5 considerations before signing a car lease in Singapore

Car leasing is a terrific way to have your own transport for a while without the initial cash outlay of buying one. It's the perfect solution for drivers who only wish to drive for a couple of years but need a long-term car rental alternative.

It's not all unicorns and rainbows, though. With a plethora of car rental companies in Singapore, and an even higher number of packages and deals, it can be tough finding the right lease to own a car.

Before you go signing on the dotted line of a contract with the lowest rates in town, consider these five factors.
 
 
1. Insurance excess and collision damage waiver (CDW)

You've probably heard of the terms 'excess' and 'CDW'. But what are they and how does it all work? In a nutshell, insurance excess is the amount you need to pay in the event of an accident. This is the extra payment (excess) that will be imposed on you, the policyholder, if a claim is made against your policy.

CDW, on the other hand, is an add-on option that car leasing companies provide to reduce the amount you're liable for. This usually covers damage costs to the rental car and may include anything from just the bodywork to the entire car's repair costs, depending on your policy.

What to look out for:

Keep an eye out for suspiciously high insurance excess, this could mean that what's stated isn't the total amount you'll have to pay. Rather, it could be split up into 'total', 'own damage', and 'third party damage' excess.
 
 
2. What's included in your car leasing package?

Most car leasing companies don't just provide leasing services, they also offer add-ons and other entitlements, but at slightly higher rates. These are typically included in more premium packages if you're willing to shell out a little more money.

What to look out for:

Roadside assistance: Most leasing companies would want you to contact their hotline for roadside assistance (accident recovery, vehicle breakdown, towing services etc) regardless of whether you're a customer or not. The main difference is the cost of these services and how much you, as the driver, are liable for.

Accident repair and claims: Accident recovery, accident reporting, insurance claims, damage repairs.

Servicing and maintenance: Servicing and basic wear and tear maintenance are usually included in most packages. However, damaged parts that aren't considered normal wear and tear and their respective costs may be excluded.

Replacement vehicle: What about a replacement vehicle during servicing or repairs? It might not seem important at first, but going without your ride for a few days, or even a week, could disrupt your daily lifestyle, especially if you need your own transport for work.

Option to change car model mid-lease: Your car needs might change mid-lease, from a sedan to an MPV, for example. Some companies do provide the option of upgrading or switching car models mid-lease, with a top up, of course.



3. Transparent pricing, warranties, and other hidden costs

Hidden costs can burn a hole in your pocket if you're not careful. This is where your inner Grammar-Nazi comes in. Always read the fine print. Read it once more. Then again. And again. Some companies may offer base leasing rates but may not disclose other add-on fees that magically appear the minute you return the car.

Another important thing to look out for is warranty. It doesn't hurt to find out exactly what your warranty covers and what you're liable for in the event of an accident or something else.

What to look out for:

Always double check your warranty coverage and liability, as well as fees that aren't included in the contract, such as road tax, lower-than-average insurance excess, excessive wear and tear costs, early termination fees, and extra costs for exceeding the mileage limit.
 
 
4. Mileage limits

Speaking of mileage limits, you should also check your car leasing contract to find out if your vehicle has a cap. Most leasing companies in Singapore don't impose a mileage limit unless you plan to lease an exotic or supercar. But it's okay to be a bit 'kiasu' in this situation.

Those that have a mileage limit, typically 12,000km - 15,000km per year (differs based on the dealer), might have slightly lower rates than those that don't. A big mistake many drivers make is underestimating their mileage requirements and end up paying a lot more than expected for exceeding their mileage limits.

What to look out for:

Consider your lifestyle and estimate how much you'll be driving. If you're not sure, it might be a safer option to go with a lease that has unlimited mileage.
 
 
5. Private-hire Vehicle (PHV) driver incentives

Looking to lease a car for PHV purposes? Good news, many long-term car leasing companies do offer incentives for PHV drivers these days.

Check with the car leasing company if the car is a registered PHV (blue decal), and if they have any promotions of incentives for PHV drivers. These are usually seasonal so it's advisable to do some research beforehand.

What to look out for:

PHV driver incentives can include any of the following: petrol discounts, completion bonuses, insurance coverage, roadside assistance, and the list goes on.
 
 
Car leasing in Singapore: Bottom line

Daunting as it may be, putting in the time to look out for the things mentioned in this article will help save you from a whole lot of headaches once you sign a car leasing contract.

Figure out your needs and do your homework before making a substantial financial commitment. Do also research the reviews of the car leasing companies shared online.

sgCarMart is launching a new service that allows you to compare detailed breakdowns of multiple SG car leasing quotes and package prices, at a single glance. You can get multiple leasing quotations with breakdowns on package details and entitlements via sgCarMart's car leasing service.
 
 
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