Singapore drivers turn to long-term rentals and leasing as car prices spiral

More individuals and companies in Singapore are renting or leasing cars as the cost of buying and maintaining a car – especially due to record Certificate of Entitlement (COE) prices – continue to climb, said industry observers.

Multiple companies The Business Times spoke to said they had observed an uptick in longer-term car rentals or leases in Singapore in the past 12 months.

Longer-term car rentals refer to those lasting from a month to a year, while leasing involves longer periods of at least a year and where the hirer is given the option to purchase the car afterwards.

Charmain Kwee, executive director of Eurokars Group, said: “With car prices steadily increasing, we see that more individuals and companies are turning to longer-term rentals and leases as a way of owning a car without needing to fork out a big lump sum, and have a more convenient ownership experience.”

In Singapore, cars meant for rentals and leases are classified as self-drive private-hire cars (PHCs). This is in contrast to chauffeured PHCs, which are used to serve ride-hailing trips and need to display a chauffeured PHC label.

The population growth of self-drive PHCs has increased in recent years, compared to chauffeured PHCs.

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The number of self-drive PHCs grew by 50 per cent to 32,027 in June 2025 from 2020; the number of chauffeured PHCs, meanwhile, rose 23 per cent to 61,369 across the same time period.

For the first six months of the year, 2,025 self drive PHCs were registered, compared to 1,705 chauffeured PHCs.

Lease of use

Car rental and leasing companies BT spoke to all reported increased booking or interest in their services, especially over the past 12 months.

Toh Ting Feng, CEO of car rental service ZipZap, said: “We’ve seen a 5 to 10 per cent uptick in our leads for our car subscription service in recent weeks, partially attributing to the fluctuations in COE prices, indicating a clear and growing interest in this mobility solution.”

In July, the team behind car sharing service GetGo launched ZipZap, which offers no-deposit car rentals for six months or longer.

“We have observed a steady increase in demand for longer-term car rentals in Singapore,” said Eurokars’ Kwee. “Over the past year, rentals of at least one month among customers without personal vehicles have grown by approximately 40 per cent, with over half of these customers returning for repeat bookings.”

The multi-brand automotive group, which is an authorised dealer for BMW, Mazda, MG, Rolls-Royce and other marques, offers car rental and leasing through its subsidiary, Eurokars Leasing.

Other companies that reported similar trends include Kinto Singapore – a subsidiary of Toyota Financial Services – and the leasing arm of multi-brand dealership group Wearnes Automotive.

This is despite rentals and leasing typically costing more per month than purchasing a car and servicing the loan. According to industry sources, the monthly payment for a car lease of around three to five years is about 20 per cent more than servicing the amount for the same car on a seven-year loan.

This is because leasing includes expenses – such as road tax, insurance, and maintenance – in the price, as well as goods and services tax.

On the rise

Industry players said a major factor for the uptake in rentals is high COE premiums, which have increased the upfront costs of car ownership.

Since 2022, COE prices have generally remained elevated compared to the years before.

The mainstream Category A premium has stayed above S$75,000, while Category B, for larger, more powerful cars, has been above S$100,000 since mid-2022.

Premiums have also shot up in recent months on increased demand ahead of a planned reduction in electric vehicle subsidies next year. This has been the case especially for Category A, which set new records in September and October.

The Monetary Authority of Singapore’s rules dictate a maximum loan amount of 70 per cent of the car’s retail price, depending on the car’s open market value, with the remainder payable up front.

For example, a Toyota Yaris Cross Hybrid retails at S$212,888 with COE and requires a minimum down payment of S$85,156. In October 2024, the same car cost S$186,888 with COE and required a down payment of S$74,755 – some 18 per cent less.

ZipZap’s Toh said many of the company’s subscribers were owners of cars whose COEs had expired and sought an alternative to the “significant financial commitment of hefty COE prices”.

Dennis Lim, general manager for pre-owned and leasing for Wearnes Automotive, said the high COE environment has meant an increase in rentals and leases as buyers wait for COE prices to soften.

“Leases provide hirers with more certainty since the costs involved are pretty much fixed, and there is no need to fork out huge deposits,” he added.

A convenient truth

Charmain Kwee, executive director of Eurokars Group, says around half of the company’s rentals and leases are corporate customers, with a “slow but steady” uptick over the past few years.

Likewise, companies are turning to rentals and leasing to avoid high upfront costs.

While the company car population increased to 35,109 in 2022 from 30,966 in 2020, it has since slumped 9.9 per cent to 31,637 as at June 2025.

Eurokars’ Kwee said that around half of the company’s rentals and leases are corporate customers, with a “slow but steady” uptick over the past few years as companies begin to be more receptive to leasing.

“Though leasing a car is more expensive than owning a vehicle, the current price of vehicle ownership has increased so significantly that it might not make financial sense from a cash flow and operational perspective for companies to continue owning them,” she said.

Bruce Lee, chief operating officer of Kinto Singapore, said there has been a “noticeable” increase in companies opting to rent instead of buy.

Convenience is another reason buyers are opting to rent instead. Typically, renting includes most costs of ownership – such as road tax, insurance and servicing – except for fuel. Some services also include a courtesy car.

ZipZap’s Toh said that convenience has been a “major draw” for users of the service.

“Our subscribers appreciate the predictability of a single all-inclusive monthly fee which covers various costs like insurance, maintenance and road tax, removing the financial stress and administrative burdens of owning a car,” he said.

The convenience factor extends to companies as well as individuals.

Kinto’s Lee said that for companies, advantages over buying a car include avoiding downtime, the ability to refresh car fleets easily every few years, and staying asset-light.

Costs of ownership include time needed for fleet management and other costs which may not be immediately apparent, including maintenance and administration.

Eurokars’ Kwee said leasing provides companies with more leeway in terms of cashflow and day-to-day liabilities, delivering benefits without the cost of owning a depreciating asset.

With no major increase in COE supply on the horizon and high premiums set to stay, industry observers said they expect rental and leasing take-up to increase in the near future.

It could also be helped by the fact that attitudes to leasing are changing.

“The demand for flexible car access is strong; and long-term rentals, leasing and subscription are a significant part of this growing market,” said Toh.

“We definitely see this trend continuing as we see a shifting mindset and preference towards ‘subscription as a service’ rather than ‘ownership’, as people today are more comfortable and understand the benefits and flexibility that subscription services provide.”