Despite the increase in Certificate of Entitlement (COE) supply, COE premiums are still sky high, which lead to equally astronomical car prices.
Besides COE, the tiered ARF (Additional Registration Fee) scheme plus the stricter financing rules implemented earlier this year also played a part in raising the barriers of car ownership, leaving aspiring car owners in a quandary.
A Toyota Vios now costs $115k (as of 18th March) - twice as much as it did five years agoThe previous lending regulations, which allowed banks to extend 'full' loans with a repayment period of 10 years, have been abolished. Under the new rules, buyers who intend to purchase a car (including used ones) with an Open Market Value (OMV) less than or equal to $20k can only borrow 60 percent of the vehicle's price (COE included), and must repay the loan in five years.
If the car's OMV is above $20k, a buyer can only borrow 50 percent of the car's price and must settle the loan within five years.
Specifically, it's the hefty down payment that is a big hurdle to many people. Buying a Toyota Vios, for example, requires one to fork out a $46k down payment. Acquiring a Camry 2.0 -which is listed at $150k at press time - would mean handing over $75k should you decide to purchase one.
If you can't afford to buy a car, we'll demonstrate how you can still "own" one. Even if you could purchase a car outright, we'll show you how leasing could potentially save you a good amount of cash.
Besides COE, the tiered ARF (Additional Registration Fee) scheme plus the stricter financing rules implemented earlier this year also played a part in raising the barriers of car ownership, leaving aspiring car owners in a quandary.
If the car's OMV is above $20k, a buyer can only borrow 50 percent of the car's price and must settle the loan within five years.
Specifically, it's the hefty down payment that is a big hurdle to many people. Buying a Toyota Vios, for example, requires one to fork out a $46k down payment. Acquiring a Camry 2.0 -which is listed at $150k at press time - would mean handing over $75k should you decide to purchase one.
If you can't afford to buy a car, we'll demonstrate how you can still "own" one. Even if you could purchase a car outright, we'll show you how leasing could potentially save you a good amount of cash.
The advantages
Apart from not having to hand over a big chunk of your savings as a down payment, most leasing contracts also stipulate that the leasing company will be responsible for expenses such as road tax, insurance and vehicle maintenance (see sidebar overleaf for potential 'savings').
Some dealers even offer the use of a courtesy car while the leased vehicle is being serviced. Of course, the lessee remains responsible for ERP charges, parking fees and any fines incurred for the duration of the lease.
The greatest advantage leasing holds is that since you don't own the car, you don't have to contend with depreciation and
resale issues when changing vehicles. This is significant as, generally speaking, a new car loses 15 percent of its value within the first year alone.
Car leasing does without the hefty downpayment but requires a larger sum of monthly repaymentsIf you're planning to lease a new car, it is possible to choose specifics such as colour and standard equipment. But if you're
leasing a used vehicle, you'll be limited to whatever the dealer in question currently has in stock. A new car is, of course, more expensive to lease than an older one.
Most firms will also allow you to use your own registration number on the car you intend to lease (as long as you pay the necessary LTA transfer fee, of course).
In contrast to owning a car, leasing also gives you the opportunity to change vehicles sooner, without having to worry
about settling the outstanding loan for the car in question.
Apart from not having to hand over a big chunk of your savings as a down payment, most leasing contracts also stipulate that the leasing company will be responsible for expenses such as road tax, insurance and vehicle maintenance (see sidebar overleaf for potential 'savings').
Some dealers even offer the use of a courtesy car while the leased vehicle is being serviced. Of course, the lessee remains responsible for ERP charges, parking fees and any fines incurred for the duration of the lease.
The greatest advantage leasing holds is that since you don't own the car, you don't have to contend with depreciation and
resale issues when changing vehicles. This is significant as, generally speaking, a new car loses 15 percent of its value within the first year alone.
leasing a used vehicle, you'll be limited to whatever the dealer in question currently has in stock. A new car is, of course, more expensive to lease than an older one.
Most firms will also allow you to use your own registration number on the car you intend to lease (as long as you pay the necessary LTA transfer fee, of course).
In contrast to owning a car, leasing also gives you the opportunity to change vehicles sooner, without having to worry
about settling the outstanding loan for the car in question.
The catch
However, when monthly payments on a car lease are compared to monthly payments on a hire-purchase loan, the former's advantage doesn't seem especially great.
Local Suzuki agent Champion Motors, for example, is offering the Swift 1.4 GLX hatchback (automatic variant) from $1,490 a month - subject to a 10 percent downpayment and a minimum lease period of 72 months.
Kia is leasing the new K3 for as low as $1,719 a month with $0 depositBut if you were to purchase said Swift model, the monthly repayment on a five year loan (at 2.6 percent annual interest)
would be $1,151. This is assuming a 40 percent down payment against the car's selling price of $101,900 at press time.
When it comes to luxury models, however, leasing is a much more expensive option. Under Mercedes-Benz's Star Lease programme, for example, the A180 Style hatchback costs $2,367 a month (as of 2nd April 2015) for a 60-month term.
But if you were to purchase the vehicle, listed at $144,888 at press time, your monthly repayment would amount to $1,364 (assuming a 50 percent down payment and a five-year loan).
That's $1,003 more to lease the same car per month, or an extra outlay of $60k after five years. And once the hire-purchase loan is fully paid, the car is 'free' to be driven for the rest of its COE lifespan.
Besides, if you're planning to buy a new vehicle, you'll have your Preferred Additional Registration Fee (PARF) rebate and the remaining COE paper value - provided the owner scraps the car before its tenth year - to put towards the next car. The PARF rebate is 50 percent of the ARF in the car's tenth year.
In contrast, when the leasing period is over, you're left with nothing. As several industry veterans have pointed out, this is
the other reason why many remain cool to the idea of leasing.
Pre-owned leasing
If leasing a brand-new car is too expensive, you could consider leasing a used vehicle. For instance, renting a three-year old (2012-registered) BMW 520i costs $4,300 per month - with a minimum leasing period of 12 months.
However, when monthly payments on a car lease are compared to monthly payments on a hire-purchase loan, the former's advantage doesn't seem especially great.
Local Suzuki agent Champion Motors, for example, is offering the Swift 1.4 GLX hatchback (automatic variant) from $1,490 a month - subject to a 10 percent downpayment and a minimum lease period of 72 months.
would be $1,151. This is assuming a 40 percent down payment against the car's selling price of $101,900 at press time.
When it comes to luxury models, however, leasing is a much more expensive option. Under Mercedes-Benz's Star Lease programme, for example, the A180 Style hatchback costs $2,367 a month (as of 2nd April 2015) for a 60-month term.
But if you were to purchase the vehicle, listed at $144,888 at press time, your monthly repayment would amount to $1,364 (assuming a 50 percent down payment and a five-year loan).
That's $1,003 more to lease the same car per month, or an extra outlay of $60k after five years. And once the hire-purchase loan is fully paid, the car is 'free' to be driven for the rest of its COE lifespan.
Besides, if you're planning to buy a new vehicle, you'll have your Preferred Additional Registration Fee (PARF) rebate and the remaining COE paper value - provided the owner scraps the car before its tenth year - to put towards the next car. The PARF rebate is 50 percent of the ARF in the car's tenth year.
In contrast, when the leasing period is over, you're left with nothing. As several industry veterans have pointed out, this is
the other reason why many remain cool to the idea of leasing.
Pre-owned leasing
If leasing a brand-new car is too expensive, you could consider leasing a used vehicle. For instance, renting a three-year old (2012-registered) BMW 520i costs $4,300 per month - with a minimum leasing period of 12 months.
In contrast, a brand new BMW 520i under the same leasing program will set you back $4,580 per month and requires a minimum leasing period that is thrice as long - 36 months.
If you want more variety in terms of the makes and models available, you can check out multi-brand distributor Wearnes Automotive's leasing programme, which offers all the models - both new and used units - from the seven marques (Volvo, Jaguar, Land Rover, Infiniti, Renault, McLaren and Bentley) under the Wearnes umbrella.
Apart from these brands, the company also claims to be able to meet a customer's request for any make/model that isn't part of its portfolio. Unique to Wearnes, however, are the added services not offered by most firms.
For instance, Wearnes' 'Full Service' leasing programme includes vehicle pickup/delivery for maintenance, personal accident insurance in addition to the comprehensive insurance coverage, and 24-hour roadside assistance that covers driving in Malaysia, too.
Besides offering makes and models from their local dealership portfolio, Wearnes Automotive's leasing programme can also meet customers' requirements for any models in the marketThe quality of the used vehicles available for lease varies by dealer. For example, Wearnes tries to offer cars not more than five years old. Be aware, too, that some dealers place mileage caps on their cars.
Wearnes, for instance, has an annual cap of 20,000km on its vehicles (whether new or used) and charges 50 cents per additional kilometre covered at the end of the lease, although a
spokesperson did mention that clients can negotiate to have this clause waived.
An emerging trend
Although leasing isn't popular among local motorists yet, more car dealers have joined the leasing game anyway. Porsche,
MINI, Kia and Volkswagen are just a few of the authorised agents that have recently introduced leasing schemes. This is great news for drivers, as more options equal better chances of finding the programme that best suits their needs.
Here are some related articles that might interest you
Best luxury car rental companies for all your fancy events in Singapore
7 popular private-hire cars and where to get them
Rent a car from these 'no deposit needed' car rental companies
Car rental companies that offer affordable services for P-plate drivers
Impress your relatives without owning a car this Chinese New Year
For cars that are currently available for lease, visit our Car Rental section.
If you want more variety in terms of the makes and models available, you can check out multi-brand distributor Wearnes Automotive's leasing programme, which offers all the models - both new and used units - from the seven marques (Volvo, Jaguar, Land Rover, Infiniti, Renault, McLaren and Bentley) under the Wearnes umbrella.
Apart from these brands, the company also claims to be able to meet a customer's request for any make/model that isn't part of its portfolio. Unique to Wearnes, however, are the added services not offered by most firms.
For instance, Wearnes' 'Full Service' leasing programme includes vehicle pickup/delivery for maintenance, personal accident insurance in addition to the comprehensive insurance coverage, and 24-hour roadside assistance that covers driving in Malaysia, too.
Wearnes, for instance, has an annual cap of 20,000km on its vehicles (whether new or used) and charges 50 cents per additional kilometre covered at the end of the lease, although a
spokesperson did mention that clients can negotiate to have this clause waived.
An emerging trend
Although leasing isn't popular among local motorists yet, more car dealers have joined the leasing game anyway. Porsche,
MINI, Kia and Volkswagen are just a few of the authorised agents that have recently introduced leasing schemes. This is great news for drivers, as more options equal better chances of finding the programme that best suits their needs.
Here are some related articles that might interest you
Best luxury car rental companies for all your fancy events in Singapore
7 popular private-hire cars and where to get them
Rent a car from these 'no deposit needed' car rental companies
Car rental companies that offer affordable services for P-plate drivers
Impress your relatives without owning a car this Chinese New Year
For cars that are currently available for lease, visit our Car Rental section.
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