22 Sep Should one buy or lease a car in Singapore?
Just as it is like when you have to make major decisions in life, hearing from others who’ve gone through similar journeys like you will come in handy. In this article, you will out some tips given by consumers on when you should lease or buy a car in Singapore.
Cars are expensive in Singapore
98 percent of business people and car buyers agree that Singapore leads as the most expensive city to purchase, own and run a car. Reason being, the city is both small and rammed with vehicles. Thus, car leasing in Singapore has become a more popular option compared to buying a car.
To limit the number of vehicles, the LTA (Land Transport Authority) has placed numerous restrictions to make car ownership harder over the recent years. This include fees from:
- Open Market Value (or OMV): this is the price set on a car prior to export, in addition to shipping costs, and insurance fees.
- Additional Registration Fee (or ARF): This is a tax payable to register a new car (often a percentage to the OMV). If the OMV is higher, expect the ARF to go higher. That is, cars with $20k to $50k OMV pay 100% of ARF, those with $50k plus OMV pay over 180% in ARF of OMV.
- Certificate of Entitlement (or COE): car owners must acquire a COE that allows them to own and drive the vehicle around for a maximum of 10 years in Singapore.
- Road tax: is renewable after 6 to 12 months and no car is able to hit the road without a proof of payment receipt. Inspections are carried out every two years to ensure that drivers are complying to this requirement. The average cost per year in road tax is around $2000.
Despite all the hurdles that buying car presents, it is obvious that owning a car would be a good idea because you can resell it. However, when it comes to leasing, you don’t have to worry the LTA restrictions that have been just discussed. Also, you’ll be free from having to follow up on inspection dates, searching for the right insurance companies and spending countless hours to clear the car after shipping.
Now, when you should buy or rent a car in Singapore?
BUY a car if:
- You have ready cash for deposit payment and some other extra fees for OMV, ARF, and the COE.
- You’ll be staying in Singapore longer than 2 years
- You plan to resell it anytime later
LEASE the car if:
- You’ve got no deposit upfront and don’t want to spend on extra car ownership fees
- You are an expatriate employee of a company that pays a monthly for your transport
- You are new in the city and not conversant with local car repair workshops
- You don’t plan to stay long in Singapore
- You are not extremely particular about owning a branded car
In summary, commercial car leasing companies are becoming popular in offering clients a more affordable and hassle-free way of enjoying the benefits that a car provides.