Car News / Lifestyle

The Lease Buyback Scheme: How Does It Work?

The Lease Buyback Scheme, also known as Lease-To-Own Scheme, has seen rising popularity in Singapore. Although the term was originally popularised by the HDB, the concept has slowly crept its way into the automotive industry in Singapore. What exactly is the Lease Buyback Scheme, and is it worth it? Keep reading to find out!


Drawing inspiration from HDB, some car dealers offer Lease Buyback Schemes that allow owners to lease (rent) a car long-term, and eventually buy the car. Most dealers will require your lease to be at least five to seven years, and at the end of the lease, the car is yours! That means you are free to do whatever you want with the car.

The Lease Buyback Scheme is an alternative to forking out the full sum to buy a car. It provides a middle-ground for those who do not wish to pay a large sum upfront yet want to own a brand new car. Instead of paying hefty down-payments of up to 50%, you only need to pay a deposit that is 5-10% of the price of the car.

There are also some dealers that provide a short-term lease of 6 months. After that, they open up a few choices for you:

  1. Re-lease the car: Continue renting the car for another 6 months
  2. Release the car: Return the car and collect your deposit
  3. Buy the car: Purchase the car at its price from 6 months ago (the rental paid will offset some of the cost)
  4. Lease another car: Find another car to lease for another 6 months

Do note that these short-term leases will require you to pay the remaining cost of the car should you wish to buy it. Hence, it differs slightly from long-term Lease Buyback Schemes.



One of the biggest advantages of this scheme is that the overall cost is cheaper than paying the full sum at once. Since the price is fixed from years ago, you can beat COE inflation and still get a brand new vehicle!


Since the car is technically a rental until the end of your contract, the monthly cost usually already includes insurance, maintenance, and road taxes. As such, you do not have to worry about bringing the car for maintenance or renewing the road tax on your own. However, do check your lease contract if these costs are included in your monthly payments.


For shorter Lease Buyback plans, you can always opt to change your mind about the car after your lease ends. If you find that the car was not what you were looking for, you can always choose another model. Plus, this is good for drivers who want to find the right fit before settling on a car.


Of course, we believe that drivers should consider some possible concerns of a Lease Buyback Scheme. Here are some questions that you may find useful in your decision-making:

  • Are you ready to commit to a long-term lease? (i.e. you do not foresee yourself facing difficulties when you need to free up some cash in the future or breaking the contract early)
  • Will the car be sufficient for all your needs (ample storage space, child-safe, etc.) in the long run?
  • Are you comfortable with not having official “ownership” of the car until the lease ends?
  • Are you willing to forgo the freedom to modify and customise the car?

(Related Story: Buying Or Leasing A Car: Which One Is Cheaper?)


After reviewing the advantages and considerations when it comes to the Lease Buyback Scheme, we have concluded that it is most suitable for Private Hire Vehicle (PHV) drivers. More specifically, for PHV drivers who are committed to their jobs for the long-term.

With the Lease Buyback Scheme, PHV drivers need not worry about maintenance and insurance, and yet gain ownership of the car once their lease ends. Moreover, once PHV drivers switch from leasing to owning the car, they need not pay rental fees anymore!

Ultimately, we believe that the Lease Buyback Scheme is beneficial if drivers are willing and able to commit for the long-term. If you are still unsure about whether this scheme is for you, there are other options such as buying a (second-hand) car. Browse our marketplace for a diverse selection of pre-owned and brand-new cars today!

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