After the first open bidding exercise in January 2014, a car buyer here will have to pay almost $80,000 for his or her Certificate of Entitlement or COE in the ‘Open’ category (any type or size of vehicle) before adding on the price of the car. As COE prices are not expected to head too far south this year.
As car ownership costs are very high when is leasing a better alternative?
Leasing is a convenient solution for people who do not wish to tie up too much of their funds, especially with the new loan regulations that require a 50 per cent downpayment on new car purchases. For leasing, you just need to pay a monthly fee and all else is covered. There is no risk of ownership, nor servicing costs to bear. But do note, a lessee has to pay a security deposit of three months rental (refundable at the end of the lease).
What are the main types of car leasing programmes available?
There are two main types of leases: The first is a Full Servicing Lease (which is what Wearnes does) that covers everything including servicing, tyre changes, replacement vehicles and insurance. The other type is Basic Leasing meaning the hirer just pays for the monthly fee but has pay for the cost servicing the vehicle.
What would be the main benefits and drawbacks to leasing versus buying a car?
The main benefit is related to the high cost of car ownership. The higher the price of your car, the more likely you are to lose a greater amount of money when you sell off the car a few years later. Leasing offers you the flexibility to change cars after every contract period without losing a cent. However, if you intend to drive a vehicle for more than five to seven years then it may be more worthwhile to buy than lease.
That means the case for leasing becomes more attractive or beneficial for prestige and flagship marques?
Yes in a way as the more prestigious or expensive a car, the higher the downpayment required to buy it. For example, a Range Rover Evoque is retailing at $280,000 today. To buy it, you will have to place a cash downpayment of $140,000 and take a loan out for the other $140,000, which translates to a monthly instalment of about $2,650 per month (for a five-year loan). This is excluding other expenses such as insurance and road tax that are payable yearly. If you lease the vehicle instead, you will pay an upfront deposit of $12,600 ($4,200 x 3) which is refundable at the end of three years. The monthly servicing fee is $4200 +7 per cent GST.
For Wearnes, what are the popular models often chosen for lease?
Typically models such as Volvo XC60s, Jaguar XF and XJ, Range Rover Evoques and Infinitis are popular amongst leasing customers.
What is the usual lease period here and are there schemes that offer those who have long term leases an option to buy the vehicles at the end of the lease period?
It is usually for a period of three years and, yes, we do allow customers an option to buy over the vehicle at the end of the lease. The amount has to be a mutually agreed amount by both parties.