If you like to travel in the comforts of a private car, would leasing or owning a car be better? Or is getting around with an Uber the best option?
Singapore is one of the most expensive cities to own a car. Whereas $100,000+ might get you a luxury ride in Europe, you’d be lucky to get a family sedan at that price in Singapore.
So if you must resort to cars, compare the cost against the two other best options: leasing, and just Uber-ing everywhere:
For the purposes of this article, we will use the Toyota Altis as the car of choice. This is a versatile vehicle, at the same price range as the most common models. We will also assume you have the minimum down payment required (aroma und 50% of the car price), as there’s not much point in comparing if buying isn’t even an option. We will also look at the cost over a five year period.
This article uses the prevailing COE rates as of July to September 2015. Exact numbers may change dramatically, as COE prices (and hence car prices) are not fixed.
Cost of Car Purchase
In 2013 the Monetary Authority of Singapore (MAS) restricted financing for car loans to 50% of the car price, for vehicles with an Open Market Value (OMV) of above S$20,000. In addition, the maximum possible loan tenure is five years.
The price of the Toyota Altis, inclusive of COE and registration fees, is around $115,000. Note that this is an approximation, based on current COE rates and the registration fees as of September 2015.
At $115,000, assuming a typical car loan interest rate of 2.28% per annum*, you would pay:
- Down payment of S$57,500 in cash
- Monthly installments of S$1,068 per month, for 60 months
- The total cost is approximately $121,580 after five years
(*This is common in many banks, but you can occasionally find lower rates if you search around. A car dealer can sometimes direct you to a bank that is offering lower interest.)
Now Add the Road Tax...
Next, we will have to factor in the road tax, which is based on your car’s engine capacity. The Toyota Altis 1.6 has an engine capacity of 1,598 cc’s. The road tax comes to about $593 per annum.
Over five years, that brings the car cost up to S$124,525
Now Add the Price of Petrol...
The average Singaporean, according to the Land Transport Authority (LTA), drives about 19,000 kilometres per year. Based on the Toyota Altis’ fuel consumption (14.5 km per litre), you would use about 1,310.3 litres of fuel per year, or 6551.5 litres in five years.
Now assuming fuel prices stay about the same at around $2.05 per litre (in reality they will probably go up over the years), you would pay around $13,430 for petrol over five years. Again, bear in mind this is a very low estimate that discounts petrol price inflation.
The total cost of your car over five years now comes to S$137,955.
Now Add Car Insurance Premiums...
We’re still not done, because now you need to cover the cost of your car insurance. Now the cost of premiums varies for each driver, but we will go with the average price of comprehensive car insurance (you have to buy this type of insurance if you took a bank loan). Assuming you have no prior accidents, the typical rate is around S$3,200 per annum.
Over five years, you would pay S$16,000 in insurance premiums. The total cost of your car, over five years, is now S$153,955.
Now Add Maintenance Costs…
Let us assume that your car suffers zero breakdowns or serious mechanical problems over five years. This is not unrealistic, as most cars go about seven years or so before the drivers experience problems.
The car’s servicing requires around S$300 to S$500 per visit if you use the authorised dealer. This is for standard procedures like replacing worn brake pads, checking the drive train, making sure the air conditioner doesn’t leak, etc. This is done every six months.
Using an average of S$400 per visit, that’s $4,000 over five years. The cost your car now comes to about S$157,955.
Let’s estimate that including tire changes, roadworthiness inspections, parking coupons, ERP charges, and any assorted fines, the total cost of owning a typical car over five years would be around S$160,000.
Cost of Leasing
The cost of leasing a Toyota Altis is around S$1,500 a month. This is a typical price offered by dealers and online car rental agencies. The price of leasing includes road tax, servicing, and insurance, but not petrol.
The total cost of leasing the car after five years would be S$90,000. Assuming the same rate of fuel consumption, you are looking at a cost of about S$103,500. The total savings, as opposed to buying the vehicle, are around S$56,500.
Also, note that the initial deposit for long term lease is around three months (S$4,500). This is opposed to the whopping S$57,500 down payment needed to purchase the car. It’s an important consideration, since you shouldn’t wipe out your savings and live dangerously just to have a car.
Cost of Just Uber-ing Everywhere
Uber’s rates are a little loose, and seem to change between cities. Rather than dazzle you with the maths involved*, we will just assume you travel a distance from one end of the island to a central region. This is fairly typical for Singaporeans travelling to and from work.
This is about S$20 to S$26. We will assume an average cost of S$23 per trip, or about S$46 per day to get to and from work. Over the course of five years, that’s about S$41,400. After factoring in inflation of around 3%, you would pay roughly S$43,000 after five years. And if you're diligent about keeping track of Uber promo codes in Singapore, you can easily save at least 10% of this amount.
Taking an Uber everywhere will save you $117,000 compared to buying a car, and S$60,500 compared to leasing a car.So if you must travel in a car all the time, and you are on a budget, just download the Uber app. Don’t even bother with the other options.
*If you insist on specifics, a discussion on Quora suggests Uber’s general method of calculating fares is: b+∫T0(ct+cdf′(t))dt=b+ctT+cdf(T), where T is time and f:[0,T]→[0,∞ is the distance covered as a function of time.
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