Car Leasing in Singapore: Should You Consider It?

Singapore has the highest global car ownership prices because of a multitude of taxes, purchasing costs, and administrative fees from the Land Transport Authority. The LTA is doing its best to reduce traffic by reducing the number of cars on the road through high ownership costs.

It is, unfortunately, a necessary evil to ensure proper traffic flow and lower pollution levels in Singapore.

In such an economic situation, people in Singapore are beginning to consider leasing as an alternative to traditional car ownership, because it can cut costs and red tape.

Car leasing in Singapore offers lower up-front costs and less administration. Singapore requires you bid on a COE (certificate of entitlement) against other people also seeking to buy cars, and the price of the COE is controlled by supply and demand economics in which there is a scarcity of cars!

And when demand outweighs supply, prices will naturally go up!  The scarcity of COEs means that a certificate of entitlement can run you significantly more than you paid for the car itself!

We’ll compare the pros and cons of private car ownership against the pros and cons of leasing so that you can make informed decisions about transportation. Some of the pros and cons apply to car purchasing and leasing anywhere in the world, and some are specific to the regulations and economy of Singapore.

Pros and Cons of Private Car Ownership

Private ownership of cars in Singapore offers a number of pros and cons. Private ownership offers you the pride and freedom of your own car but it might be outweighed by the cons of heavy cost, regulation, and taxes.

Pros

• You can resell your car.
• The flexibility of not having to sign a rental agreement.
• You own the car, so you have greater freedom and control over customisations if you want to outfit your car with aftermarket accessories. (bodykits, exhausts, tune-ups, etc)
• The pride of owning your own car.
• You’re buying the car, so you can get any make and model you can find!
• Warranties that come with new cars will probably cover some service and some roadside assistance.
• Although you have to purchase a 10-year COE, the Land Transport Authority (LTA) offer a rebate back to you when you deregister your car with the Preferential Additional Registration Fee (PARF). This process helps get older cars off the road to reduce traffic caused by mechanical failures.
• You choose if and when to make repairs. Minor scratches and dents might have to be repaired on a lease per the agreement, but if you own the car, you decide when it goes to the shop.

Cons

Singapore’s cost of ownership for cars is estimated to be the highest in the world, with expensive import costs, high taxes, and a certificate of entitlement fees.

• Singapore has the highest global car prices
• Owning a car in Singapore can be incredibly expensive, far more expensive than owning a car in other places. One estimate places car ownership in Singapore at around $160,000 over 10 years.
• High COE prices:-
  • The certificate is licensed by the government to limit the number of cars on the road at a time.
  • The certificate is active for 10 years before requiring renewal.
• As in most places, Singapore car ownership will create interest payments (if you don’t pay for the car in full when you purchase) and insurance costs. Car ownership also requires paid parking, service costs, maintenance costs, and fuel costs. These extra expenditures drive up the cost of your car.
• Annual road tax and insurance costs

The Bottom Line

Purchasing a car in Singapore requires heavy upfront fees and administration work to certify the car and even legally get it on the road. Once it is on the road, you’ll be bleeding money for petrol, upkeep, insurance, fees, ERP, and road taxes. If money isn’t an option, however, purchasing a car will offer you greater freedom (and you won’t have a lease agreement).

You’ll notice that almost all of the cons to car purchasing are financial and administrative. Buying a car outright is the more expensive option. However, you can save on the hassle of the administration work of owning a car by leasing one.

Pros and Cons of Leasing

Car leasing in Singapore can be a great alternative to purchasing a car, especially if you’re put off by the high costs and administration processes. Leasing a car is a long term car rental process, in which the company is your intermediary between you and government regulation. The leasing company will cover certain fees and administrative tasks and costs associated with ownership.

Pros

• No huge cash deposit upfront, no downpayment required. Save the cash for monthly payments or other things!
• Some companies will provide transportation in the form of monthly lease payments. Your company may cover monthly lease payments for a car to cover transportation costs.
• Leased cars have designated repair workshops, and the company will help with the process.
• Generally less of a commitment than a purchased car. If you will be in Singapore a short time or are unsure how long you’ll be in Singapore, it might be more beneficial to just lease a car to save time and money.
• Leasing agencies will often help or entirely complete administrative tasks and costs.
• Insurance, road tax, servicing, repairs are often covered.
• Pick-up and drop-off services for maximum flexibility.
• If you’re worried about driving a clunky used car, don’t be! Many leasing agencies will give you the opportunity to lease a brand new car instead of a used car. Just because you don’t have every make and model available doesn’t mean you’ll be driving a rusty old car with a sign that says “Rental.”
• Comprehensive monthly rates. Instead of having to settle payment with different parties, everything is done via your car leasing company.
• If you don’t love the car you have, many leasing agencies provide you with the opportunity and freedom to upgrade. The lease grows with you! If you get a new job or promotion, upgrade the contract to reflect success. It’s easier to drive a nicer model with a lease than buying a new car every time you get a raise.
• 24hr roadside assistance and replacement vehicle options keep you on the move.  Most leasing agencies will help you get back on the road as soon as you break down with roadside assistance and replacement vehicles.

Cons

• Less freedom on the makes and models that are available.
• Rental agreements signed to lease cars can be restrictive and lock you into contracts and payments.
• Rental terms and conditions are sometimes more restrictive than car ownership, stipulating conditions like “Singapore driving only” or even the names of people covered by insurance to drive the car.
• Rental car insurance excesses can increase when you take the car outside of Singapore, especially to Malaysia.
• Many lease agreements require you to make repairs to certain scratches and dents that you might avoid making on a car that you own.

The Bottom Line

If you will be in Singapore for a short time or are unsure how long you’ll be in Singapore, a lease is a great option. Leasing also consolidates payments and generally offers cheaper short term options. The bar for car purchasing is much more expensive than the entry rate for a lease.

If you don’t have the money to cover the high costs of purchasing a car in Singapore and want the flexibility of a lease (accepting some of the restrictions), car leasing in Singapore may be a great option.

Conclusion

At this point, you’ve seen that car leasing in Singapore and car purchasing in Singapore both offer some great pros and cons. The bottom line for both options will be cost and administration.

Purchasing a car in Singapore requires you to deal with car manufacturers and government regulations, making payouts to a variety of places. Car ownership in Singapore costs more than it does in any other place in the world! It does offer you the resale value of the car and the bonus you get from the government for taking it off the road.

If you have the financing capabilities and don’t mind the administration, purchasing gives you more freedom than a lease would.

Car leasing in Singapore offers you a consolidated monthly fee that covers a number of fees, administrative costs, and maintenance costs. Leasing generally offers a shorter commitment than purchasing does and can offer significantly lower up-front costs.

Weigh all your options and do a cost-benefit analysis before purchasing or leasing. The pros and cons in this article should get you off to a great start.