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Can you truly afford a car in Singapore?

To splurge or to save – check the real cost of car ownership before taking the leap

It’s known the world over that getting a car in Singapore is chillingly costly. For a newbie, there is a giddying array of items that add to the cost of those shiny new wheels. From registration fees, Goods & Services Tax (GST) and the car’s Open Market Value (OMV) to the infamous Certificate of Entitlement (COE), Additional Registration Fee (ARF) and Excise Duty, you’re looking at a giant dent on your bank account.

Yet, chances are there are some of us who will continue to lust for this pricey toy. After all, you’ve worked hard for the dream, and you can’t tag a value on the freedom that comes with having your own vehicle.

But before you plunge headlong into buying your own set of wheels, here’s a quick look at just how much exactly it will cost you to get a first-hand entry-level car.

But a car offers so much freedom and convenience. How can I possibly resist?

When you are shelling out half of your salary each month to pay off and maintain a car, this leaves you little for anything else.

Think of the opportunity costs involved. By laying down too much on a car, you may wind up limiting your mortgage amount on a more important asset: your own home.

Plus, what other lifestyle perks will you potentially give up for your own ride? Nice rejuvenating holidays, an earlier retirement, restaurant meals, home improvement projects… the list goes on and on. And unlike property or an investment portfolio, a car depreciates in value consistently.

The bottom line is, buying a car will make a huge impact on your financial situation, and you need to be prepared for it.


But, how else can I get to places quickly and easily?

Since getting a car is a huge financial burden, why not consider public transport? Calculate the current commute costs for you and your household members, and compare that to the cost of a car. Chances are, the former is far more affordable.

The closest alternative to driving your own car is to take a taxi, which is estimated to cost just one-tenth of the former. If you time your trips accordingly, you can even chalk up some savings on ERP and peak hour surcharges.

A less expensive way to get around is with the MRT. With the newly opened Downtown Line boasting stations at Bukit Panjang, Hillview, Sixth Avenue and Rochor among other locations, you can zip from place to place in less time and with less hassle.

Plus, more trains and train-cars have been added to service the various MRT lines and to the Bukit Panjang LRT line respectively so not only do you get to places faster, trains are less crowded. You can also expect smoother journeys on the North-South and East-West MRT lines as rail-support sleepers are progressively replaced.

And thanks to the Bus Service Enhance Programme (BESP), a total of 1,000 buses will be added to the roads by 2017. The best thing about taking public transport is that it offers you the opportunity to work out those legs a little more, and cuts out the stress from driving in traffic jams.


This all sounds great, but I still want to own a car without breaking the bank. What options do I have?

If you need a car urgently but can’t afford the hefty down payment, you can consider leasing. One way of doing this is via conventional rental. The newer way is to “loan” a car from the dealer itself.

How this works is you get to drive the car as if it were your own for a few years before returning it. There is a smaller down payment, and you pay a monthly fee to sustain the programme. The fees typically cover road tax and insurance.

Getting a used car will also be easier on the wallet – it is often 30% cheaper than a new one. Try to look for cars that have been fully paid for, so you won’t be at the mercy of bank interest rates. A second-hand car is also advantageous because of the lower depreciation rate after the first three years. What’s more, it is immediately available to you once the transfer is done.

Last but not least, the Off Peak Car (OPC) or Revised Off Peak Car (ROPC) scheme may be a viable option, as you enjoy an immediate rebate of up to $17,000 on the COE and ARF, in addition to road tax savings.

Sources:
Road Tax Calculator
Types of Vehicle Taxes & Fees