Is leasing cheaper than buying a car in Singapore?

Sometimes. Leasing can look cheaper monthly because depreciation risk is transferred and some costs are bundled. But you are paying a margin for flexibility and risk transfer. Buying tends to win when you hold longer and manage depreciation exposure well.

When does car leasing make sense in Singapore?

Leasing is most rational when your holding period is short (often 1–3 years), your timeline is uncertain, you value predictable costs, or you want to reduce COE timing and resale risk.

What costs are usually included in a car lease?

It depends on the contract. Many leases bundle servicing and maintenance, and some include road tax and insurance. Always verify what is included vs excluded (insurance excess, tyres, accidents, mileage caps, replacement car, etc.).

Is leasing better if COE is high?

Leasing can reduce exposure to COE timing risk and resale uncertainty during high COE cycles because you are not carrying full depreciation risk. But the leasing company prices that risk into your monthly rate.

← Back to Ownership Guide

Car Leasing vs Buying in Singapore (2026): Which Makes More Sense?

Last updated: February 2026

In Singapore, leasing vs buying is not mainly a “cheaper monthly payment” debate. It is a holding period + depreciation/COE risk transfer decision.

Leasing means paying a margin for flexibility, predictability, and reduced exit risk. Buying means carrying full depreciation exposure — with potential cost efficiency if your holding period and structure are sound.

Quick Answer

Lease if your timeline is short or uncertain (1–3 years), you value predictable cashflow, and you want to reduce COE + resale timing risk.
Buy if you can hold 5+ years, can carry depreciation exposure comfortably, and want full control over usage and resale.
Grey zone (3–4 years): decide based on contract structure, mileage caps, early termination risk, and liquidity resilience.

Before leasing vs buying, confirm a car is worth it at all: Is It Worth Owning a Car? · Break-even check: Car vs Ride-Hailing Calculator

Jump to the Section You Need

1) The core difference (risk transfer)
2) Holding period lens (the real determinant)
3) What leasing includes (and the traps)
4) What buying really costs
5) How to compare leasing vs buying properly
6) When leasing is rational
7) When buying is rational
8) Final checklist
FAQ

1) The Core Difference: Risk Transfer

Buying: you carry depreciation, COE timing exposure, resale outcome, and maintenance volatility.
Leasing: the leasing company carries more depreciation timing and resale risk — and prices that into your monthly rate.

Risk transfer is never free. Lease pricing embeds depreciation uncertainty, utilisation risk, maintenance buffers, and profit margin.

2) Holding Period Lens (The Real Determinant)

Rule of thumb:

1–2 years: leasing often wins on flexibility + exit certainty
3–4 years: grey zone (contract structure matters)
5+ years: buying often wins if depreciation profile is sensible

If your concern is COE timing risk: Buy Now or Wait?

3) What Leasing Includes (And the Traps)

Leasing can appear “cheaper” because some costs are bundled. Always verify contract terms.

Item	Often Included	Often Excluded / Conditional
Servicing	✅	—
Maintenance & repairs	Sometimes	Accidents / abuse / specific parts
Road tax	Sometimes	—
Insurance	Sometimes	Excess, named driver limits
Tyres & battery	Sometimes	Often capped
Mileage	—	Capped (excess fees apply)

Lease contract trap checklist:

Mileage cap + excess per km
Insurance excess and claim penalties
Early termination penalties
Wear-and-tear exclusions
Downtime replacement terms

4) What Buying Really Costs

Instalments are not the cost. True cost is dominated by: depreciation (COE embedded), plus insurance, maintenance, fuel, parking/ERP, and opportunity cost.

Reference: 5-Year Ownership Breakdown · True Monthly Cost · COE Structure

If financing, understand: Flat rate vs Effective Interest

5) How to Compare Leasing vs Buying Properly

Compare on the same timeline:

Leasing total = (monthly lease × months) + upfront fees + excess fees (if any)
Buying total exposure = (purchase − resale) + interest + insurance + operating costs + opportunity cost

Don’t compare lease price to loan instalment. Compare lease price to true monthly ownership cost.

6) When Leasing Is Rational

Timeline uncertainty (relocation, job change, family change)
Short holding period (12–36 months)
Desire to reduce resale + COE timing risk
Cash preservation (avoid large upfront capital)
Preference for predictable bundled costs

7) When Buying Is Rational

Holding period 5+ years
Comfortable carrying depreciation exposure
Liquidity strength and buffers
Desire for usage flexibility and resale control

Within buying: Used vs New Car

8) Final Checklist

Lease if:

Holding period is short or uncertain
You value exit flexibility
Contract inclusions meaningfully reduce volatility

Buy if:

You can hold 5+ years
You can carry true monthly cost without stress
You understand depreciation + COE risk

FAQ

Is leasing cheaper than buying in Singapore?

Sometimes monthly. But leasing includes margin for risk transfer. Buying tends to win when holding longer and managing depreciation well.

When does leasing make sense?

Short timelines, uncertain plans, or desire for predictable bundled costs.

Is leasing better when COE is high?

It reduces direct exposure to COE timing risk, but the leasing company prices that risk into your rate.