9 Things to Know Before Buying a Car in Singapore

Having a car of your own in Singapore can empower you in many ways. A car will not only help you fulfil your aspirational needs, but it will also boost your productivity and help you save your precious time. However, everything related to owning a car in this country is expensive, including getting the license. In addition, there are many other expenses that you will have to incur before you can own a car. After getting your car, you might have to end up spending at least S$2,000 every month in maintaining it. So, read on to find out about all such aspects of owning a car before you purchase one.

1. Be Careful of What the Salesperson Has to Say

You do not want to be swayed by what the salesperson says about the car. It is perfectly alright to listen to what he/she has to say, as they have specific knowledge that you might not. But in the end, you have to keep in mind that they are, after all, trying their best to get you to buy their car. They earn more in the form of commission for each car they sell and the amount is more for an expensive car. Therefore, consider your budget before taking a decision on purchasing a car. Don’t get influenced by fancy terms, car capabilities, and many other features and facts that the salesperson will tell you.

2. Accessories that You Wish to Buy

Even if you have already done your research and have picked a car, be careful about the add-ons that you choose to get. Salespersons are likely to present you with a range of accessories and try their best to convince you that you absolutely need them. While there are accessories that will be of great help to you, you will be able to do without a lot of them. Think twice before you purchase neon lights, double silencers, or a fancy music system.

3. Cost of Buying a New Car

There are five major components that will determine the price of your vehicle. However, these components will be applicable only when you purchase a new car:

Open Market Value:
The open market value is the price that people in other nations pay for the exact same car. In other words, it is the ‘sticker price’ of the car.

Dealers’ Margin:
To keep their business profitable and to cover their own expenditures, car dealers charge an amount known as the Dealers’ Margin. This could range from 15% for a reasonably priced car to 50% and more for luxury brands.

Certificate of Entitlement:
With a Certificate of Entitlement or COE, you will be able to drive your car in Singapore for 10 years. The prices of Certificate of Entitlement can go up sharply when there is a huge demand for cars, which in turn causes the prices of cars to go up.

Goods and Services Tax (GST) and Excise Duty:
In Singapore, you have to pay Excise Duty which is normally close to 20% of the Open Market Value. In addition, you will also have to pay a further 7% GST on both the amount for the Excise Duty and OMV.

Additional Registration Fee (ARF):
An Additional Registration Fee will be imposed on all cars at the time of registration. This amount is determined based on the Open Market Value of the car.

4. Consider Different Models and Dealerships Before Buying

Do not just enter a car dealership and settle on a car right away. Visit at least five other dealers and take a look at what they have to offer as you are very likely to find variations in the price for the same model. Price is not the only thing that will differ. Different dealerships may also give you varying number of accessories. If you are looking to get free accessories for your car, you may be able to get a sweeter deal from a dealer other than the one you’re looking at right now.

5. Cost of a Driving License in Singapore

Having a driving license is useful even if you are not buying a car, but there are numerous factors that will determine how much you end up paying for a license. Here are a few factors that will determine the cost of your driving license:

  • The kind of licence you are planning to get (manual or auto).
  • The number of attempts and lessons you require before you pass the driving test.
  • Time of the day when you go for your driving lessons (peak slots or off-peak slots).
  • Where you take your lessons (driving schools or private lessons).

6. Parallel Importer or Authorised Dealer

In Singapore, you can either purchase a car from an authorised dealer or you can approach a parallel importer. There are pros and cons associated with both.

Parallel Importers

  • You will not get replacement parts easily.
  • The car may not be suitable for driving on Singapore roads.
  • Purchasing from parallel importers is often cheaper than going to a dealership.
  • You will have wider options to choose from.
  • Parallel importers may not be as dependable as authorised dealers since they lack after sales support.

Authorised Dealers

  • They are more reliable than parallel importers in terms of after-sales support and replacement parts.
  • The cars will be compatible for driving on Singapore roads.
  • However, you may have to pay more for cars purchased from such dealers.

7. Think Before You Purchase a Used Car

Often, the first thing that comes to anyone’s mind when you say ‘used car’ is the maintenance costs involved. Do not go simply by what the seller has to say about the car. The seller will obviously want to sell it off to you and will tell you only the good aspects of the vehicle. You must yourself take a look under the hood and check for all the common issues that a used car often faces and try to find the reason why the person is selling the car. Take your friend along who knows a thing or two about used cars. Someone who knows cars will be able to give you an idea of what you’re getting into.

Consider the rebates owned by the previous owner. Preferential Additional Registration Fee or PARF cars are newer than Certificate of Entitlement or COE cars. If you choose a PARF car you will spend less on maintenance, but it will have a high Open Market Value that will perhaps make you spend more than what you had initially intended.

8. Cost of Maintaining a Car

Once you have got your car, you will still have to spend more on things such a general maintenance, insurance and other taxes. Here is a list of other expenses that you will have to incur:

  • If you have taken a loan to purchase the car, you will have to factor in costs such as interest as part of the entire cost of ownership, spread across a ten-year period.
  • You will have to spend more on general wear and tear and other maintenance costs. This amount will differ based on the car you purchase and how much you drive.
  • With rising fuel prices, your expenses on petrol will add up incessantly. However, you can save on petrol by getting the right fuel card that offers a decent discount.
  • Because of limited parking space in Singapore, you will have to consider the parking charges, especially if you are living in an HDB apartment and anywhere else you have to park your car.
  • You will also have to compulsorily purchase a motor insurance that will surely cost you over S$1,250 per year, if you go for a comprehensive coverage.
  • The Land Transport Authority will also charge an amount as road tax every year. This will be close to S$500 based on the car you own.

9. Things to Consider if You Are Applying for a Loan

If you purchase a car using a car loan, there are many more things that you have to consider. Here is a comprehensive list:

  • The timing of your loan is very important. You should apply for a loan only when you are sure about repaying at least 6 to 7 of the monthly instalment amounts. By doing so, you can easily sell your car even if you lose your source of income.
  • Even if you are applying for a loan, you will have to pay a fixed amount when you purchase a car as down payment while you can borrow the rest. Think of another option if you do not have enough money to cover a few months’ worth of instalments or for a down payment.
  • If you qualify for a car loan, to get the right amount, you must have a decent credit score and all your total loan payments including the car loan amount must be under 60% of your combined income.
  • Finally, you must also shop carefully for the loan. You must try to get the best in terms of down payments, interest rates, promotions offered and loan tenures.

Purchasing a car is a serious financial obligation that requires careful calculation. Weigh the cost of owning the car you want to buy with the benefits it will give you and also base it on whether you can afford it or not.

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