Car leasing and car subscription services are attractive alternatives for drivers who find that owning a car in Singapore is not a viable option. While both offer flexible and convenient access to a vehicle without the commitment of traditional car ownership, they operate on different principles and have distinct benefits.
Car leasing involves renting a vehicle for an extended period, typically from one to five years or longer. During this time, you pay a fixed monthly fee to use the car owned by a leasing company, such as Sime Darby Services.
Car subscription services have gained in popularity in recent years by offering a more flexible alternative to traditional car ownership and leasing. As a subscriber, you pay a recurring fee to access a fleet of vehicles from the provider, for a predefined period ranging from as short as a day to months. Newer players in the market include Fasst, which offers fast and easy booking of a car and vehicle delivery to your doorstep within 48 hours.
Duration of contract
Car leasing agreements come with a fixed contract period usually upwards from a year. Compared to car loan repayments for purchasing a similar vehicle, your monthly lease payments are often lower as you are mainly paying for the vehicle’s depreciation.
However, ending a lease agreement before the expiry of the contract period may incur early termination fees. Some leasing contracts also come with mileage limits. Exceeding these limits, or returning the vehicle with excessive wear and tear, can result in additional fees or financial penalties.
With car subscription, there is no long-term commitment. Subscribers can typically modify, pause or cancel their subscription with relatively short notice and minimal hassle.
While car subscription services offer convenience and flexibility, they often come with higher monthly costs compared to leasing, reflecting the added flexibility they provide. Subscription fees may also change, affecting how much you have to pay.
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Vehicle maintenance
In many car leasing agreements, the lessee is responsible for the vehicle’s maintenance and service costs. However, this can vary depending on the specific terms outlined in the lease contract. Some car leasing companies may offer agreements that include maintenance packages for an additional fee.
Unlike leasing, car subscription services usually offer all-inclusive packages that include maintenance, insurance, and roadside assistance in the subscription fee. This provides peace of mind for drivers who prefer a hassle-free experience.
Fasst, for example, not only includes unlimited mileage, insurance and road tax coverage, servicing and maintenance in its subscription but also 24/7 roadside assistance in Singapore and Malaysia, as well as a replacement vehicle during your vehicle downtime.
Choice of vehicle
Car leasing ensures that you will always have access to the vehicle, and the specific make and model of the car you will be driving. In some cases, you may even have the option to customise your leased vehicle according to your personal preference such as choosing specific features.
On the flip side, you won’t be able to change your leased vehicle as often if you grow tired of driving it.
Car subscription services offer subscribers the flexibility to switch between different vehicles within the provider’s fleet. This flexibility is beneficial based on the subscriber’s changing needs and preferences, or the need to have different types of vehicles for different occasions.
However, the availability of certain vehicle models may be limited. Car subscribers also generally have less control over vehicle specifications compared to long-term car leasing arrangements.
Potential to own your leased vehicle
There is an additional type of car leasing arrangement known as lease-to-own. This is where the lessee has the option to purchase the vehicle at the end of the lease term. Typically, a purchase price is determined at the beginning of the lease term or based on the vehicle’s residual value (its expected value at the end of the lease term). If the lessee decides to exercise the option to purchase, they will usually need to pay the agreed-upon purchase price, along with any applicable fees or taxes.
>>READ: Buy or lease a car?
Lease to own agreements can provide flexibility for individuals who are unsure about committing to purchasing a vehicle outright but want the option to buy it at the end of the lease term if they decide they want to keep it. However, it is essential to carefully review the terms and conditions of the lease agreement, including any obligations, fees, or penalties associated with exercising the option to purchase the vehicle.
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Conclusion
In Singapore, both car leasing and car subscription offer viable alternatives to traditional car ownership. The choice between the two depends on factors such as your budget, commitment level, driving habits, and preference for flexibility.
If you prioritise lower monthly payments and are comfortable with a long-term commitment, car leasing might be the better option. For those who like their leased vehicles so much, you could potentially end up owning it with a lease-to-own arrangement. On the other hand, if flexibility and convenience are paramount, and you are willing to pay a premium for it, car subscription services offer an attractive solution.
By understanding the difference between these car leasing and car subscription, you can then make an informed decision on which to choose that aligns with your lifestyle and needs.
