Car Subscription or Car Ownership: Which One Will Save You Money ?, Money News

Auto subscriptions have recently entered the auto industry in Singapore, allowing people to drive their favorite cars without the high upfront costs of owning a car.

With its flexibility of duration and all-inclusive monthly subscription fees, the car subscription model rivals traditional car ownership. We’ve compared the costs of car subscriptions to car ownership to see where you can save money.

Car subscriptions: flexible terms with hidden costs

The car subscription companies are the first of their kind in Singapore. Unlike traditional methods of renting a car, auto subscriptions allow Singaporeans to rent a car on a monthly basis, without a fixed-term contract that binds the buyer to a rental car for a year or more.

These car subscription fees take the form of a monthly subscription that includes all the costs of owning a car such as: car insurance, road tax, warranty and 24 hour assistance maintenance costs. 24.

While one of the selling points of the car subscription is that you can return it at any time, most cars that Carro loans out have a minimum term of 6 months. With that in mind, you can expect a minimum payout of $ 10,558 for a Kira Cerato (LX Sedan) – the cheapest subscription available.

In addition to this subscription fee, Carro requires you to pay a non-refundable reservation fee of $ 1,000 for new cars or a refundable security deposit for used cars which varies by car model.

Likewise, the company charges an optional concierge fee of $ 99 per month, which takes into account pickup and delivery services when your car needs maintenance.

It is important to note that your monthly payment is not fixed. Carro actually determines your auto insurance through a pay-per-kilometer model, which is then calculated into your monthly subscription.

So even if you don’t have to pay an external premium on auto insurance or maintenance costs, you may still be responsible for additional costs outside of the base charges advertised on Carro’s website.

Car ownership: high costs with an expiration date


It is well known that owning a car in Singapore is expensive. The average cost of a compact car is $ 92,888, which includes COE – an expensive component of car costs that can even exceed the value of the car.

In addition to the COE, you will also be responsible for registration fees, road tax, auto insurance, and a down payment for your vehicle as an upfront charge.

Total cost of owning a car over five years


The total cost of owning a car also depends on the depreciation value of your car. Assuming you pay off your car loan, your Mazda 3 Series will still have 51% of its original value after five years, bringing your total net cost down to around $ 52,856 if you decide to sell it.

Likewise, you will find that your Mercedes Benz is 44% of its original depreciation value, so your total net cost is $ 94,949.

It is important to note that auto insurance and auto loans are highly dependent on your needs and qualifications, while maintenance costs depend on the model and maintenance needs of your vehicle.

Therefore, it is likely that you will end up paying more in running costs for your car, especially if you encounter unforeseen accidents.

Where can you save money?

The lower upfront costs of a car subscription have a strong appeal against the costly commitment of owning a car. In the first year alone, you pay almost 162% more to own a Mazda 3 Series than to use a subscription service, and 262% more to own a Mercedes-Benz.

However, when it comes to buying or owning for the long term, we’ve found that you can actually save money by owning a property, as long as you can sell your car after you’ve successfully made your car loan payments. .

Additionally, we’ve found that the annual recurring costs of owning a car are actually 22-36% cheaper than paying for a car subscription service.

In the case of both of these car models, you will save more money owning a car if you sell your vehicle right after paying off your loan (when the value of the car has not fully depreciated).

By doing this, you could save 45% and 37% on the total costs of your Mazda 3 Series and Mercedes Benz, respectively, compared to using an auto subscription service.

However, the advantage of owning a car is that you can have a car in your name for as long as you want, so it may not be a good idea to sell it after a few years. In this case, it may appear that a car subscription is cheaper.


For example, at the end of the five-year period, you will have saved up to 7-29% by purchasing a Mazda 3 Series or Mercedes Benz than if you had purchased the cars.

However, the longer you keep your car, the more expensive car subscription services become.

Over the past 10 years, we’ve found that you’ll end up paying 24-39% less for your car if you own it than if you subscribe to it (not counting the discounts you get for scrapping) .

Between the annual amortization, high upfront costs, and possible COE renewals, owning a car may not be as profitable as a short-term car subscription. Plus, the main selling point of a car subscription is that you can trade in your vehicle for a better one whenever you want.

This model works well for those who may foresee a need for a different type of car in the future, whether it’s time to test drive a luxury vehicle or you need more room for new additions to the family. .

So, when it comes to choosing between the two, it’s important to consider not only the initial costs of the car, but also what you want out of it. If you tend to keep your car longer between sales, it may be worth owning a car.

This article first appeared in Champion of value.

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