The Star Malaysia

Car leasing vs rental and hire-purchase

- YS CHAN Kuala Lumpur

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

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

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