When Leasing A Car, Is Insurance Included?

January 11, 2023
6:51 pm

Leasing a car soon? Wondering what are your options for insurance? Check out this article!

When leasing a car, you may be wondering, is insurance included? All car rental agencies must carry some form of auto insurance, whether full coverage, third-party liability, or third-party fire and theft. Since insurance is included in your rental car package, you don’t have to worry about securing it separately.

But before signing a contract with the lowest rates in town, you should consider the following 8 factors:

Car Leasing Package

When you lease a car, insurance coverage includes the following:

Roadside assistance
Accident repair & claims
Servicing & maintenance
Replacement vehicles

In addition to leasing services, most car leasing companies also offer add-ons and other benefits at slightly higher prices.

Roadside assistance: Most leasing companies would like you to call their hotline for roadside assistance (accident recovery, vehicle breakdown, towing services, etc.) regardless of your status as a customer. The primary difference is the cost of these services and the amount you, the driver, are responsible for.
Accident repair and claims: Accident recovery, accident reporting, insurance claims, and damage repairs.
Servicing and basic wear and tear maintenance: These are typically included in most packages. However, costs associated with damaged parts that are not considered normal wear and tear may be excluded.
Option to change car model mid-lease: Your needs for a car may change mid-lease. Some companies offer the option of upgrading or switching car models in the middle of a lease for a fee.

Insurance Excess And Collision Damage Waiver (CDW)

Insurance excess is the amount you are responsible for paying in the event of an accident. This is the additional payment (excess) that you, the policyholder, will be required to make in case of a claim.

Collision Damage Waiver (CDW) is an add-on option offered by car leasing companies to reduce your liability. Depending on your policy, this may cover anything from the bodywork to the cost of repairing the entire vehicle.

Keep an eye out for insurance excesses that seem suspiciously high, as this could indicate that the stated amount is not the total amount you will be required to pay. Instead, it could be broken down into “total,” “own damage,” and “third party damage” excess.

Prices And Auto Insurance

Read what you agree to before you sign. If you’re not careful, hidden costs can hurt your wallet. Some companies may have base lease rates, but they may not tell you about other fees that appear out of nowhere when you return the car.

The warranty is another important thing to look out for. Find out what your warranty covers and what you’re responsible for in case of an accident or something else.

Always double-check your warranty coverage and liability, as well as fees that aren’t included in the contract, like road tax, lower-than-average insurance excess, excessive wear and tear costs, early termination fees, and extra costs for going over the mileage limit.

Speed Limits

If you’re leasing a car, you should see if there’s a limit on annual mileage; most agreements set limits between 12,000 and 15,000km.

If you are concerned about exceeding a certain number of miles in your leased vehicle, you should also review the terms of your lease. Unless you’re renting an exotic or supercar, most Singapore leasing companies won’t cap your annual mileage.

Rates may be slightly lower for those who agree to a mileage cap, usually between 12,000 and 15,000 kilometres per year (varies by dealer). When it comes to mileage limits, many drivers make the common mistake of severely underestimating their needs, resulting in hefty fines.

Gap Insurance

Gap insurance covers the difference between a vehicle’s residual value and the amount your auto insurer pays if the vehicle is totalled. Some lessors require you to purchase and include premiums in your monthly payments.

Security Deposit

You may be required to pay a security deposit, which the lessor may use to cover car damages or extra mileage charges when you return the vehicle. Your entire security deposit will be returned if you do not owe any additional fees.

Cap Cost

You may reduce your cap cost by negotiating the price, trading in a vehicle, or making a down payment, among other methods. Cap cost reductions can result in lower monthly payments because you pay for the depreciation between the cap cost and the residual value (the car’s value at the end of the lease).

Acquisition Fee

Some leasing companies charge an acquisition fee when arranging the lease. You might be able to negotiate this fee or locate a lease without one.

Conclusion On When Leasing A Car Is Insurance Included

At Hong Seh Leasing, car insurance is included when leasing a car. Be fully protected and discuss with us your leasing needs. Lease a car in Singapore now with Hong Seh Leasing.

We offer Comprehensive and Lease-to-Own packages in Singapore. We offer different leasing services for brands such as: Mercedes Benz, BMW, Toyota, and Lexus. We also offer electric van & lorry leasing for your travel needs.

Frequently Asked Questions On When Leasing A Car Is Insurance Included

What Is A Fully Comprehensive Insurance Policy?

Comprehensive auto insurance covers liability for property damage and bodily injury/death to third parties. It also covers damage to your vehicle caused by fire, theft, storms, floods, and accidents.

What's The Difference Between A Leased Car And A Car Rental?

Here are the main differences between leasing and renting a car:

Rentals are for a few days or, at most, a few weeks.
Leasing agreements are typically for several years.

What Should Additional Insurance Policies Be Considered?

Additional auto insurance policies you should consider before leasing include:

Travel insurance
Windshield and tires
Rental car requirement

You may also check our article on car rental insurance to know more!

How Do I File A Claim For Rental Car Insurance?

Collect evidence from the scene; photographs and videos can be useful. Collect items such as medical certificates, invoices, and other expenses. Your insurance company will require notification of any accidents within 24 hours or the following business day.

If not, the insurer may not cover any claims related to the accident, and the renter may be responsible for all damages resulting from the accident. If necessary, take your vehicle to a certified shop.

Questions? Contact Us Today!

How Does Leasing A Car Work? 5 Must-Read Facts

January 11, 2023
6:33 pm

"How does leasing a car work?" is likely a question that's popped into your head. After many weeks or months of figuring out a way to drive a car without actually owning one (cars can be costly to maintain, after all), car leasing is the best last resort. But how exactly does car leasing work, and how is it different from a car rental? We'll discuss this topic and some considerations when taking out a car lease. Let's get right to it.

What Is A Car Lease?

Car leasing is an arrangement wherein you make several monthly payments to rent a vehicle for a specific period.

But wait, that sounds a lot like renting a car. Not quite. Car rentals are short-term. Most rental companies offer one-day rentals to customers who need them for a weekend getaway or personal use.

On the other hand, car leasing is long-term. You get to use the vehicle for various purposes (commercial, corporate, or personal) for several years, as agreed between you and the car leasing company.

Depending on the car leasing company you’ve engaged with, you can trade a run-of-the-mill Toyota with a top-of-the-line, luxury BMW 4 Series Convertible — that is, if you’ve held up your end of the bargain and made the necessary monthly payment at the end of the lease.

Then, you can start again with a new car lease and drive the new vehicle for whatever purpose.

What's Included In A Car Lease?

A car lease is an agreement between you and the leasing company to “borrow” a vehicle for an x number of years (also known as the lease period).

When leasing a car, the value of your monthly payment will depend on the vehicle’s depreciation. This is the difference between its selling and purchase price.

Depreciation rates vary across different makes and models, but you can expect 15-35% in the first year, down to 50% over the next three years.

Your car lease contract can cover the following:

Down payment/upfront costs of leasing a car
Lease length (you will generally encounter two types of lease periods:
- Brand new car – A minimum of 3 years or above
- Existing car – A minimum of 6 months or above
Termination fees (if you end up returning the vehicle before the leasing period ends)
Mileage allowance or how many kilometres you can drive yearly – Most leasing companies only allow a mileage limit of 15,000 to 25,000 kilometres. They may ask you to pay for every kilometre exceeded)
Wear and tear – The lessor (leasing company) may ask you to pay extra for excessive wear and tear on the leased vehicle. Eating, smoking, or other activities may increase the likelihood of incurring additional wear and tear fees.
Annual insurance and road tax coverage – There’s no need to renew road tax or find an insurance company to cover the vehicle. These are already included in the leasing plan.
Regular maintenance and servicing – Car leasing packages include maintenance costs for tyres and batteries.
Flexible lease terms – Lease a corporate vehicle or a brand-new car of your choice. Many lease agreements are flexible and allow customers to choose a plan that matches their lifestyle needs.
Replacement vehicle – If you encounter problems with the car, the lessor can offer a replacement vehicle to ensure continuity.

Why Should You Choose Car Leasing Over Financing In Singapore?

Singapore has one of the highest car ownership prices. If you wish to buy a car, you’re not only paying for its purchase price but other fees and taxes, including:

Open Market Value (OMV)
Certificate of Entitlement (COE) renewal
Road tax
Additional Registration Fee (ARF)
Emissions surcharge
Insurance premiums
Maintenance costs
Car loans

Buying a car in Singapore is no walk in the park, which is why many individuals opt for car leasing instead, and for several reasons:

Low Monthly Payments

Monthly car leases are generally lower than the payments you’ll make after taking out a loan for a car.

Lower Down Payment

In addition to low down payments, car leasing generally offers lower down payments (10%) than buying a brand-new car. For example, vehicles with an OMW of $20,000 will require you to make a 30% down payment. Anything above $20,000, you’ll end up paying 10% more.

Wide Variety Of Models To Choose From

If you’ve always dreamed of driving luxury or performance vehicles, leasing a car is more affordable than financing. It’s far less expensive than buying a new vehicle and covering repair and maintenance costs yearly.

Comes With Insurance

The leasing company will already cover the car’s insurance. This gives you peace of mind knowing you won’t need to scour dozens of motor insurance companies for a comprehensive car insurance plan that meets regulations.

No Need To Trade Or Sell The Vehicle

Most car owners are faced with the dilemma of whether to dispose of or sell their used car. This doesn’t happen with leasing since you can always return the vehicle to the lessor without any strings attached.

What Should You Consider Before Leasing A Car?

Leasing a car may be new to you, and the jargon surrounding lease agreements can be confusing. This is why it’s essential to understand common car leasing terms and what they mean:

Acquisition fee – Your car dealership or leasing provider will need you to pay upfront. This is also known as the down payment or acquisition fee for lease arrangements. You may either negotiate this fee or find a company that doesn’t require it.
Capitalised cost – This is the vehicle’s initial price. It’s negotiable in a car leasing arrangement, similar to a car purchase.
Disposition fee – Some companies require customers to pay a disposition fee at the end of the lease. This helps them cover the costs of preparing the car for sale.
Lease term – This refers to the end of the lease.
Purchase option agreement – You can negotiate with the company on how much you’re willing to buy the vehicle for once the lease expires.
Residual value – The vehicle’s value at the end of the lease. The lessor or a third-party financer or dealership will usually determine this.
Proof of income – The lessor may need you to present proof of income showing that you earn three times the leasing rate. This guarantees you can make the lease payments on the agreed monthly dates.
Security deposit – The lessor may request a refundable fee to cover additional damage to the vehicle. It can also cover extra mileage fees if you exceed the mileage allowance. If at the end of the lease, the car is in the same condition as when you received it, the lessor will return the security deposit in full.

What Should You Consider Before Leasing A Car?

Leasing a car is a cost-effective option for people who need an alternative means of transport. It’s also a great way of driving the newest models in the market without paying for all the costs associated with buying a car in Singapore.

Here’s what you need to do to start your car leasing journey:

Choose The Right Vehicle

With a multitude of options to choose from, picking the right car to lease can be overwhelming. But the good news is, most companies offer brand new makes and models.

Think about what type of vehicle you need. Do you need a small SUV to drive your kids to and from school? Or will a sedan fit your lifestyle better?

Determine how the vehicle will fit into your daily activities, then narrow down your options. You can even test-drive the car before committing to it.

What we offer: Hong Seh Car Leasing in Singapore carries the latest models for top car brands like Toyota, Lexus, BMW, Mercedes-Benz, and more. Click here for a complete list of car models available for lease.

Shop Around For Different Leasing Companies

Leasing a car is a significant financial undertaking, and it requires extensive planning. Don’t just agree to the first lease term you receive — do your due diligence by looking at other leasing services and what they offer.

Ultimately, all you want from your car lease is a good deal. Don’t worry about taking time with your decision. Look at company reviews and weigh them against reviews from other companies.

Ensure You Can Make The Monthly Lease Payments

You don’t need good credit standing in Singapore to lease a car. However, you will need to prove that your income is sufficient to make the monthly payments.

This means you’ll need to earn at least 3-4x the value of the lease (you must be making $7,500 at the very least).

Discuss first with your chosen lessor and see if you’re eligible. They may request documents like:

Employment pass
NRIC
Passport
Residential address
Letter of employment including term, salary, benefits, and allowances

Conclusion About How Car Leasing Works In Singapore

Ever wanted to drive a vehicle without actually buying one? We’re not talking about renting. We’re talking about leasing (for a monthly fee).

Car leasing has become a popular option among individuals who need long-term transport. Unlike a rental that lasts for only several days or months, car lease terms can last for up to 4 years, depending on the mileage limit.

Lease a car in Singapore now with Hong Seh Leasing. We offer Comprehensive and Lease-to-Own packages in Singapore. Buy out the car, finish the lease, or trade it after it ends — we give our customers what they need.

Day: January 11, 2023