Van Rental in Singapore: Benefits of Leasing VS Buying

Vans are a do-it-all, utility vehicle that have a place in our hearts, from the iconic Mystery Machine in everyone’s favourite Scooby Doo cartoons that can carry a whole team of private investigators and large-sized dog to today’s beloved package delivery man bringing presents from the internet. With its upsized capacity, there are endless possibilities and functions that these versatile vans can perform. From carrying commuters to cargo, these capable carriers buck the adage that less is more. While it is clear that vans can help a person or a company accomplish a lot, it is less clear whether a cheap van rental or buying one outright is better.


Pros and Cons of Van Rentals

Van rental prices are one of the biggest advantages of choosing a cheap van rental instead of buying. The monthly rental is a convenient all-in-one1 fee that includes road tax, insurance, service and maintenance which can add up to quite a fair amount.

Although leased vehicles can vary in age, there are also leases of brand new vehicles. An advantage of leasing is that the lessee can change to a different van after every few years, given that a typical contract lasts for 3 – 5 years. This is an especially valid consideration as electric vehicles are becoming more efficient and viable for commercial purposes. Buying a van and fully paying off the loan in 7 years to be saddled with an obsolete vehicle instead of a productive asset negates the main advantages of buying altogether.

This shorter commitment period with leasing contracts is advantageous as it brings with it the flexibility to extend the contract, amend it or upgrade of vehicle.

This brings us to some drawbacks of cheap van rentals. Contracts may include a clause for excessive use that restricts wear and tear such as disallowing unspecified drivers, putting limits on total mileage or to restrict operation of the vehicle outside of the country. There may also be restrictions in the event of an accident, since the insurance policy is included in the contract.

As with any amendment of contract terms after signing on the agreement, costs may be incurred. Likewise, breaking the leasing contract prior to expiry can be expensive so although it is a shorter term commitment than buying a commercial vehicle, it still places a financial burden on the lessee for some time.

On the other hand, a passenger van rental can make accounting sense by presenting it as an operating expense rather than having a capital expense on the books. Additionally, the company may wish to avoid listing a liability such as one incurred when taking a loan to buy a car.


Pros and Cons of Buying a Van

Ownership comes with a certain amount of freedom. When the company considers the prevailing van rental prices and chooses to own instead of rent, it is free to operate, maintain, use and even customise as it sees appropriate. Operating costs can be controlled by using cheaper workshops and cosmetic repairs can be delayed if necessary. At the end of the service life of the commercial vehicle, it can also recover some costs.

If purchasing first-hand, the newest model vehicle can be obtained and almost always, the mileage would also be lower. This is beneficial because newer vehicles perform better than older ones, needing less repairs, are more fuel efficient and are in better general condition.

Buying a commercial vehicle could also be a good option when interest rates are low or if the creditworthiness of a buyer entitles him to the best rates. The disadvantages are that these loans are considered when calculating a person’s Total Debt Servicing Ratio (TDSR) which limits an individual’s debt ratio.

The downside is that the buyer has to bear all the costs of ownership such as the down payment, maintenance and repair costs, COE bidding, road tax and eventual disposal. It is a long term commitment and some of these costs like servicing and repair can get most expensive with age.

Finally, because servicing a loan can be a long term commitment, there is a risk of default unlike when one is just leasing. A default will negatively affect credit worthiness and may affect application for other loans in the future.


Which is Better – Cheap Van Rentals Or Buying a Van?

Choosing which route to go down depends on many factors, especially the economic climate which determines the future business outlook as well as uncertainty. There is a global trend towards default on car loans and that can be taken as an indicator of difficult times and also as a signal that interest rates will increase to mitigate the effect of the defaults if it persists.

Aside from these macroeconomic factors, there are 3 main considerations to take. First is liquidity and cash flow. Buying a commercial vehicle involves large upfront costs. Taking advantage of a cheap van rental helps to reduce the financial burden and spreads out the costs over time. If this van is integral to the business operation, it helps generate cash flow to finance its monthly costs.

Next is maintenance, especially if your enterprise needs to operate a fleet of vans. The all-in-one pricing which includes servicing, accident recovery and repairs could help to streamline the business instead of having to dedicate time to do everything by oneself.

Finally, there is the consideration of total cost over the period that the commercial vehicle is used. This includes all promotions, cashback and inducements given by the leasing or dealership and also takes into consideration prevailing factors like interest rates and COE prices. When these are all taken into account, then one can properly appreciate the softer factors like choice, flexibility and convenience, and make a fully informed choice.

Mercedes Servicing: External Specialist Workshops or Dealership After sales?

The joy of driving a continental car is palpable from its widely proclaimed reputation for quality, comfort and luxury that precedes it, and subsequently quickly confirmed when one steps behind the wheel of a Mercedes, BMW, Audi or Volvo. From the distinctive comfort of the driver’s cabin to the electronic functions ergonomically installed within easy reach, the driving experience is an elevated experience.

However, continental cars also have the reputation of being costly to maintain; servicing is more expensive, genuine parts take longer to arrive, prone to breakdowns. This tarnishes the gilded dream that some have of owning a prestigious continental vehicle such as a Mercedes Benz. It’s as much a well tuned driving machine as it is a status symbol. This then raises the question of how to keep this gorgeous machine purring like a kitty without breaking the bank?


A Growing Taste for Continental Vehicles

The population of continental cars has been on the increase1. Growing affluence, demographics and no small amount of advertising has pushed the popularity of continental cars. Taking the absolute numbers of Mercedes Benz as an indication, over a period of the decade leading up to 2020, it can be seen that the German brand has grown over 100% from 30,467 to 64,886 vehicles. In the same period, the ever popular Toyota fell 9% while the total car population in Singapore increased by 6.4%2. Despite the growing fondness for these European imports, the fact remains that its upkeep is not the cheapest. To the new owners of a Mercedes Benz, and probably to many existing ones, the perennial question is how to keep running costs low. That usually leads to the million dollar question; are specialist workshops or dealership-operated after sales centers the better choice for Mercedes Benz servicing?


The Options for Mercedes Servicing

New cars typically come with a servicing package for the first few years. Within that time, repair work might also have to be done at the dealership’s service center in order to keep to the terms of the warranty. After that, an owner has two choices, to continue going to the dealership or to switch to an independent car workshop.

Mercedes Benz servicing comes in two packages, simply named A and B3. Service A is done after the first 10,000km, while service B is performed after 20,000km, with each alternating every subsequent 10,000km or 1 year.


Service package A being a minor servicing consists of the following at a cost of between $400 – $500.

  • Mercedes Synthetic Motor Oil Replacement
  • Oil Filter Replacement^
  • Brake inspection
  • Tire pressure checks & adjustments (including the spare)
  • Maintenance counter reset

Service package B is considered major servicing and costs roughly $700 – $800 to perform the following:

Mercedes-Benz Synthetic Motor Oil Replacement

  • Oil filter replacement^
  • Cabin filter replacement
  • Tire pressure inspection
  • Brake fluid inspection
  • Brake component inspection


The equivalent at an independent workshop could cost5 approximately $300 and $600 respectively. Which option to choose looks like a foregone conclusion but how does the private workshop achieve its cost savings?


Advantages of Using an Independent Workshop for your Mercedes Servicing

Cost savings is the biggest advantage of going to an independent service center, speed is another which comes about because there would naturally be many more independent workshops than a dealership can operate. Securing a date and time to suit your schedule would be much easier. Drivers might also find that last minute bookings may even be accommodated.

Returning to the point on competitive pricing, independent workshops are usually able to offer lower prices for several reasons. Lower overheads is one reason. Operating as a standalone workshop, it does not have a big facility, multiple departments or a large payroll to account for, so overheads are typically lower. They are also able to source for non OEM parts, discounted original parts or even used genuine parts. They are at liberty to exercise more resourcefulness to meet clients’ budgets.

Dealing with an independent workshop is also a more personal process. Over the years a relationship can be built up whereas an authorised workshop is more impersonal. As such, better pricing or discounts can be extended to their loyal customers. The workshop owner would also be better acquainted with the problems and service history of the vehicles; knowing its particular quirks and how to repair it more efficiently. In contrast, drivers usually meet the service advisor at an authorised workshop and would not have a chance to meet or speak with the mechanic assigned. An additional benefit of building relationships with privately owned businesses is that there is greater flexibility to go the extra mile, such as staying open a little longer to allow drivers to collect their car at the end of a long day at work. They might also be more willing to do work that authorised service centers would not be willing to due to the time and labour needed or in a bid to upsell products.


Advantages of Dealership Service Centers

Servicing a vehicle at the dealership is strictly by the books. The rules of engagement are predictable and fixed. The mechanics follow a manual and a prescribed list of steps when attending to vehicles. Mechanics are all trained to a uniform degree of expertise and the appropriate industry standard tools and diagnostic equipment are used. Original parts are always used to guarantee optimal performance but that could take time to ship in which adds to the cost.

The process could also be more streamlined as many have adopted the use of apps or websites to receive and make bookings. Even when dropping off the car, the driver only has to deal with a service advisor and never has to meet the technician or understand any of the mechanical issues. Lastly, as a larger entity, dealership owned service centers are less likely to close down.

As with many decisions in life, few questions can be answered with a definitive answer. Both options have their pros and cons. The decision to pick one over the other comes down to the value a driver puts on time and quality assurance. Finding a trustworthy and experienced private workshop can take time in order to reap the benefits of better personalised service at a more favourable price. To make the decision just a bit more complicated, large independent workshops such as ETHOZ blur the line between the two and can offer the best of both worlds.

Loan Secured by Property: What are the best assets to pledge?

Loans can sound like a taboo word and it can well be if taken hastily or for the wrong reasons – much like how self-medicating, even with the best of intentions, can be harmful. However, there are many prudent, intelligent reasons that justify borrowing. 

 

The advantages of a loan secured by property or other collateral 

Secured lending comes with lower interest rates or better terms compared to unsecured lending. The logic is simple, if the mechanics are anything but. Evaluating risk is at the heart of what a banker does, regardless of whether he is providing financing advice or extending facilities to customers. Accurately assessing the risk profile of its clients and astutely managing that risk is what the banking industry is built on.

An unsecured loan is riskier because a banker or financial institution can only depend on a borrower’s creditworthiness to evaluate whether a loan would be paid back on time, in accordance with the contracted terms. In case of a failure to satisfy one’s repayment obligations, the bank has fewer options available for recourse. The bank does not automatically have a right over any of the borrower’s property and instead has to first commence legal proceedings in order to obtain a writ of seizure, that would allow a bailiff to make lawful claims on personal property of any value. This would then be liquidated and go towards restitution of the defaulted loans. In the worst case scenario, non performing loans would be declared bad debts and written off, after the proper accounting rules have been followed. Although banks would prefer any and all loans to be guaranteed by an asset, the relatively smaller amounts usually do not warrant it or in the case of student loans, the lender might have few assets worth pledging.

In contrast, secured loans are much less risky because the lender has a lien on specific assets linked contractually to the loan. This gives the lender a legal right to seize the pledged property in lieu of payments. With this privilege, banks are able to extend better loan terms. Apart from lower interest rates, late penalties might also be more forgiving where there could be longer grace periods and smaller late fees. Typically, secured loans are also easier to obtain, and could be approved for larger principle sums.

 

 Common Types of Secured Loans

 Secured loans are commonplace, to the point that it is often unnoticed. Often, the most significant ones encountered by most of us are the auto loan and property mortgage. This means that the bank can repossess the vehicle or foreclose on the property when sufficient time has lapsed and a certain predetermined number of payments have been missed. For businesses, instruments such as letters of credit, standby letters of credit facilitate act as form of surety between merchants and suppliers, and thereby providing a form of short term loan. On a smaller scale individuals might be familiar with pawnshop loans and payday loans. With the former, personal property such as jewellery or other expensive effects are kept with the pawnbroker and returned only when the loan is repaid. Payday loans, as the name suggests, pledges an individual’s future income in return for a loan upfront. These are offered here by licensed money lenders and the process could be as simple as writing a post dated cheque. To investors, margin trading is yet another example of the many forms of secured lending in everyday life. In this case, an investor sets up a trading account with a brokerage firm and uses leverage to multiply an investment. However, if the markets turn on the investor, the brokerage can liquidate the account to recover the loan amount.

 

 Quality of Collateral

 Just as there seems to be a hierarchy in the type and assortment of loans, so too collateral varies in preference. When valuing an asset to be pledged, four factors are considered: condition, liquidation value, ease of liquidation, and nature of the asset. The first condition takes into account depreciation of physical assets and its remaining value. The next two consider its market value, cost of liquidation and efforts needed to dispose of the asset. The final point takes note of the type of asset and its scale.

With these guidelines, two methods for valuing collateral are employed. One of them is to compare it to similar assets with established monetary values as a proxy. The other is to consult with a qualified assessor with strong knowledge of the asset type.

Through these studies over time, a correlation between quality of collateral and quality of borrower had been determined. It was found that individuals and companies that could provide strong collateral were also more likely to honour repayment terms and had a lower probability of defaulting. Additionally, a link was also found between those with high quality assets to pledge and a higher degree of prudence in the use of loan funds. All these factors point toward a lower risk profile.

In short, high quality assets mitigate are of suitable value relative to the loan amount and are easily liquidated – all of which reduces the risk to the lender. Cash, as always, is king. Cash in bank accounts make the best collateral. Of equal quality are near-cash assets  such as certificates of deposit, foreign currency, securities, bonds and other similar instruments. Next in line are high value tangible assets like property, vehicles, precious metals and jewels. At the other end of the spectrum, increasing willingness to expand the pool of clientele has prompted institutions to accept less conventional forms as collateral. These can range from expensive equipment like golf clubs and electronics to exotic items such as art and wine collections or medical instruments.

Just like the lenders that assess risk before extending a loan offer, the borrower also has to evaluate risks involved in accepting. However, if it is managed properly both parties can reach a win-win situation.

 

 

 

5 Alternative Ways to Finance Businesses

Businesses count on cash as the sustenance it needs to operate and similarly, even your very own future cash cow will need to consume a lot of the green stuff before you have the opportunity to milk it. Some of these funds will go towards investments in assets that are vital to start up the company, while some of it will go towards fixed costs such as salaries, software licenses, website subscriptions or rent. Aside from these overheads, there are also variable costs such as certain utilities or transportation to cover. All this clamour for cash has to be attended to. There are various ways this can be accomplished, with external business financing being a potentially beneficial way to bridge these needs.

 

Just over 10 years ago, business financing in Singapore primarily originated from traditional sources like banks and credit unions. This typically involved a credit evaluation and resulted in a plain vanilla loan, with a choice to pledge collateral or not. Factoring or invoice financing, which was already commonplace since the 1960s1 where a company would sell its receivables to  a third party for upfront funds was as far as financing options would deviate. Then came the subprime mortgage crisis that precipitated the largest2 global financial crisis since The Great Depression of the 1930s. In its wake, reforms were instituted to curb the risky lending practices that was the cause. More oversight was established, such as increased capital requirements3 as required by the Dodd-Frank act in the USA.

 

Evolving to meet the demand for business financing

Tightening of credit has proven to be a challenge for smaller companies. This difficulty in securing financing can result in missed business opportunities, negative cash flow, negative working capital. In the subprime recession years from 2007 – 2009, there was a sharp contraction of Small & Medium Enterprises (SME) loans granted globally. With new SME loan growth rates hitting the bottom in 2011, the following years up to 2019 continued to see little growth4. As SMEs were considered riskier propositions by financial institutions, access to financing had become more difficult since then5. However, with the need for finance to fuel business growth still a pressing need, other players stepped in to fill that gap, giving rise to the innovation and inventiveness that is alternative financing.

 

 

Crowdfunding

Crowdfunding is a method of financing that bridges the gap between companies and members of the public looking for a profitable investment. It draws together small amounts of capital from a large number of people to fund a commercial enterprise. This is done through an online platform, with examples  like Kickstarter, Indiegogo and Gofundme.

 

Far from being a one-trick pony7, crowdfunding comes in several varieties.

 

 

Peer-to-peer lending

A technology based platform links multiple lenders of small unsecured amounts to pool together larger amounts. The administrator of the platform determines the interest rate and also evaluates the riskiness of the borrower.

 

 

Equity crowdfunding

Similar to buying shares through a stock exchange, equity crowdfunding involves sale of a stake in a business to a large number of investors.

 

 

Rewards-based crowdfunding

Commonly used as seed money to finance a product, investors make specific contributions in exchange for rewards, or delivery of the product itself at the end of the campaign.

 

 

Donation-based crowdfunding

As the name suggests, no compensation is expected or given but the financial aims are met by the contributions of multiple individuals.

 

 

Profit-sharing / revenue-sharing

Future profits or revenues of the business are shared with the crowd in return for providing funds now.

 

 

Debt-securities crowdfunding

Individuals invest in a debt security issued by the company, such as bonds or debentures.

 

 

Hybrid models

Investors are compensated by several of the above ways for providing money upfront.

 

One type of crowdfunding is not necessarily better than another. However, it is the motivation behind each type of crowdfunding that matters because it has to appeal to potential investors and their motivations. Crowdfunding can be a risky investment to those that contribute to the fund as they may come up empty handed if the project fails. Conversely, to the business seeking funds, the benefit is that there is no obligation to make good on its promises if the project fails.

 

 

Fintech Financing

Companies like Paypal, Amazon, Alibaba Tencent and even Grab all have a strong client base, a popular platform to access its clients and cash to spare. These companies are no stranger to industry disruption and have taken on traditional financial institutions to provide loans to those typically overlooked by banks and lending institutions and also to take a bite of their pie.

 

Fintech loans are able to leverage on its technology to assess risk more accurately and cheaply. It also typically has lower operational costs due to innovations in technology which it can pass on to clients as savings. It is also able to process loans quicker, even able to turnaround approval of loans on the same day7.

 

 

(Alternative Business Financing Singapore – fintech)

 

 

Government Assisted Funding

There are many initiatives to encourage innovation and to sustain promising startups in the critical initial stages. Government agencies such as Spring Singapore, Economic Development Board and Enterprise Singapore have various schemes to assist SMEs financially8.

 

These can come in the form of loans at attractive interest rates or outright financial assistance in areas such as productivity, technological upgrading or research & development.

 

 

Venture Capital Financing

This kind of funding involves a group of investors, institutions or investment banks like Goldman Sachs and Morgan Stanley that identify and nurture startups that they believe have long-term potential. In exchange, these investors hold private equity stakes in the company. In addition to relinquishing some ownership in the company, the founders often have to satisfy other conditions that pertain to its operations.

 

 

Initial Coin Offerings (ICOs)

An initial coin offering is similar to an Initial Public Offering (IPO), except that instead of receiving company shares for their investment, investors receive a cryptocurrency token. These tokens are often purchased in other more established cryptocurrency tokens such as Bitcoin or Ethereum.

 

If an ICO is successful and passes the ICO stage its price would already have risen. If it gets listed on an exchange, it can be traded like shares. In addition to this, investors would also be entitled to product, service or bonus tokens as indicated by the white paper.

 

The benefits of an ICO to companies is the ease at which one can be launched, especially in Singapore which is amongst the most receptive in the world to the launch, and exchange of digital currencies. There are few regulations required by the Monetary Authority of Singapore (MAS) and no license is needed. The company has to be a private company in Singapore, and publish a prospectus under certain conditions.

 

 

Alternative Business Financing in Singapore Funding the Underserved

SMEs make up 99% of companies in Singapore12 and contribute about 43% to GDP13. Despite the significant contributions to the economy, this group is often underserved by traditional financial institutions. It is an unsustainable status quo as they seek funding to grow. As necessity is the mother of invention, alternative business financing in Singapore is sure to keep growing.

 

 

Advantages and Disadvantages of Hire Purchase

If you have ever been in the market for big ticket items or planned for substantial capital investments, chances are that you would have considered hire-purchasing as a potential financing option. From as far back as nineteenth century England, which saw the emergence of these contracts and its rapid adoption through the crown colonies, until today’s car market, hire purchasing has been a popular option with customers considering an expensive purchase.

Considering just how commonplace these contracts have become, it can come in a number of guises (for example it is known as an installment plan in the USA or simply a car loan in Malaysia) and flavors but all adhere to the same basic principles. At the heart of it, hire purchase contracts involve an exchange of goods between buyer and seller after an initial payment or set-up fee, with the outstanding balance being paid with interest over a period of time. However, the defining aspect comes with ownership of the asset. Throughout the tenure of the contract, ownership of the goods remains with the seller or financial institution drafting the contract. It is only upon conclusion of the agreement, that the buyer has an option to go ahead with the purchase for a charge called an option-to-purchase fee. After which, ownership then transfers to the buyer. Such an arrangement presents several advantages and a few disadvantages to an individual or enterprise.

 

Advantages of Hire Purchase

1. Ready to Use

The most immediately apparent advantage of hire purchasing is that the asset or good can be immediately utilised and put into service with much less initial outlay than would otherwise be required. This typically ranges from a deposit or set-up fee of 10% for most assets, to 30% for new vehicles. A business that needs to make capital investments to kick-start its operations could find this the most expedient choice.

 

2. Easing the Financial Burden

Similarly, the financial burden is also reduced since payments are periodic and spread over a length of time. Start up costs can be significant but absolutely essential and so breaking up this commitment into smaller pieces can dramatically alleviate the financial strain.

 

3. Lower Interest with Secured Lending

Hire purchasing can also be a cheaper form of financing. The nature of these contracts makes it similar to collateralised loans, since the asset ownership only legally transfers to the buyer at the end of the agreement. As such, interest rates are generally lower than other forms of business financing like unsecured term loans. Assuming that the buyer does not terminate the agreement or repay early, the EIR (Effective Interest Rate) of hire purchase agreements can vary at about 5-6% as compared with unsecured loans that may be as high as 9%.

 

4. Flat Interest Rate

Another advantage is that hire purchase contracts have a flat interest rate. This means that the interest rate remains the same across the life of the contract without fluctuating. This may or may not be beneficial depending on the prevailing interest rates but it keeps payments predictable and thus makes budgeting, as well as cash flow management easier.

 

5. Accounting for Hire Purchase Contracts

For those keeping close tabs on their finances, there are also some tax and regulatory upsides to using hire purchase contracts to finance asset purchases. The first is that GST (Goods and Services Tax) is not charged on the interest portion of the contract so there are no additional financial obligations owed to the government in this area. Next, is that a tax relief can be claimed on qualifying fixed assets under the Hire Purchase Act in Singapore. Referred to an asset allowance, 100% of the price of goods can be written off over 1, 2 or 3 years, allowing the buyer to manage the amount of tax payable. Lastly, even the interest portion is listed as a qualifying allowable business expense which can be used to reduce the amount of tax payable.

With regard to accounting, the treatment of hire purchases on the books can have several benefits. This is because equipment obtained this way is not counted as part of the company’s assets, at least until ownership has been transferred through the exercise of the option to purchase at the end of the contract. One prime example is the analysis of metrics such as fixed assets turnover, that investors and other stakeholders might be interested in. Since the fixed assets turnover is expressed as a fraction of turnover against the value of fixed assets, a company could reap the benefits of larger turnover as generated by new equipment and machinery, without having the value of the same assets on the books. The same case can be made for other measures of operational efficiency like return on gross fixed assets or return on net assets.

*Note: The above information on Tax & Accounting treatment is strictly for reference only, business owners should seek professional advice from your own tax consultant or auditor.

 

Disadvantages of Hire Purchase

1. Overspending

Just as there are many good reasons to opt for this method of asset financing, there are several drawbacks too. The advantage of perceived affordability is a double-edged sword. With financing available, an entity may be proverbially biting off more than it can chew and proceed with a purchase under a hire purchase contract when it would be more prudent to put it off. There could also be the temptation to choose more expensive or technologically advanced options that now become within reach. As a contract between buyer and seller, terms can be priced, negotiated and included or omitted while it is being drawn up. Zero downpayment, for instance, allows the buyer to take home the goods with nothing out of pocket. However, this would surely increase all or any of the other terms like duration and interest.

 

2. Inflexible Contracts

In the event that a company over extends itself and defaults on payments, the item can legally be repossessed. On the other hand, if a company subsequently finds itself in a position to make full payment, it may not always be possible to repay early or there could be additional fees involved to do so. With a payment default, it doesn’t just end in the seller regaining possession of the asset either. It will go on record and have a negative impact on the buyer’s credit profile, affecting the ability to apply for financing in the future. This also includes any future decisions to enter other hire purchase contracts, as the terms are dependent on the applicant’s credit history, and a better credit score usually results in better terms.

With the introduction of Total Debt Servicing Ratio (TDSR) in Singapore to calculate an individual’s capacity to obtain financing, especially for home ownership, the number and value of hire purchase contracts one holds comes into consideration. The contract to take home the latest electronics or speed home in a sports car will have an impact on getting a home loan.

 

3. Asset Obsolescence

Finally, the length of the contract might be a substantial amount of time, stretching into years. By that time, the asset could have depreciated so much that it has no value at the end of the contract. In such a scenario, it might be better to take on a finance lease which could potentially be more cost effective.

 

Who benefits from Hire Purchase?

As we have seen, with its unique set of pros and cons, hire purchasing may not be the most suitable alternative for every individual or business but it still plays a vital role in the litany of financing options available. Small scale businesses and entrepreneurs can benefit most from hire purchase. High value, crucial and strategic assets can be hired and later owned. This ensures that they can start using the asset right away from the very first day and use the money generated to acquire the very same assets later.

 

 

Leasing Commercial Vehicles: 6 Important Factors to Consider

When your business needs a commercial vehicle, it’s a cost to your business however you obtain it. Hence, it’s very important to consider what you need and how to obtain the vehicle for your own business, to keep costs low and operations hassle-free. In that respect, one of the most popular ways to operate a commercial vehicle is to lease it.

Leasing removes the need for companies to also own and service their vehicles, and disposing of them in the end. It provides a flexible mode of vehicle fleet operation that can be adapted to different periods of time and needs.

Here are some factors you need to consider when planning to lease a commercial vehicle for your operations.


1) What Kind of Vehicle Do You Need

The very first factor is of course to identify the kind of vehicle you need for your particular operations. From cars to vans to trucks, each vehicle type offers different pros and cons, and is suited for different purposes. You need be clearly understand what purposes you need it for, and what impression you want the vehicle to make of your company.


2) How Long Do You Need It For

A key benefit of a lease over car ownership or renting is its suitability and cost-effectiveness for a mid-length usage period that is itself very flexible in length, ranging from a few months to a few years. When deciding to lease a car, it’s important to figure out how long you want to lease it for.


3) What Functions Do You Need

If you’re leasing a vehicle for commercial functions, chances are you’ll need to take into account the vehicle’s functions and its fittings. Some of these fittings include a canopy, a tailgate, an enclosed cargo space, a chiller or freezer, or an open deck, for cargo vehicles.

For example, if you’re a frozen food company, you need a vehicle that has been fitted for refrigeration.

Good car leasing companies will provide you the option of customising your commercial vehicle with the necessary fittings and functions that you require to ensure the vehicle suits your operational needs.


4) What is your Budget

Once you’ve sorted out the kind of vehicle you want and for how long you want it for, the dollars and cents are the most important consideration. As a business, you will have your own budget, and you’ll want to ensure that the vehicle you get can fit into that budget. Carefully plan your budget, and look for vehicles that suit your needs that also fit within the budget.

If you are unable to find a suitable commercial vehicle to lease at your current budget, this may be a sign that your expectations are too high for your budget. You will have to either increase the available budget to cater for this, or reduce your expectations or the amount of customisation you demand so that it will fit within your desired budget.


5) What is your Credit Rating

A commercial vehicle lease is similar to a loan, in that a vehicle is lent to you in exchange for regular payments. Hence, like loans, your credit rating, and the rating of your company, is crucial for securing the best terms for a commercial vehicle lease.

One good way to ensure you get the best deal possible is to check your credit score, and ensure that your credit score is healthy before applying for a commercial vehicle lease.


6) What are the Payment Terms

Lastly, when you have found the perfect commercial vehicle and the perfect leasing price, the last thing you need to do before signing on the dotted line is to look carefully at the payment terms, to ensure that they are agreeable to you. Consider not just the downpayment, but also the instalment schedule, as well as how fees and charges may be levied in certain situations.

Familiarise yourself with the terms, and if necessary, discuss and negotiate the payment terms to suit your business’ financial situation and cashflow.


Lease With The Best

To ensure the most favourable car leasing experience and packages, it is important to lease your commercial vehicle from a provider that is experienced in the automotive industry and has acquired a reputation for some of the most competitive lease packages in the industry.

ETHOZ has decades of experience in offering car leasing and car rental services for both private and commercial vehicles, as well as offering financing and other equipment leasing services for businesses.

Committed to help businesses get the wheels they need for their operations in an affordable and flexible manner, ETHOZ offers commercial vehicle leasing stands ready with a versatile fleet of ready vehicles to serve your needs at a good and affordable price.

Speak to us today, to start unlocking more capabilities in your business!

A Comprehensive Guide to Car Leasing in Singapore 2021

Car leasing is a common practice in Singapore among businesses that have short-term needs for company passenger transport, but cannot justify the cost of buying and maintaining one under the company’s own cash flow.

A smooth leasing experience will depend on your knowing what to do, and what to look out for. Here’s a detailed guide on how to go about leasing a car in 2021 to save you time and money.


Step 1: Choose a Car

The first step you need to take is to choose the ideal car model for your company’s needs–whether it be a generic Toyota or Nissan for general use, or a more luxurious BMW or Mercedes for the personal use of the CEO or the transportation of VIPs, choose a model that provides the right mix of comfort, luxury and practical functions.

You’ll also need to choose a model by balancing how long you need it for, against how much the car might cost. If you need the car for a longer period, you may want to avoid more costly makes and models that will drain your finances.


Step 2: Test Drive It

Next, you need to confirm your choice by test driving it and seeing how it handles–especially if you are personally going to drive this car. There’s no point leasing a cheaper model if it makes you uncomfortable for the duration of your lease.


Step 3: Make Sure You Have a Good Credit Score

A car lease is basically the loan of a car to you–you have to pay it back in instalments, and with interest. Hence, like a typical loan, having a good credit score is important to help you get the best deal possible, with the most favorable payment terms.

A good credit score gives your lease provider the confidence that you will be able to meet your lease instalment payments, and pay on time as well, so it is crucial that your credit score is good. Being in poor standing for credit can result in your lease application being rejected!

You should undertake steps to ensure that your score is good by paying your bills on time and punctually.


Step 4: Compare Lease Deals

Once you’re sure you’re ready to start hunting for a lease for your desired model, it’s time to start looking around. Speak to different car leasers in Singapore to find out what their rates for leasing might be, or, for the best deals with the most reputed dealer of all, you could simply speak to us at ETHOZ car leasing.

What you should be looking for in lease offers are the valuation of the car, its age, as well as the amount you would be expected to pay for the car, as well as the payment schedule–when and how much you will need to pay for each instalment.


Step 5: Negotiate Suitable Payment Terms

Once you have settled on a prospective car lease that suits the duration you need the car for, you can discuss payment terms with your chosen lease provider, to ensure a package that best suits your needs and financial situation. For example, you can discuss how much downpayment to put down upfront, and also your timetable for payments.


Step 6: Familiarise Yourself with the Terms and Conditions

As with any agreement and contract you sign, you should familiarise yourself with the terms and conditions for the car you are leasing. Every contract comes with small print that stipulate numerous terms, and once you sign on the dotted line, you are deemed to have agreed and committed yourself to fulfilling these terms, regardless of whether you read the contract and knew the terms were there or not.

These terms can include fees and charges payable for changes to the lease, penalties for late payment or damage to the vehicle, as well as other obligations and requirements that you may have to follow as a lessee. Ensure you have read these terms in detail before signing!


Step 7: Inspect Your Car Thoroughly

The last step before taking possession of your leased car is to carefully inspect the vehicle for yourself. As with all car rentals, you will be held responsible for any damage done to the vehicle once it leaves the custody of the lease provider, so while you are still there, give it a thorough check to ensure that it is working well and undamaged in all major aspects.

Test the engine, check the gauges, lights and brakes, and visually inspect all exterior and interior areas for damage, such as dents, scratches, tears or discolourations and blemishes. Ensure that you report all these to your lease provider and make sure these are recorded as having been there before you took over the keys, or you will find yourself having to pay for damage that you never caused, when you return the car.


Leasing with ETHOZ

In addition to providing you some of the most competitive packages in Singapore for car leasing, ETHOZ also offers one of the widest ranges of available car makes and models for your selection, to meet your every need and purpose.

As one of the most established car rental providers in Singapore, ETHOZ also offers short term and long term car rental services for your needs if the duration or cost of leasing is not ideal for your situation.

With decades of market-leading experience in the automotive industry, ETHOZ is the first and only port of call you’ll need if you’re looking for a good car lease! Contact us today!

A Straightforward Guide to Choosing Business Loans in Singapore

When doing business in Singapore, oftentimes you will find the need for loans, to bridge the gap between what you have and what you want to achieve. Borrowing is a normal and common way to obtain additional financing, whether you are a startup, SME, or a large corporation.

However, the finance market is a very wide area, with numerous lenders offering a sometimes bewildering array of loans and packages. With Singapore’s reputation as a financial hub, any businessman would be spoilt for choice. So how do you pick the right business loan for your business? We present a simple, straightforward guide to help you identify your needs and narrow down your criteria.

 

1)  Know Your Loan Purpose

When you take out a loan, one of the questions you can ask to narrow down the loan you should pick is what purpose the money is meant to be used for. There are many business situations where money may be needed. Some are concentrated in one area, such as the need to purchase a specific asset or expand the business somewhere. Others are more general, such as day-to-day cash flow issues.

Depending on the purpose and how general it is, there are different kinds of loan available for you, and picking the business loan most suitable for your purposes can help save you a considerable amount of money. For example, a term loan is a general loan of money that can be used for any purpose, but it may also come with a higher interest rate than loans for specific purposes.

If you know exactly what you want to use the money for, then it is best to find a loan that suits the specific need you have (such as a working capital loan if you need to use the money to defray day-to-day operating costs) rather than take out a general loan. Of course, if you don’t know, or prefer to keep your options open, then it is better to take a term loan, though you may have to accept paying a little more in interest on average.

 

2)  Know Your Loan Cost

To any businessman, cost is at the top of their minds, because costs can make or break a business. Of course, when borrowing, the same applies. One of the major factors you should use to select a good business loan is the cost of the entire loan package. This consists not just of your loan principal, but also the interest, and also the fees that are added onto the main sums.

When comparing interest rates, different business loan packages offer a wide array of different rates, calculated in a variety of ways. It’s important to note that you should know how they charge and calculate your interest rate, and calculate which rate actually gives you better savings. For example, the lowest interest rate number may not actually be the cheapest interest cost, most commonly because the rate fluctuates, or because the loan period makes you pay interest for longer. One thing to note is that the interest rate is also affected by your personal and business credit rating. Choose the interest rate and lender that best keeps your costs low over the whole loan period.

If you have two packages with very similar rates and you can’t choose between them, then perhaps the additional costs will be the deciding factor. All loan packages come with fees and charges, and these can amount to a significant sum. Again, choose the loan that keeps your costs low over the whole loan period, so make sure you don’t just look at interest rates, but also look at fees to make sure they don’t erase what you managed to save from a better interest rate.

3)  Know Your Lender

One small factor, but a potentially significant one, is whether a lender lends regularly to your industry. If the lender does, the chances of them approving a loan, or at a better rate, may increase. While this may or may not lead to savings in money, it would certainly help to save time, especially in situations where your company may urgently need the loan and time is of the essence.

 

4)  Know Whether You Can Afford It

Lastly, the most important factor in picking a business loan is whether you can actually afford or risk it. Both in terms of the amount you’re borrowing, and the payment terms, you must have some measure of confidence to pay off the loans, i.e. to have enough in your company balance each time you need to pay an instalment.

 

If you can’t honestly manage the ideal business loan package you have your eye on, it may be better to replan your business goal and borrow a more manageable loan.

 

Can’t Go Wrong with ETHOZ

As one of Singapore’s most well-known names, ETHOZ has been serving the needs of businesses for many years. In addition to providing affordable and high-quality personal and corporate car rental and leasing, ETHOZ also offers loans to help companies achieve their business aims through ETHOZ Capital. Offering term loans, working capital loans, as well as a range of SME financing and microloans, ETHOZ is the ideal partner for your business loans and other financing needs.

Get in touch with us today, and discover how much we can help you with some of the most suitable loan packages for your business today! You can’t go wrong when you go with us.

 

 

Understanding different needs for MICE Chauffeur Service

M.I.C.E events is an acronym for Meetings, Incentives, Conferences and Exhibitions. These events are business-focused and held for tradespeople in industry specific fields such as aviation, logistics, medical and construction, for example. It brings together large groups of people in related trade areas for the purpose of facilitating business interactions, establishing market presence and broadening commercial networks. With a large number of people gathered in one place, a whole slew of services, logistics, accommodation and other essentials need to be catered for, it is an important subsegment of business travel that complements many other industries. There are also additional knock on effects that benefit the travel industry as it can involve a leisure component.

To visiting participants in a foreign country, transportation can be tricky and the last thing a business traveller should be bogged down with is commuting and navigation. This makes transport arrangements amongst the key factors for a successful MICE event.


More Than a Chauffeur Rental Service

At first glance arranging transportation for an event should be relatively straightforward. One would think that any and all transportation needs would be easy to satisfy by engaging a chauffeur rental service. However, there are several other important considerations aside from just going from point A to B that have to be thought through. For one, there is the question of how many guests are travelling together or if there are VIPs that require different service levels. Depending on the number and importance of these individuals, they could ride together which makes things easier or have to travel separately which would take more coordination. If there are especially distinguished guests, private transportation might have to be provided for each individual. There might also be special preferences and other logistical requirements to think about such as bottled water or in-car internet availability.

If your guests are coming from abroad, getting to and from the airport could be something to think about. Apart from making sure the vehicle is available at the required arrival and departure times, there also has to be sufficient space for luggage. This might necessitate different models of cars on different days, such as a sedan like a Mercedes on the days of the event and a van on the first and last day when more carrying capacity is needed.

During event days all the critical considerations come into play. Schedules and being at the right place at the right time are paramount, especially if one has meetings, demonstrations or even workshops to attend, whether as a presenter, trainer or just a participant. There could be multiple venues to shuttle between or meal time arrangements to take note of.

Often, MICE events make some time for entertainment. These could take place after working hours and the chauffeur rental company would have to be consulted on whether after office hours chauffeur services can be arranged. Being able to communicate with the chauffeur in such situations might be important and so ensuring that he can speak with the client in a common language should be another aspect to think about.

With ecological issues having entered the collective consciousness in recent times, ‘sustainability’ is a perennial watch word in every industry, even the MICE one. Through careful planning and logistical coordination, carbon emissions and air pollution can be reduced significantly. The Singapore Tourism Board has even prepared a set of environmentally friendly regulations1 specifically aimed at the MICE industry to achieve this. The guidelines list out different actions of varying complexity that can be adopted, such as renting vehicles that are fuel economical or consolidating pick up amongst several guests.

There are also constantly evolving challenges that affect the MICE industry and the transportation sector that supports it such as the ongoing pandemic. There needs to be plans that accommodate mandatory quarantines for inbound passengers from any given country when it becomes required. There could also be scenarios where guests need to receive medical attention.


Better to leave it to the Chauffeur Rental Professionals

As it outlined above, negotiating the different needs for MICE chauffeur services can be a painstaking endeavour to handle alone. In such a case, it may be better to leave it to the professionals. Engaging a company that provides chauffeur services puts the minutiae in the hands of experienced professionals, thereby ensuring the comfort, punctuality and safety of the passengers.

5 Things You Must Know About Servicing Your Mercedes In Singapore

If you own a Mercedes vehicle, you would have possibly invested a huge amount of money in driving one of the best global luxury car brands. As such, it would be self-explanatory that you want to keep it operating smoothly for a long period of time. This would require a sufficient amount of servicing done to avoid possible vehicle breakdown or faultiness. In this article, you would understand a comprehensive list of things that you would need to know about servicing Mercedes.


1. Apply Car UV Protection

One of the essential steps to service a Mercedes is to apply UV protection to protect the car’s paint from damage due to UV sun rays. The service company would apply wax that provides a sufficient amount of UV protection against the harmful UV sun rays. The protection layer is typically inside the vehicle. Moreover, there are other cleaning materials available in the market to coat the protected layer and keep the vehicle looking brand new for a longer period of time.


2. Check Car Components

Every car, including Mercedes, has a few important components that require regular servicing such as hoses and belts to keep it running and operating. Some examples are timing belts and coolant hoses. If one of the belts breaks or if the hose bursts, the car will face a major issue on hand. Therefore, it is important for car owners to perform regular servicing to see if the Mercedes belts or hoses have potential damages. As such, immediately schedule a Mercedes service as soon as possible at the nearest facility.


3. Check Tire Pressure

It is important to make sure that the tire pressure is at the recommended safe psi. Most car drivers do not know that their tires are under-inflated, which can lead to potential high risks of car accidents on the road. In order to prevent such accidents from occurring, make sure that your tire pressure is at the recommended psi level. Besides checking the right tire pressure, it is important to ensure that it is adjusted at the right alignment.


4. Check Vehicle Lights

The next important step to take is to ensure that every car light is working properly. It includes the headlights, taillights, brake lights, reverse lights, hazard lights, signalling lights and turn signals. If one of these lights is not working properly, immediately send your car for servicing. As for burned or damaged light, you can have it replaced at any car facility of Mercedes.


5. Cost of Servicing

To keep your Mercedes operating smoothly for a long period, you need to make sure that you schedule for regular servicing. But don’t forget to check the total cost of servicing, and prepare yourself financially! What people don’t consider is how costly and expensive it is to maintain the vehicles, especially for luxury car brands such as Mercedes.


Most Singaporeans own and purchase a vehicle to run errands, travel with friends and family members, or simply commute from home to work and vice versa. It can be extremely costly to service the car regularly. Car servicing and maintenance plans are rarely within the budget because nobody plans for their car to wear and tear or break down. And it is typically too late when drivers notice that their cars are in need of maintenance and service – leading to costly fixtures.

Thus, it is rather important for drivers to attend any Mercedes workshops in Singapore to learn preventative maintenance measures. This helps them to be better prepared financially and emotionally for their luxury vehicles. It is also essential for drivers to know that regular Mercedes servicing is vital in helping them to save costs efficiently; or in another word, to prevent paying high costs of car repair fees in Singapore.

If you don’t want to miss out on any good deals at local Mercedes workshops, you can check out the skilful and professional mechanics at our remarkable ETHOZ Mercedes workshop, under our ETHOZ Mercedes Premium Care Maintenance Programme.

Alternatively, if you’re driving somewhere where you don’t want to bring your precious Mercedes ride, you can rent from us! ETHOZ also offers auto rental and leasing, capital financing equipment leasing Solutions, commercial vehicle financing, and other car rental services in Singapore to drivers and business owners seeking to optimise their operations, where zero downtime, predictable operating costs and controlled cash flow outlay are paramount.

Evolving from its humble roots in car leasing to become a full-fledged Automotive Solutions provider, we pride ourselves in prestigious automobile rental services with all sorts of features and functions to satisfy your needs. Furthermore, the quality and expertise of our fleet management team ensure that dedicated efforts and service works are offered to sustain long term relationships with everyone.

The mechanics at our Mercedes workshops are more than equipped to handle your luxury car with maintenance needs such as the need to provide authentic Mercedes components and parts for replacements or repairs. With ETHOZ, you can be assured of the most cost-efficient and honest advice in order to prevent unnecessary excessive spending.