Cars in Singapore are famously expensive. Besides the ridiculously inflated selling prices, there is also a whole list of other costs involved in keeping your car. Here’s our breakdown on how much it costs to keep a car in Singapore.

To keep things simple, we will be using the top-selling car in Singapore in 2019 as an example: The Honda Jazz.

Making sense of car costs

We’re going to be looking at a lot of numbers in this article. To make sure we don’t get lost, it’s helpful to organise car costs into the following breakdown:

Purchase costs

Purchase costs are made up of the following:

• Purchase price of the car
• Car loan interest
• License plate number
• In-vehicle unit

Let’s take a look at each one in turn.

At the time of writing, the dealer’s package for the Honda Jazz 1.3 costs $69,999. In comparison, prices for the Honda Jazz 1.5 (a more powerful variant) starts from RM75,000 (or roughly S$25,000) in Malaysia. Why the huge difference?

Well, as you can see from the table above, there is a whole list of surcharges and fees associated with buying a new car in Singapore.

These fees are introduced with the aim of keeping the number of vehicles on Singapore’s roads down to a manageable number.

After all, more cars means more money spent on infrastructure costs such as roads, carparks, expressways and petrol kiosks, traffic congestion problems and higher levels of air pollution.

Let’s quickly run through all these to understand what you’re paying for.

1) Open Market Value (OMV)

This refers to the value of the vehicle on the open market. In other words, it’s the selling price of the car, before fees and surcharges. For our Honda Jazz example, the car is valued at $16,293 at the time of writing.

2) Registration Fee

All new cars will have to pay a fee for registration, which is currently tagged at $220 per vehicle.

3) Additional Registration Fee (ARF)

The ARF is calculated based on the OMV of your car. Hence, the more valuable your car is, the more you’ll have to pay in ARF.

Here’s the ARF schedule:

OMV of vehicle	ARF rate (per cent of OMV)
First $20,000	100per cent
Next $30,000 (i.e., $20,001 to $50,000)	140per cent
More than $50,000	180per cent

Note that ARF is cumulative. It is charged as the OMV of your vehicle crosses each threshold.

In our example, our Honda Jazz’s OMV is $16,293, less than $20,000. Hence, we only have to pay the first tier of ARF, which is 100per cent of OMV, or $16,293.

Now, if the OMV of our vehicle is higher, say, $25,000, then we would have had to pay two tiers of ARF, accordingly:

Tier 1: 100per cent of OMV on first $20,000 = $25,000
Tier 2: 140per cent of OMV on next $5,000 = $7,000
Total ARF = $32,000

Imagine what happens when our car’s OMV exceeds $50,000.

4) Excise Duty

Like tobacco and alcohol, the Singapore government charges a tax on cars imported into Singapore. Excise duties are charged at a standard 20per cent of the OMV.

5) Goods and Services Tax

And then there’s good old GST, which is (thankfully) charged only on the OMV and the Excise Duty. We shudder to think if GST was charged on the overall purchase price.

6) Certificate of Entitlement (COE)

And contributing the most to the inflated cost (for lower priced vehicles anyway) is the COE, which is a special license that entitles you to own a car in Singapore for a period of 10 years. The COE rate is determined by open bidding sessions, which are conducted twice a month.

COEs are grouped into 5 categories according to engine capacity and/or vehicle type, in an effort to achieve more granular control over the number and type of vehicles plying our roads.

Category A	Car up to 1,600cc & 97kW (130bhp)
Category B	Car above 1,600cc or 97kW (130bhp)
Category C	Goods vehicle and bus
Category D	Motorcycle
Category E	Open – all except motorcycle

For Honda Jazz, the engine capacity is less than 1,600 cc, which means the COE you’ll need to bid for falls into Category A, which costs $32,875 at the time of writing.

7) Vehicular Emissions Scheme (VES)

To encourage the ownership of more environmentally friendly cars, the VES adds either a rebate or a surcharge to the purchase cost.

Your intended model is tested on emission levels of five air pollutants (carbon dioxide, hydrocarbons, carbon monoxides, nitrogen oxides and particulate matter), and assigned a band based on the worst performing pollutant.

Vehicles that generate less of these pollutants qualify for a rebate (either $10,000 or $20,000).

Those that do not meet the emissions levels do not get to enjoy a rebate. And vehicles that exceed pollution thresholds actually incur a surcharge of up to $20,000.

For our example, the dealer tells us that the Honda Jazz 1.3 qualifies for a $10,000 rebate under VES, which is applied to the ARF.

VES notwithstanding, car owners are expected to pay a minimum of $5,000 in ARF.

8) Dealer’s package

Our calculations put the total purchase cost of the Honda Jazz at just slightly over $60,000. However, the dealer’s package advertised is $69,999. What’s the reason for the difference?

Very likely, the dealer’s package includes a markup to cover their own costs. It is common for this markup to range from 15per cent all the way up to 50per cent for luxury models.

9) Car loan interest

It is likely that you will be taking out a car loan to pay for the purchase of your vehicle, which means you’ll need to cover the interest charges as well.

Here are the car loan rules in Singapore, according to the MAS.

OMV of vehicle	Maximum loan amount (per cent of purchase price)	Maximum loan tenure
Up to $20,000	70per cent	7 years
$20,000 or more	60per cent	7 years

So once again, for our example car, we would be able to borrow up to 70per cent of $60,307 for up to 7 years. Using our handy loan calculator , we get the following:

Let’s say we borrow 70per cent of $60,000 ($42,000), the total repayment comes up to $50,173. This means we would need to pay $8,173 in interest.

10) License plate number

Every vehicle in Singapore needs to have a valid vehicle registration number (AKA license plate number). The LTA will automatically assign a number for free when you register your vehicle. You can also opt to retain your existing license plate number.

If you want a specific license plate number, you’ll need to bid for it. Bidding costs at least $1,000 right out of the gate. In case you’re curious, the most expensive license plate number in Singapore was sold for $335,000 (not a typo) — that’s enough to buy an entire HDB flat.

11) In-vehicle unit (IU)

Another thing you’ll need to install in your new car before you can start driving it is the In-Vehicle Unit, a card-reader which lets you pay for ERP charges and parking fees. The cost of installing one is $155.80 (inclusive of GST).

Maintenance and Running Costs

Besides the upfront purchase cost, driving your car will also incur maintenance and running costs. We’ve summarised some of the most common ones in the table below.

	Average monthly cost	Average annual cost
Petrol	$154.70	$1,856.40
Parking	$110	$1,320
ERP	$30	$360
Road Tax	N/A	$578
Insurance	N/A	$1,600
Maintenance	N/A	$591.46
Total		$6,305.86

1) Petrol

To calculate how much you’ll spend on petrol, let’s use the following assumptions:

• Average annual distance driven per car = 17,500km (source)
• Average petrol price per litre = $2.08 (source)
• Fuel consumption of Honda Jazz 1.3 = 5.1l/100km
• Annual petrol cost = $1,856.40

2) Parking

Parking charges in Singapore can vary, depending on where and when you park. For simplicity, let’s assume you splurge on the very best of HDB parking for your shiny new Honda Jazz: $110 per month for sheltered parking in a multi-storey carpark.

	HDB Carparks	Private Carparks
Day rates	$1.20 per hour (outside central area) $2.40 per hour (within central area)	$2 to $4 per hour
Overnight rates	$5	NA
Season parking	$80 to $110 per month	NA

3) Electronic Road Pricing (ERP)

Although ERP has been suspended in light of Covid-19 , normal rates are between $3 to $6 per charge for affected roads leading into and coming out from affected regions.

As ERP is pretty much dependent on your driving habits, you may not need to spend anything in this category. However, for the sake of argument, we’ll set an ERP budget of $30 per month.

4) Road tax

You will need to pay road tax every 6 or 12 months. The amount you will need to pay depends on the engine capacity of your vehicle. You can quickly and easily calculate your road tax using an online calculator, such as this one from sgcarmart.com.

Using this calculator, we determined the road tax payable for our Honda Jazz: $289 every 6 months, or $578 per year.

5) Insurance

It is illegal to drive without valid driver’s insurance so don’t even try to get away with not paying it. Generally, young, male drivers are penalised more heavily, as they are perceived to be the riskiest drivers on the road.

Older, more experienced drivers generally pay less insurance, and of course, having an impeccable driving record will grant you the best rates.

For the purpose of illustration, we’ll assume the driver of our Honda Jazz is a 35-year-old male with 5 years of driving experience.

Online quotes place our insurance at between $1,100 to $2,000 per year. We’ll go with the middle-of-the-road rate of $1,600 per year.

6) Maintenance

In order to prevent serious problems and ensure smooth and efficient running, you’ll need to send your vehicle into the workshop for regular maintenance.

How often you’ll need to do this depends on the car make and model, but a general rule of thumb indicates servicing once every 6 months or 10,000 km, whichever comes first.

For our Honda Jazz, general maintenance costs $295.73 per session, according to Honda’s website.

Hidden costs

Speeding, illegal parking, failing to use proper turn signals, and even using your mobile while driving — these are just some of the common driving offences that you may commit if you’re not careful.

If you’re caught, not only will you be given demerit points, you may also be asked to pay a fine. Depending on severity, these fines range from $100 to $400 . However, serious violations will earn you a trip to court, where you can expect heftier fines and even jail time.

You may be aware that owning a vehicle is a liability. The value of your car depreciates every year. Generally, the lifespan of a car in Singapore is about 10 years, same as that of a COE.

There are penalties if you want to keep your car for more than 10 years (such as increased road tax, for one), but surrendering your car before that will net you some returns.

Remember the ARF (Additional Registration Fee)? If you deregister your vehicle between years 5 and 10, you’ll get back a portion of what you paid for the ARF in the form of the Preferential Additional Registration Fee (PARF) Rebate.

Here’s how much you can expect to get back.

Age of vehicle at deregistration	PARF Rebate (per cent of ARF paid)
5 years	75per cent
6 years	70per cent
7 years	65per cent
8 years	60per cent
9 years	55per cent
Above 9 years but less than 10 years	50per cent
Above 10 years	nil

You can also redeem any remaining COE at the time you deregister your vehicle. The proceeds of this can be applied towards the registration of another vehicle, transferred to another driver, or encashed.

What is the annual average cost of owning a vehicle in Singapore?

Let’s find out how much it will cost us each year on average to own our Honda Jazz.

	Annual average cost
Monthly loan installment: $597	$7,164
Maintenance and running costs	$6,305.86
Less PARF rebate (Year 9)	($814.65)
Total	$12,655.21

We mustn’t forget our one-time cost, to better estimate the first-year upkeep:

	One-time costs
Deposit (30per cent of purchase price)	$18,000
In-vehicle unit	$155.80
License plate number (bidded)	$1,000
Total	$19,155.80

There you have it, the magic number for a car’s upkeep in a year. Don’t be forgetting that this figure is derived using a Honda Jazz 1.3, and this is likely to be an underestimation if you are eyeing a continental car or an electric model .

Now, over to you to make a more informed decision on whether you’re ready for the commitment!