Renting vs Buying a Car in S’pore: The Pros & Cons for Aspiring Drivers

Image: Andrew Lam /

Unless you live in 1819 when cars didn’t exist, you’d have known that cars in Singapore are expensive. So expensive, even Hollywood stars who earn millions of dollars a movie baulked at the prices.

We’ve even done a video on why a car in Singapore costs an arm and leg; here, take a look here if you want to be wowed by how much papers in Singapore cost (literally):

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With such crazy prices, it’s common for Singaporeans to take public transport for the entirety of their life, because let’s face it: despite the constant MRT breakdowns and the long waiting time for buses, public transport is still pretty much convenient.

But what if you die-die want a car, because you’ve got kids or aged parents to ferry around, or you’re sharing it with your family members?

Back in the days, you either buy one with a full loan even if you’re earning $2,000 a month, or you forgo that dream. Those were the days when COEs could be less than $10,000, and a Cherry QQ could cost less than $30,000 (I kid you not).

You won’t have thought of renting one, because rental back then was catered primarily for a short period, like three or five days. Usually, only companies would rent (they called it “leasing” instead) cars long-term for their salespeople and bosses, and they didn’t come cheap.

Now, the world is completely different.

With the private-hire industry coming in fast and furious in the last few years, renting a car for months is no longer a luxury for the few: it has become mainstream. Car rental companies switched to renting out long-term, accepting weekly payments with low deposits to attract as many private-hire drivers as possible.

Business-savvy people also saw the opportunity and bought numerous cars, renting them out to make a killing.

(Article continues below) Xing Xing is a 34-year-old Singaporean lady who decides to meet up with an online friend she found in Facebook. But it turns out that he’s not what he seems to be: Prepare boxes of tissue and watch the saddest Singapore Facebook love story here:

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And all of a sudden, you see car rental companies everywhere, trying to grab a slice of the pie.

While most of them also rent out their cars for personal use, the usual strategy is to target the private-hire drivers, since they would most likely have the money to pay the rental. The weekly payment is established just for them, as private-hire firms usually pay every week.

But things have changed quite a bit recently.

Less Private-hire Drivers in the Market and More Rental Cars Rotting in Car Parks

Let’s look at the numbers: since 1 July 2018, the number of people who technically could drive private-hire dropped from 42,900 to 22,000. This is primarily due to the new licensing framework: from 1 July 2018 onwards, anyone who wants to drive private hire needs to have passed a vocational licence.

With such a drastic drop, those rental cars are left in limbo. We know, because right beside our office is a building with many car rental companies, and the number of cars over there has been increasing every single day.

But don’t take our word for it: read on and you’ll understand.

Also, car rental prices have also decreased: in the past, it’s common to get two months’ rental as deposit. Soon, it dropped to one month, and then to $500, and then to $200, and some companies didn’t even need a deposit (as long as you’re a private-hire driver).

Prices have dropped as well: go to Carousell and you might see a weekly rental of just $200++ for older cars. One year ago, go to any car rental company and ask for a car that’s less than $300 a month, and you might be kicked out of the office.

So, with car rental prices dropping, is it a good time to buy a car now, or rent one?

Before that, we need to look at the prices of new cars (or second-hand car).

Prices Dropping Like Crazy

The best indicator on car prices is the price of COE: it’s a complete representation of the demand and supply of car owners in Singapore. It’ll also determine the prices of second-hand car, and of course the demand for rental cars.

Here, take a look:

Image: sgcarmart

I don’t need to be an Albert Einstein to tell you that prices are tumbling, and I don’t need a crystal ball to project that it would go down even further.

The reason is simple: there’s an influx of second-hand cars in the market, and that affects the supply. Your trusty econs professor would have told you that with high supply and constant demand, prices are set to drop.

So, both rental cars and car prices are dropping. Should you buy one, or should you rent one?

Let’s look at the pros and cons of each decision.

Pros of Renting a Car

No Need for a Lump Sum
First off, you won’t need to fork out a lump sum for the down-payment. With deposit as low as $200, you can start driving with the first month’s rental, or if you just want to try it out, you can go with the first week rental. Rental can be from $1,000 to $2,000, depending on whether you want an old car or a new one. In other words, for a few hundred dollars, you can drive off a car like a boss.

Everything is Included Except Petrol
You won’t need to pay for insurance or maintenance: everything is usually absorbed by the car rental company. On average, insurance can cost about $100 a month and maintenance might be about $50 a month (if you’re lucky: if not it’ll be crazily high).

One-stop Service
If you’re driving your own car and it breaks down, you’ll have to call the tow-truck (cost #1), repair the car (cost #2) and would not have any car to drive while it’s being repaired (cost #3). If you’ve a rental car, just make a call and they’ll send you a replacement car (usually lah, depending on the company). You won’t need to worry about anything. Ask any car owners and they’ll tell you that their main concern is the condition of the car: would they need to fork out a hefty fee for repairs? If you rent one, you’ve no such worry.

Lesser commitment
When you buy a car, you’ll lose money should you decide to sell it early: in other words, you’re stuck with it unless you’ve money to burn. It would be worse if you get a lemon second-hand car. However, if you rent one, you can choose your commitment. The longer your commit, the cheaper the rental would be. There are companies that doesn’t even tie you down to a contract, effectively meaning that you can drive one today and choose not to drive one the next day. If you’ve an unstable job, this would be perfect, isn’t it?

Cons of Renting a Car

More Expensive
Well, for a start, this is obvious: overall, you would be paying more, since the monthly instalment and other costs of owning a car is always lower than a rental (if not, why would rental companies exist?). For example, a car that cost $100,000 would mean that the monthly cost for ten years is about $833, and with interest and other expenses (e.g. insurance premiums), it would be at $1,000. With the parf rebate after it’s scraped, the monthly cost could be technically about $900 – still somehow cheaper than a rental.

Higher Excess
As a car owner, you’ll source for your own insurance and usually, the excess is $500—i.e., if you get into an accident and it’s your fault, you just need to pay a maximum of $500. For rental car, the company usually have a fixed “excess” and it could go up to $2,000. They even separate it into two kinds: third-party and own damage, whereas for private car ownership insurance, it’s the same excess.

Stories of how people have to pay a hefty amount for excess after they got into an accident with car rental companies are everywhere; just Google and you’d be shook.

Of course, some companies do allow you to top up a certain amount to lower the excess – but that would mean your rental is going to be way more expensive.

Unethical Rental Companies
This is really all about luck: some companies have Ah Beng salespeople who would bully you if they see that you’re “bulliable”. One of their tactics is to always look for tiny scratches or dents when you return the car: they’ll then jack up the repair cost and get you to pay for them (in the past, they deduct from your deposit).

The other trick they’ve always used is to hold you responsible for any repairs the car needs as it’s supposedly due to your “negligence”. For example, if the battery isn’t working, they’ll claim that you’ve not switched off the headlights when it’s parked, so you’re liable for a new battery…when they know all too well that the battery is old AF and is supposed to be changed a few months ago.

It’s always best to Google the car rental company before signing the contract, and make sure you do your due diligence before committing to a company.

Now, how about owning your own car?

Pros of Owning Your Own Car

Cheaper in the Long Run
As mentioned, it would be relatively cheaper if you have your own car. In fact, if you buy a second-hand car with low depreciation, you could be looking at a cost of less than $600 a month: provided that you have a lump sum in the first place.

For example, a car could be sold at $12,000 now and has one more year of COE: that means every month, the cost is about $1,000. The parf value of the car could be $6,000 when it’s scraped, so essentially, you’re paying $500 a month (before expenses like interest or insurance) to drive the car, compared to at least $1,000 a month for rental.

You can modify it the way you want
Want a new spoiler? Go head and install it. Want a new seat? Go buy one from Autobacs. It’s your car: you can do anything you want to it. Nothing beats the feeling of shopping for new rims after striking 4D.

Lower Excess
In comparison to rental, the excess is usually much lower, at about $500 to $1,000. You can even opt for zero-excess: the premiums might be slightly higher, but you won’t need to worry about an unexpected expense. We all love certainty, don’t we?

Bragging Rights
Okay, this is very subjective, but saying that you own a car sounds way better than you renting one, right? Unless everyone has read this article lah.

Cons of Owning Your Own Car

High Upfront Payment and Hire-purchase penalty
To own one, you’ve to make a down-payment of at least 30% to 40% of the car price, and considering that a new car is usually more than $100,000, that’s like paying over $30,000 in cash even before you can start driving the car.

And if you decide to sell the car, there’s a high chance that you’ve got to pay the bank as the interest rate for cars are rather high. Also, the moment you drive the car out, the value of the car dropped immediately.

I’m not going to list down all the numbers, but here’s the takeaway: you’d have to pay a lump sum and you can’t just discard the car whenever you feel like it.

Chances of Getting a Lemon Car
A lemon car is a car that’s problematic: some unethical dealers would already know about it but prefer not to disclose the problems to you. While there’s a lemon law to protect consumers, it’s still a risk as dealers might close down tomorrow, or dispute the case.

And when that happens? You’ll have to fork out more money for repairs. If your engine needs an overhaul, good luck: you might as well scrap your car and just say goodbye to your hard-earned money.

Unpredictable Repair Costs
When you rent a car, you won’t care what’s wrong with it: as long as it can move, you’re happy. If it can’t, you call the rental company.

As a car owner, you’ll sweat when the car suddenly stalls: do you need to change some expensive parts? Did you damage the other parts of the car? Would the cost be so high that you’d have to makan Maggi Mee for months?

(Article continues below) Xing Xing is a 34-year-old Singaporean lady who decides to meet up with an online friend she found in Facebook. But it turns out that he’s not what he seems to be: Prepare boxes of tissue and watch the saddest Singapore Facebook love story here:

(Since you’re here, subscribe to our YouTube Channel for more informative videos lah)

Having to Do Everything for Yourself
From sourcing of insurers to finding a reliable and honest mechanic, you’d have to get your hands dirty to do everything. While some people like doing that, and even make friends with the mechanics, others might not. After all, time is money, but if you don’t source for things yourself, you might just buy a set of tyres for $1,000 when you could get it elsewhere for $300.

So, Rent or Buy?
Asking this question is like asking whether cats are cuter, or dogs are cuter. It really varies according to your needs.

But me?

Well, I’ll stick with BMW.

Bus, MRT and walk.

‘coz it’s still expensive AF, be it buying or renting #justsaying

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