The ultimate guide to car ownership in Singapore
PHOTO: GoBear
PUBLISHED ONNovember 09, 2020 1:00 AM
Buying a car in Singapore is no mean feat. It's expensive, and could be one of the biggest purchases of your life.
We talk through the major considerations you should make to ensure your (often emotion-driven) purchase decision is as well thought out and rational as possible.
New vs used cars – which is better?
There are few things in life as intoxicating as new-car smell. It's the sweet, heady scent of luxury, success, and all the good things life can bring all rolled into one.
But is new always better than used? And under what circumstances could going used actually work out better for you? We compare the pros and cons.
Criteria 1: Value for money
Winner: Used cars
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New Cars |
Used Cars |
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It is said that a new car depreciates the most in its first five years. As soon as you put your pedal to the metal and zip out of the dealership, your sweet new ride instantly drops a few thousand dollars. Ouch.
However, note that not all cars depreciate at the same rate. Some brands, such as Toyota and Honda have a reputation for reliability and are known for holding their value particularly well. |
You pay significantly less (depending on the age of the car) as compared to a newer version of the same model.
Furthermore, as the first owner has already absorbed most of the loss, a used car depreciates less. So, you stand to lose less should you resell the car.
With the lower prices of used cars, you may even be able to afford a higher class of car. |
Criteria 2: Warranty
Winner: New cars
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New Cars |
Used Cars |
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New cars come with warranty, typically for the first three years or 100,000km (whichever comes first). Some car dealers also offer warranty extensions to 5 or more years.
Warranty packages usually include free car servicing, which covers both the interior and exterior of your new car. |
If your used car has run out of warranty, you may have to pay for repairs out of pocket.
And if you got a dud and have to keep returning it to the workshop for repairs, your eventual bill could run up to the thousands. |
Criteria 3: Financing options
Winner: New cars
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New Cars |
Used Cars |
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To sweeten the deal and attract new car buyers, automakers offer a bevy of incentives, such as cash rebates. New car loans also come with better interest rates. You may also be able to negotiate down the price of the car with the salesperson.
You may end up not paying too much more for a new car, as compared to a new-ish used car that is 1 to 2 years old. |
Used car dealers can help provide information on interest rates, maximum loan and tenure should you require a loan. |
Criteria 4: Maintenance
Winner: New cars
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New Cars |
Used Cars |
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New cars are low maintenance as there is no wear and tear and everything is pristine and brand spanking new — from the latest upgraded engine and technology specs, to the gleaming new paintwork and tyres.
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It’s true what they say about buying a used car — you might just be buying someone else’s problems. The car may have been poorly maintained or involved in accidents.
However, if you have a trusted workshop to go to, you could get them to check the condition of the car before you even buy it.
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Criteria 5: Ease of shopping
Winner: New cars
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New Cars |
Used Cars |
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You get the full retail experience; the convenience of looking at the full range of car models at various budgets, the fun of test driving different cars to get a better feel of which suits you best, and the good customer service. |
You need to be a very discerning buyer and know more or less what you want to look out for. Choices may be limited at that point in time. You also need a good trusted professional to help you do a thorough check on the condition of the used car before you ink the deal.
But if you luck out and end up finding a barely used car for a good deal, it could mean significant savings for you. |
Criteria 6: COE prices
Winner: Depends
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New Cars |
Used Cars |
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To register a vehicle, you must first bid for a Certificate of Entitlement (COE). You can bid for a COE during the open bidding exercises conducted twice a month. Before the start of each bidding exercise, the Land Transport Authority will announce the vehicle quota of COEs available for each category. When you secure a COE from the bidding exercise, you can register a vehicle and use it for 10 years. New cars are more of a bargain when COE prices are low. |
Comparatively cheaper when COE prices are high. |
With these factors in mind, it is clear that if your budget is not an issue, purchasing a new car can offer more peace of mind.
If you maintain it well and drive it over a long period of time, you will also get your cost per wear down and most importantly, enjoyment out of the drive.
Costs of owning a car
We all know that the upfront cost of buying a car is very high. But there are also many other day-to-day expenditures which could add significantly to your monthly spend.
ERP charges, season parking fees, petrol
If you are a first-time owner of a car, you could be shocked by how the dollars and cents add up. This is especially if you are driving to work in the CBD everyday. Here's an estimate of how much it could cost you:
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Item |
Cost / Month |
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Cash card top-up for ERP charges, parking |
$200 |
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Fuel |
$200 |
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Season Parking |
$250 (for office); $120 (for HDB) |
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TOTAL |
$770 |
Car insurance
All car owners have to be covered by car insurance, minimally a Third Party Only or Third Party, Theft and Fire insurance policy. A TPO costs about $513.28 per annum.
However, you may find it necessary to upgrade to a more comprehensive car insurance policy for better coverage against personal injuries and damage to your car.
Your car insurance premium depends on factors such as how long you've been driving for, whether you've had any accidents, and how old your car is.
Assuming you are what insurance companies consider a "safe driver", comprehensive car insurance plans could start at $700 per annum.
Taxes
As they say, nothing is certain except death and taxes. You will have to pay an annual road tax for your car. How much you pay depends on your car's engine capacity, age, scheme and fuel usage.
Assuming you drive a Toyota Corolla Altis 1.6 that is less than 10 years old, you will likely have to pay $742 in road taxes a year.
And if you drive a vintage car, your road tax could be up to 50 per cent more expensive.
Maintenance costs
Whether you purchase a new or used car, it will need regular servicing maintenance for tip-top performance. New cars have an advantage as they have no existing wear and tear, and enjoy a warranty of at least three years that covers free servicing.
But once the warranty is over, it's all fair game. If you drive a continental car, be prepared for higher repair costs than Asian brand cars.
Don't forget, you will also need to replace consumables such as tires, windshield wipers and brake pads when they wear out.
Estimated cost of normal servicing: $250 per session, every 6 months
Minor accidents
No matter how careful you are, there's a possibility of getting into scrapes. This is especially if you are a new driver and have not developed a good judgement of close corners, or cannot react fast enough to changes on Singapore's busy and congested roads.
A mishap could result in a few scratches or dents, or the need to replace some parts. While the repair is unlikely to cost you an arm and a leg, you could still be paying through the nose if you have not set aside sufficient funds for such incidentals.
This article was first published on GoBear.