Car owners, desiring more income have turn to creating new sources of income via renting their vehicle out. In this article, we take a look at reasons why it is dangerous to use such vehicles.
With the rise of the sharing economy in the recent years, there’re more innovative ways for additional incomes. From shared transport, housing, office spaces to lifestyle, the sharing economy offers many new opportunities. In the automotive industry, car owners are starting to look at options like chauffeuring, private hire services, freelance courier, food delivery or even rental services to utilize their asset.
Malaysian Law
(details on Malaysian Law)
Pros and Cons of Renting From an Established Car Rental Source VS Illegal Car Rental Source
Let’s take a look at the hidden risks and liabilities involved for both parties.
- Proper Documentation – Are your rights protected legally?
The presence of proper documentation and system provides clarity, which helps to prevent any future dispute. For smaller rental firms, some rental transactions are perform through verbal agreement out of mutual trust. When things go south, some unscrupulous rental firms will extort clients by charging fines and holding on to deposits. Many of these companies target P-Plate holders or young drivers by offering cheap rental deals and low entry requirements.
For those with proper contracts, do examine the clauses and clarify any doubts with the sales person involved before signing any agreement. Please do not be deceive by any cheap deals with vague terms and conditions. There is a case whereby a client was accused and fined for subletting by the rental firm after his brother took over to drive with the client’s presence as a passenger. Not only was the deposit forfeited, the client was also fined $3,000.
To prevent this from happening to you, be sure to let the car rental company know if there is more than one authorised driver for the rental car. Some established car rental companies in Singapore do offer such complimentary service as they will need to update the insurance company to ensure sufficient coverage for the drivers.
- Unknown Rental Source or Usage of Rental Car – Do you know where your vehicle came from or what were they used for?
Next, is the source of the vehicles! Do you know who and where are you renting the vehicle from? Who knows if the vehicle was disposed due to a defect or committed crime. For a cheap and dubious deal, you might end up incurring more cost and trouble. Imagine, what if you were offered a cheap deal without knowing that it’s a deregistered vehicle?
In Singapore, it is illegal for private car owners to rent out their vehicles via car rental companies. A customer service executive fell victim for a rental scam after renting out her Volkswagen Golf through an unregistered car rental company. She landed up with a $17,000 repair bill. Other incidents of subletting also took place in 2009, where a man conned 16 victims out of about $134,000 by renting cars from them and not paying them. He then sublet their vehicles out to others and pocketed their payments. Please do not fall for the promises of additional income and incurred losses due to greed. Do look for established car rental companies in Singapore that own their own fleet.
- Accident – Are you covered?
When renting from illegal car rental sources, are you well-covered when an accident occurs? Probably not. Your car renter might not have sufficient insurance coverage as some insurance companies do charge extra for additional drivers. When an accident happens, the insurance company might not even accept the claims submitted as the driver (you) during the point of accident is not the policy holder. This will only cause unnecessary conflict to arise. Not only will you risk the possibility of bearing your own hospital bills, but you may also be asked to pay for the vehicle repairs!
For private car owners, you tend to bear a higher risk if your vehicle is involve in an accident during the rental period. What if the person who rented your car decides to play punk by denying all responsibility? You will have to bear the costs of repairing your car.
- Traffic Fines – Who will be responsible to pay for fines?
In Singapore, all traffic fines will be sent to the registered car owner of the vehicle unless the driver was caught red-handed by the traffic police. Logically, the driver should be responsible for any fines issued by the authorities. However, there’re some inconsiderate hirers who do deny the act and refuse to pay for the traffic fines. Under such circumstances, the car owner will have no choice but to settle the fines.
- Missing Vehicles
You may wonder why some rental companies actually screen potential renters before committing to a deal. Well, there have been increase concerns over rental cars being used for criminal activities. During arrest, some of these cars were impounded by the authorities, while others were severally damaged. Some have even gone missing. This is why some car rental companies go the extra mile to secure their vehicles by installing GPS for security purposes. For car owners who are renting their cars out illegally [1], do note that you may not be legally protected if the vehicle happens to go missing during the leasing period.
According to the Consumers Association of Singapore (CASE), motorcar related complaints make up 15% of overall complaints, topping the chart in 2017. Do beware of illegal car rental services to avoid any unwanted risks, liabilities and claims. Apart from illegal car rental services, there are also news reports of illegal chauffeuring services in Singapore.
In an enforcement operation carried out by the Singapore authority last August, 2 drivers were caught providing illegal chauffeuring services with Malaysian-registered vehicles. According to Today, the prices quoted were relatively cheaper as compared to the legal service providers with Singapore-registered vehicles.