The brands that are synonymous with short term car rentals have long been household names. When most people think of such short term car rentals in Singapore, names such as Hertz, Avis and Europecar are likely the first that spring to mind. Having been founded in 1918, 1948 and 1949 respectively, these names hold a lot of cache and are amongst the weightiest in the industry. Their business networks span the globe and seem to be at every airport and in every major city, ready to serve clients’ every need.
In Singapore, the car rental market has grown steadily. With car prices consistently ranked the highest in the world, it comes as no surprise that many are opening up to the idea of renting rather than owning. In a study completed in March 2020, the market was projected to grow at a CAGR of 3.71% between 2018 and 2024. After spending 2020-2021 in the doldrums, a sharp 20% rebound is expected in the following year, before levelling off to a more subdued but respectable average of about 7% year-on-year growth up to 2025. Capitalising on the strong demand for both long and short term car leasing, Singapore has seen the rise of many enterprises offering such services. Apart from the traditional car rental companies like the ones mentioned above, resale car dealers, car manufacturers and financing companies have built up a car leasing segment in their business. Even car leasing companies that had long been serving only corporate customers have also begun to open their doors to regular consumers.
As with any well developed business, an established brand comes with many advantages for customers. Want to return a rental car in a different city, enjoy cruising in a luxurious sedan or just like having more options? These are differentiated product solutions that these large brands are able to cater to.
Why Enter a Long or Short Term Car Lease With an Established Company
The list of reasons to engage a reputable company when deciding where to rent or lease a vehicle from can be categorised into 3 groups; product offering, convenience and support. Each in itself may not make a compelling enough proposition to a customer but together, the combination of the 3 delivers robust solutions for every need.
In larger, more established companies, the vehicle fleet is often bigger when compared to smaller set ups. Finding the perfect car that meets every requirement without having to compromise would be less of a challenge. Prefer an SUV over a sedan or looking for a sportier ride? With a larger fleet of vehicles, chances are that there’s something in the inventory that fits the bill.
Apart from a wide range of vehicles there could be other services like chauffeured services, flexible tenure options and also different leasing types too.
Personal Contract Hire (PCH) is a medium term rental agreement that typically lasts between 1 to 4 years and the vehicle is returned at the end of the tenure. There is no option of buying the car and the monthly rental amount depends on the length of the contract, the upfront deposit placed with the rental company and the final mileage racked up.
Personal Contract Purchase (PCP) is similar to PCH in all aspects and to a hire purchase (HP) contract which is the way most people buy cars in Singapore. The main differences are that in a PCP, the monthly repayments are lower than that of a HP contract and at the end there is a balloon payment option to take ownership of the vehicle.
Leases can also be open-end or closed-end. This is a way of apportioning the loss when the market value of the car at the end of the lease falls below the residual value as calculated at the start of the contract. This risk can be shouldered by either the lessee or lessor and the monthly repayments are adjusted according to which party bears the brunt of that risk.
Beyond vehicle model selections and different convenient payment options, established car rental companies could have a workshop for repairs and maintenance or they could have a network of workshop partners that clients can choose from. Likewise, there might be breakdown support or towing services and a customer hotline to reach out to in the event of an accident or when mechanical problems arise such as a dead battery that can leave drivers suddenly stranded in an unfamiliar area. There could also be a replacement vehicle available so clients would not be left without transportation while the car is being fixed. These services make it a one-stop-shop that makes the experience of having a vehicle extremely easy and takes out all if not most of the hassles.
However, all these frills come with a price and if one could do without some of the bells and whistles, there are cheaper alternatives.
Long or Short Term Car Lease With an Unestablished Company
Whether it is to an individual or a company, costs always form one of the biggest considerations of any decision. If one is willing to deal with some of the occasional inconveniences or able to handle some of the recurring chores like servicing, opting for a cheaper rental vehicle from a smaller company could be a good choice.
Due diligence, especially with companies that are not a recognisable brand, always pays off. In the worst case scenario, the cheap deal from an unestablished rental company may not be properly licensed to operate such a business. This is a more likely scenario these days when service providers can operate solely online or through a phone app without much of a physical presence.
A more likely scenario are hidden costs and inadequate insurance coverage. If there is inadequate insurance coverage, the driver may be liable for any damages that exceed the amount of coverage. Likewise, this lack of transparency can also cost the driver a substantial amount of money if it is not clarified beforehand. Some examples include a surcharge for younger drivers, no unlimited mileage option, extra costs for breakdown services, lack of maintenance logs or simply adding charges for prepaid petrol. The list can be quite extensive and easily overlooked if one does not know what to look out for.
Smaller companies may also have a smaller range of vehicles or vehicles that are older and not in as good a condition either cosmetically or internally. It is important to note that cost savings may seem to be a priority at the expense of comfort initially but it depends on the duration of the rental. A few days with a vehicle that is a compromise could be ignored or even barely noticed but over a longer duration can prove to be a larger bugbear.
That said, the industry for long term as well as short term car rentals have grown to be extremely competitive and even some smaller companies bring a lot of value to the table but one should always be mindful of the potential trade-offs.