What will it actually cost for you to own the new 2021 Mercedes Benz S-Class?

With an increasing number of millionaires in Singapore, it's not a rare sight to see high-end and performance vehicles on the streets.

While owning a car is a definite status symbol in Singapore, owning a luxury car can be seen as the ultimate sign of wealth in an already very wealthy city-state. But how much does it actually cost to own one of the most popular luxury vehicles in Singapore?

And how much would you need to earn to be able to afford those costs? We take a look at the costs of owning the newly released Mercedes Benz S-class .

The upfront costs of the Mercedes Benz S-Class S450L

The latest Mercedes Benz S-Class S450L will cost you $502,888 (including the COE and after the $20,000 VES surcharge) if you register it before the end of June 2021 or $507,888 if you register the car July 1, 2021 onwards.

This is 3.5x more expensive than one of the most popular sedans in Singapore, the Toyota Corolla Altis 1.6, and 12 per cent more expensive than the average four-room HDB flat.

Since the OMV of the S450L is currently $111,149, you'll qualify for a loan that's 60 per cent of the total cost. Due to this, you would need to have roughly $200,000 in cash for the down payment.

Recurring costs of the Mercedes Benz S450L

Cars require constant maintenance and upkeep, and luxury cars are no exception. In the case with the Mercedes Benz S-Class, you'll pay $1,406 or more for a basic car servicing package of three sessions (roughly $469/session).

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If you need to repair your car, you can expect to pay much higher. Additionally, you'll need to pay for road tax, which depends on your engine capacity.

With a Mercedes Benz S-Class, this will cost you S$2,384 per year. Other miscellaneous costs you'll need to take into consideration are petrol costs, road tolls, insurance and car washes.

If you already have driving experience and you have a good record, your car insurance will be roughly $2,500 per year with a 50 per cent NCD. If you're a brand new driver, then you can expect to pay an average of $4,400 to insure your Mercedes Benz S450L.

Petrol costs will also cost the average driver $3,516 per year, taking into consideration the Mercedes S450L's mileage of 11.8km/L. Overall, you can expect to pay close to $9,000 per year in additional costs beyond your car loan payments.

How much would you need to earn to afford a Mercedes S450L?

With the monthly payments alone costing more than what the average Singaporean makes per month, you'd need to earn at least $7,030 per month to qualify for the full 60 per cent loan thanks to the Total Debt Servicing Ratio (TDSR).

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That is with the expectation that you have no other loan repayments or debt obligations.

So let's use a more realistic example. Let's say you're the average Singaporean who just wants a luxury car.

In this case, if your four-room HDB flat cost the median price of $450,000 and you took out a 25-year housing loan with a 1.25 per cent interest rate, then your monthly mortgage payment would be $1,573.

This increases your total monthly debt obligations to $5,789. In this case, you would need to earn at least $9,649 ($115,780 per year gross income) to qualify for the full 60 per cent loan for the Mercedes. If you have credit debt or student loan debt, then you'd need to earn even more to qualify for the full loan.

Saving on car costs

While cars are expensive, there are still plenty of ways to reduce your financial burden. The easiest way to save on car costs is to buy a certified, pre-owned vehicle with a healthy amount of mileage.

For instance, you can purchase a used 2018 or 2019 Mercedes Benz S450L at a 30 - 40 per cent discount. When it comes to actually maintaining your car, then you should make sure you get your car serviced every 10,000km to make sure it is operating properly.

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While you may think that you should wait until an issue appears, you'll actually save money in the long run because maintenance costs are much lower than servicing or fixing an issue.

Another way to save on ownership costs is to compare insurers. Since you will already need to pay a premium on your insurance because of your car model, comparing car insurance plans is key to avoid overpaying for your plan.

Lastly, it's good practice to make sure you get a competitive car loan. Even small interest rate changes can make a huge difference in your total interest cost.

That said, you will get what you pay for with your car. Skimping on necessary costs just to save money will often result in more headaches down the line. At the same time, don't feel pressured to overpay for services that you know your car doesn't need.

This article was first published in ValueChampion.