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

Personal Finance

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

November 5, 2021

When car subscription was introduced to the automobile industry of Singapore, it became the talk of the town! Well, getting a subscription sounded more lucrative than buying a car, which attracted everyone’s attention!

However, what is the catch here? Will getting a car subscription be more cost-effective than purchasing a car? Or is it just a tall tale?

To give you a clear idea about these two procedures, we’ve discussed all the relevant matters in this article. By the time you finish reading this, you can confidently decide which deal is sweeter than the other!

So without wasting much, hop on the ride with us!

Car Subscription – Offers Flexibility with Hidden Charges

Car subscription is the hottest thing in the automobile industry. When you take a look at its terms, you will see amazing flexibility. However, just like everything in this universe, it comes with perks and cons.

Unlike leasing a vehicle, which was a popular thing in Singapore, you can get a car subscription for a month. Moreover, you won’t have to sign any complicated contract; hence, you can cancel your subscription after a month without any issues.

Now the question is, how will the company charge you for this facility? Well, the cost includes maintenance charges, car insurance, road tax, and warranty. So yes, it is just like having car ownership, but for 30 days only.

However, some companies will allow you to have a subscription for six months minimum. In that case, you will get a pretty sweet deal on the package depending on the company you are picking.

For instance, Carro is one of the most reputed companies that provide car subscriptions. And its rule is that you’ll have to subscribe for a six-month package.

Carro offers you a subscription starting from S$10,558 for six months. However, the charge will increase depending on your uses and vehicle selection.

It doesn’t matter whichever company you choose; the fees will be charged according to many aspects. Such as how you are using your car, the length of your subscription, maintenance, and most importantly, the car you choose to drive.

The most remarkable thing about a car subscription is that once you get a vehicle, you are not bound to it forever. And for some people, that deal is pretty comforting!

The Pros and Cons of Car Subscription

ProsCons
You won’t have to sign up for long-term contact.Monthly fees will be quite high.
You don’t have to worry about getting a car loan.Package cost will increase over the years.
Subscription doesn’t require any down payment.You will have to pay a higher amount for a high-end car model.
There is nothing to be anxious about the car’s reselling value.You may not be able to choose from a wide range of vehicles.
The subscription fees will cover all the charges.You cannot perform any modifications.
You will get 24/7 customer supports which will be beneficial during an emergency.You won’t be able to upgrade your mileage.

Car Ownership – Expensive and Has an Expiration Date

When it comes to buying a car in Singapore, the process is hectic and expensive. Most citizens get a car loan to cover the expenses, and they have to pay installments with interest every month.

So people tend to avoid car ownership, and the efficient public transportation system supports that. However, some of us really need a car for many personal reasons. Hence, we try to own one despite all the obstacles.

The average cost of a standard car is around S$94,000, and the price increases according to your automobile selection. Furthermore, you’ll have to spend money on maintenance, fuel, road tax, and many more things over the years.

Another thing is that getting a car loan won’t be that easy. As the bank will evaluate your credit history and asset, you may not cover the full cost with your loan money.

Moreover, your car insurance amount will depend on your credit history too. Therefore, if your vehicle falls into an accident, your insurance money won’t be enough.

Here is a possible cost scenario if you own a car. Suppose you are buying a Mazda 3 Series (M-Hybrid Classic). It will cost you around S$99,888. If you pay S$39,555, you will still need to repay S$51,120 in installments. And here is the list of the recurring expenditure.

Maintenance CostS$1265
Road Tax (Annual)S$3,069
Car InsuranceS$8,835

After using your car for 5 years, if it is in good condition, the reselling price will be around S$50,000. So before committing to a car, keep the possible expenditure in your mind.

The Pros and Cons of Car Ownership

ProsCons
You can sell your car whenever you want.Cars are expensive; you need an ample amount of cash.
The car insurance cost is relatively lower.Taking a car loan is a complicated procedure.
You won’t have to worry about any rental agreement.You will have to pay maintenance, repairs, and fuel cost all the time.
You have the liberty to get any car model you want.If you miss any installments, you may get a penalty.
You can maintain your car however you want. There’s nothing to worry about dents and scratches.When you plan to resell your car, finding a buyer will be a hectic task.

Car Subscription or Car Ownership – Which One Is the Money Saver?

In the sections above, we have given you an idea about the costs of individual services. So you may have got a picture in your mind already that which method will be more cost-effective than the other.

But if you still have some confusion, here is a side-by-side comparison that will clear the smoke.

Car Subscription Service Cost (Approx)
6-monthS$10,558
1-yearS$20,176
5-yearS$96,880
Car Ownership Cost (Approx)
Total Cost in the first yearS$52,812
Recurring Annual CostS$12,858
Total 5-year costS$104,880

The benefit of owning a car is that you can resell it after using it for a long time and use that resell money as the down payment for a new car. In that case, you won’t have to go for a bigger car loan at all, which is a relief.

On the other hand, the cost of a car subscription will keep increasing over the years. And if you take a subscription for five years, you will end up using an amount that could have been used for buying a new vehicle. Furthermore, you won’t own the car, so you cannot sell it and get some dollars from it.

Therefore, the final statement is that getting a car subscription is cost-effective if you get it for a short amount of time, such as a 6-month or one-month deal. However, it won’t offer you an advantage if you get it in the long run.

By contrast, though buying a car can be complicated and expensive, it will be an asset for you as you can resell it in the future. You can use that money to buy a new vehicle and invest in a business opportunity, whatever you want.

So there isn’t any real winner here. Both of these choices have their advantage and disadvantage. It is up to you to decide which one is more beneficial.

The Bottom Line

If you think you need a car for regular use and want to own it for a long time, buying a car will be the wisest option. And when you require a vehicle temporarily, you can go for the subscription without any hesitation.

When it comes to long-term use, a car subscription is not the ideal choice. You will be spending a huge amount of money but won’t have any resell value. On the other hand, even if you have used your car for years, you can resell it for a great price.

Both of these choices have their own perks and cons. And so, pick one that works the best for you.