Cars are known to be insanely expensive in Singapore, but there can be situations where one finds it necessary to own one… or even rent. But does renting a car for the long-term make sense in Singapore? Let’s find out.
Cost of renting VS buying a car
We’ve previously covered how much it cost to own a car in Singapore. Our research shows that it costs around $103,000 to own a Toyota Corolla Altis based on the COE price in March 2018. To lease a car in Singapore for the long term, it costs around $1,600 per month for a 3-year quote. So how do the costs compare over a five year period?
Car rental over 5 years – $1,600 x 12 x 5 = $96,000
Cost of car ownership – $103,000
At one glance, renting over a 5-year period can be a little cheaper compared to buying, but don’t forget that if you purchase a car, you can easily sell it after 5 years for about half its price. With this in mind, buying a car usually comes up to a better deal financially.
However, deciding to buy or rent a car is seldom based on the single factor of cost. Other important factors are listed below.
Factors to consider between leasing and buying a car
Quite similar to the reason why some people would rather rent an apartment instead of buying, the upfront cost of getting a car can put people off the decision to purchase. You’ll likely need to put up around a 30% deposit, which comes up to around $30,000.
Comparatively, renting a car only requires a deposit equivalent to 2 months’ rental payment. This is a mere 10% of the deposit required of a car purchase. Definitely much more affordable!
Will you be using your car on a daily basis? Or do you have long periods of travel where it’ll make sense for you to not rent the car over a certain period? If the latter is the case, renting on a short-term basis might be more cost-effective compared to committing to the expensive purchase of a car here.
Consider also whether you might want to drive your car overseas to nearby Malaysia for a road trip. Most rental cars only allow you to drive in Singapore, unless you specifically rent one where you can drive to Malaysia. Having your own car will however, grant you the liberty to drive to Malaysia if you want to.
Preference for type of car
Potential car-buyers typically go through lots of research to look for their dream car. If you have a strong preference for the type of car you want, renting might not be for you. Rental cars tend to be a little older as well, so if you want a shiny, new ride that you can call your own, buying will be recommended.
Other than the huge upfront deposit, buying a car also incurs many other costs that might not be apparent at first glance. These include costs like road tax, car insurance, service and maintenance, as well the interest payable on your car loan. On the other hand, the monthly payment for a rental car would have already included all these costs.
What’s best for you?
Buy a car if you:
- have the upfront cash for the deposit;
- want the freedom to drive to Malaysia
- want the flexibility to sell your car anytime
- Have a strong preference for the type of car model you drive
Rent a car if you:
- Don’t want to pay a large cash deposit upfront;
- are new to Singapore and not sure about how long you will stay
- don’t want to worry about scratching the car, repairing or maintaining the car
- Aren’t particular about the car model or the age of the car
Given that owning a car costs so much, it is worth considering your options and weighing the benefits and costs before making the decision. Obviously, ride-sharing, taking a cab or public transport are very cost-efficient ways to travel around Singapore as well. You might also consider renting a car only when you need it.
Whichever decision you make, don’t forget to take up the appropriate car insurance that can protect you from the financial cost of any potential car damage or road accidents. Find out more about our range of car insurance here and the optional benefits that you can choose to customise a plan that is most suitable for your car usage!