Long term car rental or buying a car in Singapore: which costs less?
Owning a car in Singapore costs more than the car. Renting one by the month costs more per month than a loan repayment. Which one is cheaper depends on one number: how long you need the car.
What owning actually costs here
Buying a car in Singapore means buying a Certificate of Entitlement alongside it. A COE gives you the right to keep a car on the road for ten years, and its price is set by a bidding exercise held twice a month. In recent years it has often cost as much as the car itself. Current prices are published by the Land Transport Authority after each exercise.
On top of the COE and the car come the Additional Registration Fee, annual road tax, insurance, servicing, parking, and depreciation, which is the largest cost of all and the one nobody sees on a bill. When you deregister the car you get some of the registration fee back as a PARF rebate, but only a portion, and only if you deregister before the COE runs out.
Each of those arrives at a different time and in a different amount. Together they are what a monthly rate replaces.
What renting by the month costs
One figure a month, fixed for the term. With SYRF that figure includes third party insurance, road tax, scheduled servicing and roadside assistance, with no mileage cap. Fuel or charging, ERP, parking, fines and any repairs to the car after damage stay with you.
How big the figure is depends on the car. SYRF's usual rates are $1,500 to $2,200 a month for Japanese and Korean cars and $1,900 to $3,000 for continental ones, with the smaller engine in each case at the lower end.
There is no COE to buy, no down payment, no loan, and nothing to sell at the end. You hand the car back.
When buying wins
If you know you will keep a car for most of a ten year COE, buying usually costs less overall, because you spread the COE and depreciation across the whole period and recover part of it at the end. Ownership also suits people who want to modify the car, keep it past ten years by renewing the COE, or simply prefer to own what they drive.
When renting wins
If your horizon is uncertain, renting removes the risk of buying at the wrong moment. COE prices move, and someone on a two year posting who buys a car is exposed to that movement twice, once when buying and again when selling. Renting also keeps your capital free, and lets you change cars when your circumstances change rather than when the loan ends.
A simple way to compare
Take the number of months you are confident you need the car. Multiply it by the monthly rental rate you have been quoted. That is the rental cost, and it is the whole of it.
For ownership over the same months, add the COE and the car price, subtract what you would realistically get back on sale plus any PARF rebate, then add road tax, insurance, servicing and parking for the period. Divide by the same number of months.
For short horizons the rental figure is almost always lower. For long ones ownership usually is. Somewhere between two and four years the lines cross, and where exactly depends on COE prices at the time, which is why it is worth doing the sum with current numbers rather than remembered ones.