Singapore Car Ownership Alternative: Long-Term Car Rental Trends & Costs

The escalating cost of car ownership in Singapore, driven by rising Certificate of Entitlement (COE) prices, is prompting more Singaporeans to consider long-term car rentals as a viable alternative. This shift is fueled by financial considerations, changing lifestyles, and the increasing availability of convenient and flexible rental options.

The High Cost of Car Ownership

The COE Effect

The continued increase in COE prices has created a significant barrier to entry for prospective car owners. In August, the price for small and medium-sized cars (Group A) reached \$104,524, a new high since the end of 2023. This escalating cost is making car ownership increasingly unaffordable for many.

Substantial Down Payments

Purchasing a car in Singapore requires a substantial 40% down payment, which can range from \$80,000 to \$100,000. This considerable sum represents a significant investment, tying up funds that could be used for other financial goals.

The Appeal of Long-Term Car Rentals

Financial Advantages

Long-term car rental offers a way to avoid the large down payment and ongoing costs associated with car ownership. Renting allows individuals to allocate funds to investments, education, or other pressing needs. Chen Mingkai, for example, chose to rent a car after realizing he could save the \$80,000 down payment and use it for his daughter's future college fund or family emergencies.

Convenience and Flexibility

Long-term rentals often include maintenance, insurance, and road tax in a single monthly fee, simplifying budgeting and eliminating unexpected expenses. Companies like GetGo, with its ZipZap service, offer long-term rentals with no deposit and flexible lease terms, making car access even more convenient.

Changing Lifestyles

Many younger Singaporeans, particularly millennials and Generation Z, view cars as a functional necessity rather than a status symbol. They prioritize flexibility and affordability, making long-term car rental an attractive option. As lifestyles evolve, the demand for alternative transportation solutions is increasing.

Car Rental Companies Responding to the Demand

GetGo and ZipZap

GetGo launched its ZipZap service to address the growing demand for long-term car rentals. The service provides a hassle-free option for those who need a dedicated vehicle without the burdens of ownership.

Lumens and Lylo

Lumens, a car rental group, has seen a significant increase in household users opting for long-term rentals. Their Lylo brand, launched two years ago, caters specifically to young user groups with affordable annual lease contracts. They are onboarding approximately 30 new subscribers every month.

Market Growth

The self-driving car rental market has experienced significant growth, increasing by approximately 45% in recent years. This demonstrates the growing interest and acceptance of car rental as a viable transportation solution.

Important Considerations When Choosing a Long-Term Car Rental

Deductibles

Consumers should carefully examine the rental package's details, especially the deductible amount in case of an accident. Some companies have high deductibles that could result in significant out-of-pocket expenses.

Deposit Return

It's important to clarify the terms regarding the return of the deposit. Some companies may take a considerable amount of time to refund the deposit, so consumers should be aware of the timeline.

Vehicle Preferences

Toyota is currently a very popular car rental choice because people view it as reliable. Hybrid vehicles are also popular choices because of fuel efficiency. Electric car rental interest is high and most companies recommend to rent the electric car first to see if it fits their lifestyle.