There are heaps of things to consider before buying a car in Singapore. Sure, you’ve heard what your friends and family’s varying opinions, and everybody has a different experience. But if you’re still unsure, or if you’ve got nobody to guide you, here’s what you should know:

Buying A Car In Singapore

  1. Can you afford it?

In recent years, MAS has taken more steps to ensure that car buyers don’t overstretch themselves financially to get a car. These stringent measures include restricting loan amounts to 50 – 60% of the open market value (OMV) of the vehicle being purchased. This has definitely put a dampener on the local car market.

Brand new continental cars – think BMW, Mercedes, Audi – can cost upwards of $200,000, which means that a prospective car buyer for a brand new Mercedes could have to front more than $100,000 in cash.

For purchasers of second hand cars, the loan term cannot exceed 5 years, regardless of the age of the car. So if you buy a car with 8 years left on its COE, you’ll still have to pay for the full value of the car.

  1. Go big or go home?

If you can afford it, most people prefer to buy larger cars. After all, BMWs, Audis and Mercedes seem to be running Singapore’s roads ragged. However, when considering buying a larger car, do remember:

  • The COE of a larger car almost always costs more. In the most recent bidding, COE for Cat B cars (Above 1600cc) was almost $9,000 higher than the COE for Cat A cars (1600cc and below).
  • Insurance premiums for larger cars tend to be much higher than that of a smaller car
  • Larger cars tend to consume more petrol than smaller vehicles
  • Drivers of large vehicles tend to face more difficulty in older parking areas, especially when parallel parking
  1. Asian or Continental?

There are many brands to choose from, most Singaporeans are increasingly buying continental cars like Volkswagons or BMWs, in lieu of Toyotas and Subarus. This can be attributed to rising COE prices. It makes little sense to buy a $20,000 car with a $67,000 COE right? Well, the issue isn’t that simple, you see:

  • Asian cars tend to be easier to maintain in the long run because spare parts for them are readily available in most car workshops
  • Continental cars also tend to carry higher insurance premiums
  • Maintenance packages for Asian cars, including oil changes and vehicle checks tend to be cheaper as well.
  1. First or Second Hand?

Most Singaporeans would, given a choice prefer to buy a brand new car. The cost of a brand new car however may not always justify that decision. Cars do not depreciate in a linear manner, rather they tend to depreciate heavily in the first few years and less in the later years. Lets take for example a 5 year old car.  You may be able to get one for between $40,000 – $50,000. However, when you consider a new car may cost you somewhere between $110,000 – $120,000. You can quickly realise it would be better to buy 2 cars 5 years old and work from there. Doing so allows you to save money on the purchasing price of the car and also allows you to scrap your vehicle twice, providing two opportunities for you to earn a trade in value.

For more information on owning a car, explore these car articles.

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).