It’s a known fact that driving in Singapore is widely viewed as a luxury. They are expensive, and the barriers to owning one are high.
While the high car prices and down payments may deter many of us from buying a car, it doesn’t stop us from wanting one. A car symbolises mobility, convenience, freedom and even our social status.
Huge cash outlay and hefty loan repayments are primary barriers to traditional car ownership. But, what if you can enjoy all the benefits of driving a car, without having ever to own one?
In many areas of our lives, we are moving towards subscription services. We watch movies / TV shows on Netflix and listen to our favourite tunes through Spotify. How awesome would it be if there’s monthly subscription service for cars?
With Carro’s car subscription service, now there is.
Here are four reasons to consider Carro’s subscription service over traditional car ownership.
1) Save for the Important Stuff
Depending on the OMV of the vehicle, a typical down payment for a mid-sized family car can range between $30,000 to upside of $100,000!
Not many of us have that amount of cash laying around for such a down payment. Even if we do, that cash could be better used for housing or investments.
With car subscription, a small deposit is taken on hold, but no down payments are required. At a starting price of just $1,199 / month, driving a car is now affordable and attainable. This option gives you a lot of financial flexibility.
Now you can put your savings to good use by investing in money generating assets and other investment opportunities.
2) No Need to Fret Over Hidden Costs
Down payments are just the beginning of your financial headaches as far as car ownership is concerned. It is likely that you would have to take out a long-term car loan and pay heavy monthly instalments for years.
Using a simple example, if you take a car loan of $50,000 at 2.88% interest for 5 years, your monthly instalment is $928!
Therefore, besides the initial down payment, you would still have monthly instalments with interest to repay the bank.
According to Carro’s CEO and founder, Aaron Tan, a typical person takes 6 years to repay their car loans, and two-thirds of them would trade in their vehicle before fully paying off their loan.
Bear in mind; the $928 in the above example is exclusive of insurance, car servicing and road tax you have to pay — these hidden costs can significantly drive up your expenditure.
By switching to car subscription, you never have to worry about loans, insurance, maintenance or road tax again. The flat fee you pay is all inclusive; you do not need to worry about hidden costs.
Since we can never predict our financial situation months or years from now, car subscription makes sense if you do not want to be burdened by hidden costs and a long term financial commitment behind traditional car ownership
3) Selling your car at a reasonable price is difficult
Another draw-back of car ownership is that it can be challenging to sell at a reasonable price later on.
While there are quick options to sell your vehicle, it is unlikely for you to get market value during a sale. Other alternatives, such as consignment and selling it on your own, can take a long time.
Time is an essential factor when it comes to selling your car – the longer you take, the more your vehicle depreciates and the lower the valuation of your car will be.
In short, time is money.
If your financial situation takes a downturn, you may not have the luxury of time to wait out for a good deal. Car ownership can be troublesome when we decide to sell.
The value vs time consideration will always be a headache.
Your car’s value will be further penalised for wear and tear such as scratches and dents on the bodywork. A drop in COE prices will also affect the resale value of your car.
Not with Car subscription. There are no loan obligations, and you don’t have to worry about selling your car at all. You return the vehicle as you please. Plus, you will not be penalised for minor scratches and dents. That is true freedom.
4) Situational Flexibility
A pain with traditional car ownership is that we do not always need the vehicle.
For instance, if you are spending a couple of months overseas for work purposes, you would still have to pay off your monthly car instalments.
Furthermore, your car will be sitting in the parking lot depreciating. You are losing money even without seeing the vehicle! Depreciation is merciless.
You won’t face such headaches with car subscription. It gives you a greater degree of flexibility which can result in higher potential savings when driving isn’t necessary for you.
Now, you can plan and decide when you need a car and when you can do without one.
Let’s use an example to show how this can significantly benefit your life.
You decided on a car subscription service instead of owning a car, and you drive mainly to send your kids to school. During the holiday season, the vehicle is underutilised. Now, you have an option of returning the car and keep that $1,199.
Isn’t this small sum of money handy for a short getaway instead?
Car subscription empowers you that way. It gives you the freedom to choose what’s best for you.
Traditionally, there is a tradeoff when it comes to driving. We want freedom in our commute, but the trade-off is that we sacrifice our financial freedom in return.
Now, we do not have to make this trade-off anymore.
You can attain that freedom without bearing the long term financial commitments associated with driving. Car subscription is a whole new way to experience driving minus all the drawbacks of car ownership. It is definitely a nifty option for us to explore.