In Singapore, car ownership can be a rather complicated and expensive experience. Recently, more people are turning to leasing instead of outright purchase. We explore the pros and cons of both models in this section:
Lower amount of cash upfront needed
With the recent change in car loan regulations by MAS, you will still need to put up a deposit of at least 30% for that car. For leasing, refundable deposits of only up to 3 months is commonly required.
Predictable financial expenses
The moment you sign a lease, you will know exactly how much you will be spending during the lease period. This is unlike car buying whereby unexpected repair costs may crop up during the period of ownership. Also, there might be significant disposal costs when it is time to sell the car.
Most leasing companies will have courtesy cars when they come and pick up the car up for servicing or repairs. This is much more convenient compared to when you need to leave the car in the garage for a few days due to a repair situation.
Leasing companies also take care of all the other costs involved with motoring such as road tax, insurance, repairs and maintenance.
All you need to do at the end of the lease is return the car to the leasing companies.
Disadvantages of leasing
Slightly higher monthly premiums paid
This is to cater to the risks which the leasing company undertakes and also the convenience of the wide range of services it provides.
Car does not belong to you at end of lease
The car belongs to the leasing company at the end of the lease. Depending on the lease period, this may not be a bad thing if it is a mid-term lease of around 3 years. You do not have to worry about ending up in negative equity situation where the sale price of the car is less than the outstanding car loan.