Malaysiakini Letter

Comparing car leasing with rental and hire-purchase

YS Chan  |  Published:  |  Modified:

LETTER | News of a public listed company (PLC) that is principally engaged in the business of development and implementation of electronic government services venturing into car leasing has created a buzz in the market.

The report quoted an executive with a foreign car company who believes that the private leasing business will take off with a focus on more affordable cars.

He added that Uber or Grab drivers would benefit from leasing, as they do not have to worry about the car’s maintenance and switching to a new car after a few years.

Other industry sources also said the PLC, which is providing online motor insurance and road tax renewal services, has the market advantage of being the first to carry out such a business.

It is obvious that these comments were made by those lacking experience in this field and some clarification is needed for a better understanding of car leasing, which is not new.

I ran a car rental business 24 years ago and managed a team of sales staff to offer car leasing to mainly multi-national corporations, as many practised off-balance sheet financing and preferred not to buy and own motor vehicles.

We were very successful as our leasing rates were lower than what other car rental companies charged for monthly rentals. Customers were provided with a replacement vehicle whenever the leased car was under routine maintenance or repair at our cost.

We paid cash to the motor distributors when taking delivery of new cars, which were registered in our corporate customers’ names. My company held ownership claim, which was endorsed on the registration card.

I designed the ownership claim form myself, had it rubber stamped and signed in the middle, cut into half, and submitted one portion to the Road Transport Department, and kept the other half to be used later for releasing ownership claims.

When Uber was introduced to Malaysia in 2014, some drivers rented from car rental companies on a monthly basis at a high cost. The rates on offer by the PLC is bound to be substantially lower.

But before anyone signs up blindly, as most taxi drivers used to do with rental-purchase scheme offered by taxi companies, it would be wise for drivers to check with Uber or Grab whether they have a similar financing scheme, offered directly or indirectly through its driver groups.

Although one has to bear the maintenance cost when buying a car through hire-purchase with a bank, it is still the cheapest option for most drivers. One should not be so gullible as to believe that facilities or “benefits” offered by leasing, car rental or taxi companies come at no cost.


The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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