Leasing out your car to make an extra coin, is it worth it?
In Singapore, you can lease out your car through the private car rental scheme. This scheme requires the car to be insured for rental purposes so that in case the driver who has rented your car gets into any traffic mishap, the insurance company would compensate. Failure to have adequate insurance might prove very risky as insurance companies wouldn’t be able to compensate for damage on the car while rented.
Leasing out your car has its pros and cons and car owners need to be aware of them before making a decision.
1) Extra income
Car owners can make a good amount of money by leasing out their cars to other drivers. Depending on the agreement with the person renting the car, a car owner can earn up to $1000 a month. This is definitely a good amount to make by leasing out your car and it can be a way of paying up the numerous taxes imposed on cars and on highways in Singapore.
2) Cheap way of owning a car
Although the number of cars on Singapore roads are steadily increasing, it is not any cheaper to own a car in Singapore. The taxes are too many, too high and thus not everybody can afford to own a car. This has led to the car-sharing scheme where two or more people share a car. While this might be effective especially if you partner with a loyal and understanding person, it can also be quite a headache if you co-own a car with a non-cooperative partner. In order to avoid this, you can opt for leasing out your car. It will cost you a lot of money to acquire the car and pay all the taxes but you can start recouping your investment once you start leasing out the car.
1 High cost of maintenance
While one might argue that maintenance cost of a car is all dependant on the type of car, the use and the kind of driving also matter a lot. While you might be taking very good care of your car, the same may not go for another driver to whom you leased your car out. Different drivers have different styles of driving and this can positively or negatively affect the maintenance cost of a car. However, leasing out your car would definitely mean higher maintenance cost, simply because the car is being used more frequently by two or more drivers as opposed to only one driver.
2 Wear and tear
Leasing out your car to one other person means that the car would be on double shifts. For instance, if you use the car to run daytime errands and the other driver uses it at night, then the car would be running for almost 24 hours a day. This means that the car would cover twice its average daily distance and thus wear and tear would increase in the same proportion. The miles would be quickly accumulating and the car would also need servicing often. In the long run, the car would depreciate very quickly and it will be a few years before it becomes unroadworthy.
Moreover, leasing out your car is also quite a risky affair. You should conduct a thorough background check on the person or people you are leasing the car to and have formal agreements with them. Failure to do so might even result in you losing the car. There have been cases where cars have disappeared without a trace after being leased to people who later turned out to have used fake identities. Worse still, the car might be used to commit an offence and the blame might be shifted to the car owner in case the offender cannot be traced.