It’s not new news that buying a car in Singapore is an expensive exercise. For many, car ownership will be the second largest investment they’ll make in their lifetime hence a lot of thought, research and value comparison goes into the purchase decision process.
For some, a car is essential to transport around pets, family members, or needed to get to/fro work. For others, it is wholly a lifestyle, and sometimes a status preference. Regardless of the reason, buying a car in Singapore is a decision that requires balancing the financial outlay with intangible lifestyle benefits. Just as you would draw up a budget, getting as precise, and updated numbers for the following will help you understand how much it costs to own a car in Singapore, and how much to set aside on a monthly and annual basis.
Cost of the vehicle
This will form the bulk of the purchase, be it a new car (a new compact car will cost on average $100,000), or if you’ve decided to buy a second-hand car in Singapore, the price will vary depending on how many kilometres have been clocked and when the COE expires. SGCarMart.com remains a good all-in-one source to familiarise yourself with the prices and brands available in the market. Also, there’s a handy New Car Pricelist that’s updated regularly by authorised distributors.
Certificate of Entitlement (COE)
Good news, COE prices are no longer at the record-high price of $76,310 (October 2013). These days buying the right to car ownership is typically north of $30k for cars up to 1600cc., and if you time it right, it can save you quite a bit. For instance, COE prices were at a low of $30,010 in February 2020 but just closed at $33,000. The difference of $2,990 could be put towards your Road Tax payments.
To find out how much you should set aside for your monthly road tax is easy. Consult one of the many online road tax calculators, but on average, a 1,600cc car will cost approximately $744 annually.
COE and PARF Rebate
Depending on when you choose to scrap your car, you’ll claw back some money as the Preferential Additional Registration Fee (PARF) value is calculated on a sliding scale.
To calculate this, follow this simple formula below for a breakdown:
(COE premium paid x Number of months remaining) / 120 months
If however, you decide to drive your car till the end of its 10 year COE ‘life’, then the COE rebate will be $0 but you’ll still be entitled to a 50% of your Additional Registration Fee (ARF), which is a tax you’ve paid on the value of your car.
Believe it or not, protecting a depreciating asset can save you money in the long run. If you’re already financially committed to becoming a car owner, don’t cut corners when it’s time to purchase car insurance which will cost at least $600 a year. Premium car plans like Aviva’s Motor Prestige Premium include a bunch of extras: high personal accident coverage limits, the lowest No Claim Discount penalty, 24/7 roadside assistance even in Malaysia, and the freedom to choose your mechanic for repairs and maintenance.
Similar to a household budget, there are associated costs to keep in mind. HDB Season Parking starts from $80 a month, petrol consumption on average in Singapore is 16,700km per year and 18km per litre, then there’s regular maintenance and repairs, ERP tolls ($0.50-$6). The best way to guesstimate this is to draw up your likely daily/weekly driving scenario and plot in all the costs, including a little buffer for unexpected scenarios.
While the cost of owning a car varies, an average figure to set aside monthly is $1,000 which – if following conventional budgeting recommendations - should be part of the 50% necessity allocation of your monthly income.
Tangible vs intangible
Now that you have done the financial sums, and the investment outlay of owning and operating a car still doesn’t make logical sense, why then do so many people own a car, sometimes even two? Simply put, car ownership represents many things: time savings, convenience and freedom being key perks that can be hard to put a price to.
See more: How much does a car really cost in Singapore
For instance, if it takes you 45 minutes by public transport to commute to work, that’s 1.5 hours a day and adds up to be 7.5 hours per week - almost a full workday. If the same distance can be covered in 15 minutes by car, you effectively claw back 5 hours weekly. This block of time can then be devoted to leisure activities, or if evaluated at a personal work cost per hour (monthly income divided by the average number of hours worked) might be money worth spending.
Then, there’s the pandemic effect to take into consideration. With an effective vaccine still missing and growing crisis fatigue, minimising time spent in crowded, enclosed spaces and reducing exposure to shared surfaces is recommended, especially for families with young children, or those with elderly folks residing under the same roof. Now more than ever, increasing one’s convenience while protecting personal space has become a luxury worth paying for.
Ultimately, buying a car in Singapore is a personal choice. If looked at purely from a numbers point of view, it is a bad financial decision. However, when you take into consideration the lifestyle benefits, the ongoing global pandemic, the convenience factors, it’s a decision that may prove way too attractive to turn down.