There is no question about the fact that driving a car in Singapore is pretty expensive. This is why most people stick to public transportation and taxi services.
But there are times when owning a car becomes necessary, like if your job requires you to travel around the country often, or if you have children to bring around. So, the next big question is which is more affordable: buying or leasing a car?
In this article, we tackle this perennial question and break down the costs below.
What is car leasing?
Car leasing like car rental, but for a longer and fixed period of time – up to a few years. Cars that are leased are usually younger than those that companies keep in their rental fleet. Car leasing companies also maintain the upkeep of the car, including road taxes, insurance, servicing and repairs.
So which is cheaper?
Surprisingly, the answer is not very clear-cut. Each option is cheaper in their own specific circumstances.
Pros: Initially, car leasing is cheaper with a very low down payment based on the period of time you will be using the car after depreciation and maintenance covered by the leasing companies. You also get to try driving a variety of cars for a fraction of the price- including luxury cars.
Cons: However, leasing a car costs you more in the long run. If you are planning on leasing long-term, the monthly leasing rates will accumulate even with the costs of upkeep being absorbed by the leasing company.
In addition, the insurance excess is much greater so if you get into an accident, you will need to pay a higher amount upfront. In the event of an accident, you will have to return the car to the company in its original condition, meaning that you will incur additional repair costs. You may also be subject to a termination fee should you wish to end your lease earlier than the contracted time.
Pros: Much greater freedom with regards to servicing, repairs, and modifications. You also receive resale value on top of additional rebates when you deregister your car within 10 years of ownership.
Cons: Buying a car entails a large down payment and the additional costs of upkeep, insurance, and road taxes. You will also have to commit to that car model for a longer period of time, should you decide against selling.
So which is better for me? Buying or leasing?
Both buying and leasing a car have their own strengths and weaknesses, and each of them are better for different purposes and personal preferences.
Lease a car if…
- You are not planning on driving long-term (This is a good option for SMEs looking to get a company vehicle)
- You want to try out driving many different cars
- You are not planning on staying in Singapore for very long
- You want to stay up to date with the latest car models
Buy a car if…
- You intend to drive for a long period of time
- You have the funds for a large down payment
- You want to enjoy rebates and resale value.
- You want more freedom over your car
Regardless of whether you choose to buy or lease a car, car ownership is costly and a large commitment to make in Singapore. Therefore, you should take your time to consider all the pros and cons of both options, and evaluate your own lifestyle to see which one is more suited for you.