Owning vs Renting a Car in Singapore: A Cost Breakdown

On top of the rising cost of petrol, the COE prices have almost doubled as compared to the previous year. With its recent surge in popularity, car sharing services such as GetGO and BlueSG have provided a cheaper alternative to car ownership.

However, is car sharing really that affordable?

In this article, we will be looking through a full cost breakdown of how much it costs to own vs rent or share a car in Singapore.

Basis of Comparison

To facilitate a fair comparison, we are comparing the cost of driving an owned car vs a rented car with the following assumptions:

• Married male driver aged 30 with 5 years of experience
• Owns a Honda Vezel 1.5X
• Drives to and from work (9 hours at work) and leisurely over the weekends (4 hours each)
• Spends about 93 hours a month (3 hours a day) on the road
• On the road for about 1488km a month (48km a day)

Total Purchase Cost

To start off, we will take a look at the one-time cost of buying a car. This price is generally fixed and only changes with the market or when there is an update in tax policies.

Purchase Cost Breakdown

1. Open Market Value (OMV)

The Open Market Value is the price of the vehicle when it is imported into Singapore. At the time of writing, the OMV of a Honda Vezel is S$20,243.

2. Registration Fee

Registration fee is compulsory for all new cars with the current rate being S$220 per vehicle.

3. Additional Registration Fee (ARF)

On top of the flat registration fee, the ARF is charged based on the OMV of the car. The ARF adopts a tier system whereby the percentage charged increases with each tier.

As the OMV of a Honda Vezel exceeds the first tier, two tiers of ARF are charged.

Tier 1: S$20,000 (100% of first S$20,000)

Tier 2: S$340.20 (100% of next S$243)

Hence, a total ARF fee of S$20340.20 is derived.

4. Excise Duty

Excise duties are indirect taxes for products such as alcohol, tobacco and energy. The current rate is 20% of OMV which comes to S$4048.60.

5. Goods and Service Tax (GST)

GST is charged on the combined price of OMV and Excise Duty which in our case is S$1700.41. At the time of writing, GST is still at 7%, which is expected to increase in the near future.

6. Certificate of Entitlement (COE)

This is the certificate that entitles you to own and use a vehicle in Singapore for a period of 10 years. Honda Vezel is considered a Category A vehicle of which the COE is S$78,899 as of July 2022.

7. Vehicular Emission Scheme (VES)

This is an initiative by the government to encourage the purchase of vehicles that are more environmentally friendly. The Honda Vezel has a VES Rating of A2 which qualifies for a S$15,000 rebate.

8. In-vehicle Unit (IU)

The in-vehicle unit is the card reader that is installed in every vehicle in Singapore that enables you to pay for ERP charges and parking fees. The total installation cost is S$155.80.

9. License Plate Number

When you register your vehicle, you will be automatically assigned a number for free. However, if you wish to have a specific number, you have to bid for it and the starting price is at least S$1,000. We assume the driver to be prudent and opt for the assigned number.

Variable Costs

The variable costs will include costs such as petrol, insurance, maintenance fees, etc. These costs are usually dependent on the owner’s usage of the vehicle.

Variable Cost Breakdown

1. Petrol

The cost of petrol is derived from the following figures:

• Average distance travelled by cars annually: 17,500km
• Average petrol price (per litre): S$2.79
• Average fuel consumption of a Honda Vezel: 7.4litre/km (13.59km/litre)

Hence, the annual cost sums up to S$3,613.05 which is about S$301.09 a month.

2. Parking

Parking fee varies among individuals and is mainly dependent on the parking location. For a sheltered HDB car park, the monthly charge is S$110. As for parking at the office, a flat fee of S$300 is assumed.

3. Electric Road Pricing

Electric Road Pricing is the toll on vehicles according to time and congestion levels with the aim of reducing traffic. This is dependent on the timing and route of the trip. For this comparison, we will set an ERP budget of S$30.

4. Road Tax

The road tax is calculated based on the engine capacity of your vehicle. This tax is paid semi-annually or annually. The annual road tax for a Honda Vezel is tabulated to be S$684.

5. Maintenance

It is advised to send your vehicle for maintenance every six months or 10,000km travelled. This cost is dependent on how well you maintain the car daily as major servicing can be very costly.

The average maintenance fee ranges from S$100 to S$400 per session. We will be using S$200 per session in this comparison.

6. Car Insurance

The last variable cost of owning a car is the insurance cost. The premium of car insurance is based on the driver’s profile and past driving history. A driving record without any accidents allows you to pay lower premiums, likewise for older and more experienced drivers.

Based on the assumed driver profile as mentioned above, the premium of car insurance is S$897.24 per year or S$74.77 per month.

Read more: Best Car Insurance Singapore

Monthly Cost of Owning a Car

As most would opt for a car loan to pay for the purchase of the car, we also have to take into account the interest charges. Applying a seven-year car loan with an annual interest rate of 2.78%, we would end up with a monthly instalment of S$1573.

Hence, the total monthly cost of owning a car after adding the monthly variable cost of S$906.02 would be S$2479.02.

Cost of Renting or Sharing a Car

Alternatively, these are the prices of renting a car based on the assumptions mentioned above.

* The rates are obtained from the respective official website and can be subjected to future changes.

* Rates are calculated based on the assumption that the driver rents the car from 6 am to 7 pm on weekdays and 9 am to 5 pm on weekends.

* Disclaimer: We understand that not everyone will rent a car for such a long period of time but we are trying to keep the usage duration constant for the sake of a fair comparison.

Read more: Guide to Car Sharing Options in Singapore

Comparison Table

Conclusion

Based on the above numbers, we can come to two main conclusions.

Firstly, if you are using the car rental or car sharing system exclusively for daily commutes to and from work, owning a car may actually be a better idea. This is because the booking hours while you are away at work and the parking costs combined negates that potential saving from using such services. Having said that, if you are looking for short-term car usage, car rental or sharing will not only save you a significant amount of money but also removes the hassle of owning and maintaining a car.

From another perspective, we have taken a look into how expensive it is to own and maintain a car in Singapore. Do note that this could be an underestimation if you are looking to own an electric or continental car.