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Answering Singaporean’s Question: Renting A Car VS Buying A Car In Singapore

So, we already know that driving is about the most expensive thing to do in Singapore. But, having a car does have its functional benefits compared to taking the cab all day when you have a busy lifestyle or a family with kids. Getting a car costs $101,999 and more if you factor in all extra insurance and serving fees that come with it. Renting a car, on the other hand is charged at an all-in-one flat rate. In the length of 5 years, is it more worth it to rent or buy a car?

In the long run, does it make more money sense to rent or own a car?

 

Price Breakdown for Honda Civic i-VTEC

We will use a Honda Civic i-VTEC as an example for easier comparisons in this article.

Buying A CarCosts Involved (5 years)Leasing A CarCosts Involved (5 years)
Road Tax, IU, Carplate, Dealer sales commission, GST on OMV and Exise dutyS$19,539Rental fee$1.8/month
Additional registration Fee
(ARF)
S$19,370
Certificate of Entitlement
(COE)
S$37,000
Open Market Value (OMV)S$19,370
Excise Duty
(20% of OMV)
S$3,874
Registration FeesS$220
Maintainence and servicingS$2,500
Car InsuranceS$4,000
5 Years sell-off price
(Dependent on market value)
S$9000 (Depreciation) X 5 Years = $45,000
PARF Car = $10,000
Total = S$55,000
Total priceS$105,873 - $55,000 = $50,873Total Price$108,000


*Note
Price-wise, owning your own car seems more worth the money as you can most important sell it away for close to half its price. However, many other factors often affect whether renting a car or buying a car is more worth it for the individual, the rest of the article will state some of the more crucial ones.

  • Owning a car often includes more costs such as car tow services, car rental charges in the case of repair, and so on, subjective to each individual. 
  • The selling price as stated above as $55,000 may fluctuate in a projected 5 years’ time. It may be higher or even way lower depending on new car models, COE and so forth.

Is Leasing Or Owning A Car Better?

The two most important factors you should consider before making the decision would be: If you have enough upfront cash to pay and if you will be driving often enough.

Buy A CarLease A Car
Have more upfront cash (deposit 30% and up)Have less upfront cash (deposit 2 months of rental)
Live In SingaporeTravel Often / Unsure if you will be in Singapore for a long time
Strong preference for a newer, specific carLittle preference for type of car

*These are only some of the more important factors we think should contribute to your decisions.

Buy A CarLease A Car
Have more upfront cash (deposit 30% and up)Have less upfront cash (deposit 2 months of rental)
Live In SingaporeTravel Often / Unsure if you will be in Singapore for a long time
Strong preference for a newer, specific carLittle preference for type of car

Benefits Of Renting A Car

  1. If you are tight on cash, you do not have to pay a large amount of money up front
  2. You can change a car every year
  3. All-in-one pricing means that you save the hassle of paying for car insurance, maintenance, and so on by yourself
  4. Worth the money if you travel overseas often or do not drive every day
  5. Can be rather affordable for models such as Toyota Vios which you can get for $70 a day.

Disadvantages Of Renting A Car

  1. More expensive in the long run of 5 years if you drive every day
  2. If you have brand and car type preferences, you will most likely be unsatisfied with the typical older rental cars

Benefits Of Buying A Car

  1. Cheaper in the long run of 5 years if you drive everyday
  2. Possible to sell off for half the price you bought initially
  3. Cannot change car
  4. Unmeasurable happiness (If you’re a car fan)

Disadvantages Of Buying A Car

  1. Large upfront payment
  2. Troublesome car tow fees, servicing and maintenance — have to rent a car during this period which incurs some costs
  3. Depreciating asset and fluctuating prices. May only be able to sell off the car at a very disadvantageous price after 5 years.

So, when does it make more sense to rent a car instead?

1. When you intend to sell before 5 years is up

You are less likely to sell your car for a good price before 5 years as the depreciation per year will be too low, and the market value of your car will pale in comparison to a brand new car for sale

2. If you do not drive every day

If you travel often or do not drive every day, letting your car idle in the car park will “lose money” compared to renting a car where you can save on days you don’t drive.

For reference, renting a Honda Civic i-VTEC per day is only $110. If you only drive 1 week in a month, you will only be spending $9,240 in one year.

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