Unless you've been living under a rock, you should know that buying a car in Singapore is just plain ridiculous.
With ever-present running costs and astronomically high COE premiums, it begs the question: does it make financial sense to own a car if you're not going to use it every day?
Whilst convenient to have your own set of wheels, if you are someone who only needs a vehicle for a few days in a month like the occasional shopping trip or family outings, should you opt to rent a vehicle instead?
In this article, we'll break down the pros and cons of both, and hopefully, you'll be able to make a more informed decision by the end of this article.
The joys of vehicle ownership
Yes, it is extremely expensive and not a necessity in Singapore as we have other adequate transport options, but owning a car brings a joy that cannot simply be described. It’s the same feeling as buying your own house. The sense of pride and accomplishment of finally stepping into your new house is just not the same as walking into a rented flat.
For some, having their own car is vital as it serves as a reliable means of transport for family members, such as elderly parents who have mobility issues or young children. Plus, if you happen to work in secluded areas with limited public transport options, travelling can consume considerable time and is clearly inconvenient in the long run.
In some cases, owning a car can even be more of a necessity rather than a want. If you have a working career that requires you to travel all over Singapore for your daily appointments, such as insurance agents, real estate agents or someone with a sales job, not having your own personal transport can be detrimental.
In such cases, this can hinder your overall work performance as increased travelling time from other forms of transport may reduce the number of appointments you can schedule on a given day. Therefore, these factors can entice potential buyers to get their own car instead.
It's great, but the costs do pile up
Stiff regulations and hefty taxes make it costly to own a car in Singapore. These are incited by the government with the intentions of reducing the number of cars on our roads, in a bid to minimise traffic congestion and reduce our overall carbon footprint. There are also ongoing expenses like fuel, yearly road tax, parking fees, ERPs, maintenance and service costs, and insurance premiums which may catch first-time owners off guard.
Since buying a car outright in cash is an unlikely scenario, most people would resort to taking an auto loan to finance the costs involved. This would mean you would have to pay monthly instalments plus accompanying interests.
Therefore, while the sticker price of a car may seem attractive, one should consider these factors before committing to a purchase.
The appeal of renting a car instead
Although renting a car does come with a few minor inconveniences, such as having the car for only a select few days, having to collect the rental car from designated locations away from home and losing the flexibility to drive wherever you want, it does have its advantages.
With car rentals, typically no upfront deposits are required, which is a financial roadblock often required when buying a car. This means that you won’t need to juggle an additional finance loan since the cost of renting is often cheap, thus avoiding excessive interest expenses.
Renting could potentially be a more attractive option too since it will not have any negative impact on your Total Debt Servicing Ratio. You could instead use your hard-earned cash for other purposes like financing home loans.
Renting also means you will avoid the miscellaneous fees and maintenance costs associated with owning a car. These include road tax renewals, regular servicing, vehicle inspections, insurance premiums and more, as these are handled by the car hire company instead.
However, the best part about car rentals is that they provide you with the freedom to use different car models according to your needs, which is impossible to attain with traditional car ownership unless you happen to own multiple vehicles.
This is especially alluring as it means we can enjoy an eclectic experience with a sports car on one weekend, and transport the family around in a sensible MPV on another. Renting also grants you the opportunity to drive premium models that would otherwise be too expensive to own.
Difference between car renting and car leasing
While we are on the subject of renting cars, it is important not to confuse the terms car rental and car leasing. Car rentals and car leasing appeal to different demographics, and both have contrasting scenarios in terms of financial arrangements, commitment periods, and usage.
One major difference between the two is the total duration of usage. Renting a car usually involves a shorter duration of time, ranging from hours to weeks. A car lease on the other hand typically entails a longer commitment period, some even ranging up to a few years.
A car lease is more catered for individuals who are able to commit for extended periods, such as requiring a car for their jobs but do not want to necessarily purchase a car on their own.
The most common types are private hire vehicles (PHVs) like your GrabCars and Gojeks, or delivery vehicles such as Lalamove.
So which side of the fence are you on?
Overall, there is no right or wrong to either option we've listed here. It ultimately boils down to your personal preference and usage habits.
While renting is technically the cheaper option, if you are someone who relies heavily on personal transport and drives on almost a daily basis, then the prospect of owning your own car may be a more financially strategic move.
If you're looking to get your own set of wheels but you’re intimidated by the myriad of costs involved that come with vehicle ownership, don't panic as DirectAsia is here to help!
They offer one of the cheapest comprehensive insurance plans for car owners in Singapore, and by dealing with them directly you bypass any middleman or agency fees, which equate to even more savings!
This article was sponsored by DirectAsia.
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