer bags than the Mazda CX-5 in the Singapore example.
Source: booking.com
And, in Australia, it will cost about $760 to rent a Subaru Forester.
Source: booking.com
Next, we try to find out how much these cars cost to buy in the different countries.
In Singapore, a secondhand Mazda CX-5 (with about 3 years left on its COE) may cost around $62,500.
Source: Motorist
In Japan, a 2018 Toyota Prius goes for about US$9,000 to US$13,000 and, in Australia, a 2018 Subaru Forester goes for about AU$14,600 to AU$27,000.
So, just taking all of this information onboard, it costs 3 to 5 times more to buy the car in Singapore compared to the cars in the other 2 countries. But, based on the rentals, it’s only 1.5 times more at most.
Leasing A Car For Longer Can Be Even Cheaper
Taking out a longer-term lease typically makes it cheaper (compared to short-term rentals in the example above). For instance, car leasing site drivelah.sg lists monthly leases for cars from $1,400 to $1,600.
In the screengrab below, a Nissan Qashqai 2016 (top left) is available at $1,390 a month – which works out to less than $50 a day.
Source: drivelah.sg
Since you’re renting a car, you’ll be more fixated on its condition rather than the fact that there may only be 1 year of COE left on the car.
Read Also: Cost Of Owning A Car In Singapore Over 10 Years
Huge Upfront Outlay To Buy A Car In Singapore
Going back to the example above, a similar secondhand Nissan Qashqai on Motorist, with 6 and a half years of COE left is selling for $133,800.
Source: Motorist
If you buy a car like this, the minimum downpayment is 30%, or about $40,140. You would also have to pay a loan instalment of nearly $1,400 a month.
From a cashflow perspective, you don’t have to pay any upfront when leasing a car. The monthly instalment would also equate to almost what the daily rate of a long-term lease would come up to.
What may make a difference is the registration year of the car. Looking back at the above example, the car for lease is about 9 years old. On the other hand, the car available for secondhand sale is about 3.5 years old, with close to 6.5 years of COE left. This might translate to a better drive, certainty of driving the same car over longer years, and potentially a cheaper overall cost when taking into account a PARF rebate after deregistering the car.
And, we’re not even discussing opportunity costs for putting a downpayment of $40,140 – which can be used to pay for other important debt or even investing.
No Headaches With Maintaining The Car
As an extension of the previous point, we also have to note that when we lease a car, there’s less headache when it comes to paying for insurance, road tax, and perhaps most importantly, servicing the car.
Owning older secondhand cars, many owners worry about the condition of the car. It’s also expected for repairs to be more frequently required and more costly. Once an issue crops up, you may be in stored for frequent visits to workshops for repairs, and in the worst-case scenario, having to replace expensive parts.
Often, breakdowns and customer support services, especially in the form of replacement cars, are also covered in car leases.
You Get Flexible Car “Ownership”
When you lease a car, you retain the flexibility to discontinue your lease after a year or two – depending on your lease. For example, you may need a car for 3 to 4 years, as you expect to send your younger children for activities. But, as they grow up, and school starts taking up more of their time, you may not need to ferry them about as much. If you have to, though, you can always continue the lease.
You may also want to test-drive the experience before buying a car. You can lease a car for a year or two, to enjoy the experience, and understand the pros and cons. Often, having a car at your disposal may also mean you end up spending even more. For example, you drive to nearby locations you used to walk to, you want to drive out further to try popular food stalls, go explore more locations and even drive into Malaysia more frequently. These can be cost savings or more costly depending on how your lifestyle prior to having a car.
Of course, you can also sell a secondhand car after using it for a few years. But remember, this would require higher upfront costs, similar monthly payments, and potentially more costly maintenance. Buying and selling may also prove to be the more tedious exercise.
