LATEST NEWS UPDATE, 2 August 2006 - Significant regulatory changes to Singapore's rental car market that you need to know:
"LTA DECISION COULD SHAKE-UP CAR RENTAL MARKET; BRING IN NEW PLAYERS" Tan Hui Leng of TODAY reports (huileng@newstoday.com.sg):
It is no longer just new cars that can be registered for private hire.
This decision, announced by the Land Transport Authority (LTA) yesterday (1 August 2006), could shake up the car rental market and bring a new player into the picture: Second-hand car dealers.
If these dealers find it difficult to sell older cars, they now have the option of renting them out.
Rental car companies said that this could increase competition and shake up the market. And with more cars, including older ones, available for hire, the cost of rentals could fall, too.
Car resellers are now sizing up the new opportunity.
Mr Raymond Tang, managing director of car reseller Yong Lee Seng Motor, said that he would study the rental market to find out if it is a feasible business.
"The used-car market is generally seeing sales of cars that are about less than two years old," said Mr Tang, who is also honorary secretary of the Singapore Vehicle Traders Association.
"Older cars are not popular and are usually scrapped or exported, so if we can keep these cars in Singapore (as rental cars), that would mean extra revenue for the Government as the cars would incur road tax, ERP, et cetera," he added.
Owners of older cars will also gain a new avenue to sell their vehicles.
In addition, the LTA has lifted the 10-year statutory lifespan of rental cars.
The lifting of the 10-year lifespan applies to all new and existing private hire cars, but the LTA will permit the registration of private hire cars only if valid insurance policies to cover the usage of the cars have been obtained.
"These changes are to allow the market to decide on the type and age of vehicles to be registered as private hire cars," the authority said in a press release.
"The public will, in turn, have a wider choice of vehicles for rent, to meet the different transport needs.
"The changes will also add flexibility to the rental car companies when sourcing for cars during any surge in demand."
The lifting of the 10-year lifespan is welcomed by car rental companies such as Hertz, which sees mainly corporate clients.
The company supplies 200 out of the 8,300 private hire cars in Singapore.
"Depending on your client profile, some private hire cars can be very well-kept because those who rent them have chauffeurs or are senior corporate staff. So the condition of these cars is better than those privately-owned by some people," said regional managing director of Hertz for Asia and Japan, Mr Wong Soon Hwa.
Even so, up until yesterday, the resale value of private hire cars was 10 to 20 per cent lower than the market rate, as those who buy or have bought these cars have to continue abiding by the 10-year statutory lifespan even if they are converted to private cars.
Those who own private cars that were converted from private hire cars can now extend the lifespan of their vehicles by renewing their Certificate of Entitlements.
Mr Wong said that with the upcoming integrated resorts, there could be a larger pool of potential customers for the car rental market.
"(Bigger spenders) are more likely to rent a car ... either on a self or chauffeur-driven basis," he said.
"They may also extend their stay or drive up to Malaysia."
UPDATE ENDS HERE.
<-------------------------------------->
ORIGINAL POSTING OF 21 JULY 2005 BEGINS HERE:
Hi, I worked for one of Singapore's most established and oldest car rental company (established in 1977) and they are based in its own 7-storey corporate center in the city center.
If you are a professional relocating to Singapore for work purposes and need a car to move around, the rule of thumb is to rent or lease a car if your stay here in Singapore would be less than 3 years. However, if you plan to stay for more than 3 years, than it is financially prudent to buy. The rate of depreciation for cars will continue to worsen as the Singapore Government has pledged to make cars more affordable by reducing outfront taxes gradually over the forthcoming years. The financial loss to car owners at disposal time will not doubt, be colossal!
A rented or leased car would offer a peace of mind generally, because the rental company borne all the depreciations and risks, including insuring the car, maintenance, repairs, paying for the road taxes and ensuring the availability of a courtesy car and a 24-hr roadside assistance program.
However, it is important that you pick a bona-fide rental company. In recent years, there has been a proliferation of unathorized parties offering cheap rental cars that may not have proper insurance cover and you as a hirer, risks both jail and fine if caught.
Here are the bits that you got to know about these "grey" (illegal) rentals:
“Grey” rentals are typically made up of “COE cars” (older vehicles that are more than 10 years old) and supermini-sized cars (1300cc and below). They are usually privately registered vehicles and is only insured for social, domestic and pleasure purposes with its owner as the primary insured.
In Singapore, a rental car is expensive to insure and it is almost near impossible to insure one because insurance companies would prefer not to deal with an individual on an ad-hoc basis, as the risks involved is high.
A bona-fide rental car is usually owned by a car leasing company and is classified by the Land Transport Authority (LTA) as a private hire vehicle. This car is required by law to be adequately and properly insured for the purposes the vehicle is used for. LTA stipulated that a private hire vehicle has a limited lifespan of 10 years on the road.
A social, domestic and pleasure purposes insurance does NOT cover car for hire or reward. Violation as such means falling foul of the LTA’s regulations which could result in prosecution, fines or jail.
Such a clause is typically found in an insurance schedule, which regulates the use of the insured car:
“LIMITATION AS TO USE: Use only for social, domestic and pleasure purposes and for the Insured’s business. The policy does not cover use for hire or reward, racing, pace-making, reliability trial, speed-testing, or the carriage of goods (other than samples) in connection with any trade or business, or use for any purpose in connection with the Motor Trade. Warranted that this policy does not cover use for tuition of any Learner Driver.”
Naturally, the consequences is insurmountable if the car is involved in a fatal accident involving a third party or yourself, or indeed your family and loved ones.
Lessee of grey rentals has no recourse under Singapore's consumer laws too. The cars cheap as they maybe, but surely you wouldn’t want to put your career or the lives of your loved one in jeopardy, would you?
An article by The Straits Times (9 April 2004) titled "Rent a car for $25 a day? It maybe illegal" is available for reading at this url:
If you are still unsure whether to rent or buy, you can write to us via email: kengsoon@pacific.net.sg or phone: +(65)6337 7533 (and ask for Miss Letchimi, our Ops Manager). Either way, we would be glad to help to make your stay in lovely Singapore a safe and memorable one.
Over the course of time, this posting has attracted a number of enquries from new and would-be expats. Most expats share the same concern. They really wanted to know how much it'd cost to lease or buy a car in Singapore.
In my emails, I attempted with a response that will answer many of these generic questions. I hope by making them available here, visitors to this site will benefit from it:-
First of all, I think it is important you pick a bona fide car leasing or rental company.
The company that I am working for is a veteran in the car rental and leasing industry. We proudly count some Fortune 500 companies as our clients.
Here in Singapore, before a car can be used as a rental vehicle, it must be registered as such with the government's car registration agency. Many new car dealers (they are often grey importers) pass on their sale stocks as rental vehicles without proper (rental) registration. And that's an offense here in this country. Furthermore, it is very expensive to insure a car that is used for rental purposes and insurance companies don't deal on an ad-hoc basis with parties who are not in the business of operating a bona fide car rental or leasing business.
Singapore is a peculiar case because leasing is often an another term used to describe long term or contract rentals. Cars which are privately purchased with a loan secured under the name of the owner and repaid by monthly instalments are really known as hire purchase (HP). The other form of leasing could be also a type of rental which offer the hirer the option to purchase the car at the end of the contract. The latter is not widely practised in Singapore although it is a more popular way of acquiring a car in America. Normal rentals are more attractive to transient residents because it allows the use of a car without capital tie down and the hirer simply walk away at the end of the contract.
Buying a car on a hire purchase arrangement can be feasible and you may need a local guarantor although I would strongly advised you against buying a car in this manner if your stay in Singapore is less than 5 years. Especially if you are on a work contract or work visa of sort. Alternatively, if you must buy a car, try paying cash for it as it means you will lose less financially when the time comes to sell on.
Car prices are hideous in Singapore! To let you have a clearer picture, I can tell you that the cheapest new MPV costs SIN$1,900 per month tax to hire on a 2 years contract. And this car is a KIA Carnival (Sedona). Brand new compact sedans such as the Corolla goes for SIN$1,450 per month and mid-size executive sedan such as the Camry goes for SIN$2,050 per month.
MPVs in Singapore that are classified as full-size are really only of mid size proportions. Compared to MPVs in America such as the Chrysler Voyager, Toyota Sienna and the Honda Odyessy (North American version), the largest MPV you can get hold of in Singapore is either the Toyota Previa or the Chrysler Voyager. But these two are expensive. Others although smaller, is cheaper to rent or buy. They are such as the Nissan Presage 2.5, Honda Odyessy 2.4 (Asian version), Mitsubishi Grandis 2.4 and the Toyota Picnic 2.0. The other true full size MPV is the Kia Carnival 2.5
If you are on a budget of SIN$1000 - SIN$1500 per month, the only alternative I can think of is to buy on an HP arrangement. For the size of this money, you probably can get to look at new 1600cc - 2000cc sedans or MPVs. But then, of course, you have to buy your own insurance and tax the car, etc. If you could, try paying cash for the car as it means you will lose marginally less financially when the time comes to sell on.
Renting a car means you don't have to worry about registration fees, additional registration fees or excise duties and disposal. Our rental cars come with full insurance and is fully taxed. We take care of all maintenance and repairs and we would provide a 24 hours breakdown recovery service to the hirer. A replacement car will be available if the original vehicle is taken off the road. All these for a fixed sum every month for the duration of the rental contract.
Rental is a wiser choice and gives you greater flexibility than owning a car. We can "build" a diplomatic clause into the contract. Usually, a diplomatic clause is available on contract 24 months or longer. It allows the hirer to return the car anytime between the 13th and 24th month period by the forfeiture of 2 months' rental as compensation. No termination is allowed during the first year of the contract.
At this company, we appreciate your business. Tell us what we can do for you. If you are not satisfied, we are not satisfied. If you need further assistance, please feel alright to phone or write anytime. I will help.
One of my work objectives is to empower new residents with accurate and knowledge facts - helping them to shop safely for a rental car in Singapore. As a result, I have strong commitment to communicate through forums such as this. In addition, I encourage all my friends/ clients/ business associate to contact me when they encounter any questions on, or related to their ground transportation needs.
Therotically, you can "lease" a car from any private individual. This is LEGAL as long as the vehicle ownership has been transferred to you (during the entire lease period) and the insured is yourself.
But it is illegal to "rent" a privately-registered car in this country.
The followings are some pointers regarding the differences between leasing and rental.
DIPLOMATIC CLAUSE:
Leasing
The inherent inflexibility of an operating lease means early termination is often not allowed. Lessee (i.e. you) must bear the entire costs of the lease.
Rental
Diplomatic clause can often be built into the rental contract offering the hirer the option to turn in the car earlier with little financial penalties.
GUARANTOR:
Leasing
Required if the lessee is a private individual.
Rental
As the car rental company owns the vehicle, the hirer doesn’t need a local guarantor to rent a car.
RETURN ON ASSETS:
Leasing
A leased car appears as a non-income generating asset in the books, affecting the performance of your assets.
Rental
A rental car appears as an operating expense in the books.
DOCUMENTATION:
Leasing
The complexity of the operating lease often means the lessee has to sign realms of documents subjecting him to legal terms and conditions.
Rental
A Letter of Acceptance and a set of rental agreement are all that is needed to rent a car.
TRANSFER FEES:
Leasing
As the car is registered under the lessee’s name, he has to pay LTA the ownership transfer fees of S$2,000 at the end of the lease or at every change of driver.
Rental
Hirer simply returns the rental car and walks away.
LIABILITIES:
Leasing
As the registered name of the leased car, the lessee bears all liabilities on the car.
Rental
Hirer has no liabilities on the hire car except the insurance excess.
OWNERSHIP:
Leasing
In addition to the transfer fees, the lessee has to sign the power of attorney to transfer the ownership of the car (to a buyer or back to the lessor of the vehicle) at the end of the lease agreement.
Rental
Hirer simply returns the rental car and walks away or signs up for a new
rental on a new car.
INSURANCE:
Leasing
Lessee buys insurance for the car. Insurer may refuse future insurance coverage or impose high excess if lessee has poor driving records (e.g. accident prone) while driving on his or her own insurance policy.
Rental
The rental company is responsible for insuring the car.
Author
Aussieboy
Registered: November 2006 Posts: 11
Comment Date: Mon, 13 November 2006
Do you lease second hand cars or only new vechiles?
Jerry_Yeo
Registered: February 2005 Posts: 1
Comment Date: Mon, 13 November 2006
Hi, both used and brand new vehicles are available. You may call +65-63377533 to enquire on the latest status of used cars.
Jerry_Yeo
Registered: February 2005 Posts: 1
Comment Date: Fri, 2 March 2007
In Singapore, the average cost of owning a new 1.3L car for 24 months is approximately SGD1,000-SGD1,200 per month (including depreciations; excluding gasoline, parking, ERP and costs of loan). I'd say if you can find a similar lease car for less than or equal to SGD1,000 per month, you are onto a winner.
draravindrad
Registered: March 2007 Posts: 0
Comment Date: Sun, 4 March 2007
hi, i am planning to work in singapore for an year and i plan to rent a car of model 2002 or above for 1 year.i am single person so a small car is enough for me. so can i get one for 500-1000 singapore dollalrs per month, including everything like insurance, registration and road taxes?. please let me know.
Jerry_Yeo
Registered: February 2005 Posts: 1
Comment Date: Mon, 5 March 2007
draravindrad, it is certainly not impossible although it may take some effort to locate a rental company who will rent you a car for less than $1K. Your best source would be this forum. Try asking around you may hit the jackpot
myarmour
Registered: May 2007 Posts: 0
Comment Date: Sun, 13 May 2007
Hi draravindrad... maybe I have a solution for you... email me pls... Tks.
Home
Auctions
Classifieds
Dating & Friends
Expat Forum
Hotels & Travel
Jobs
Maps
Service Apartments
;)
;)
;)
