Singapore has one of the highest car prices in the world. Beyond the car price stated in advertisements, do you really know how much the total cost of a car comes up to?

Using the example of one of Singapore's best selling cars in 1st half of 2017, the Honda HR-V, here's what you need to know before you park your money with this car:

Breakdown of Car Cost

  1. Certificate of Entitlement (COE)
  2. Total Car Loan Value
  3. Road Tax
  4. COE and PARF Rebate
  5. Auto Insurance

1. Certificate of Entitlement (COE)  

To register a new vehicle in Singapore, you must obtain a Certificate of Entitlement (COE) in the appropriate vehicle category. A COE represents a right to vehicle ownership and use of the limited road space for 10 years. Indicative price for the last round of bidding (September 2017), for cars up to 1,600cc and producing 130bhp of power or less, was at $36,001. This price is usually already factored into the car's retail price.  

2. Total Car Loan Value  

  • Car Price: $101,999
  • Down payment: $40,800
  • Loan amount: $61,199
  • Car loan over 5 years at 2.78% interest rate: $69,706
  • Actual cost of car: downpayment + car loan over 5 years at 2.78% interest rate
    = $40,800 + $69,706 = $110,506

3. Road Tax  

  • Road tax over the 10-year period = $7,440

4. COE and PARF Rebate  

Believe it or not, you do actually get some money back when you scrap your car at the end of the 10-year COE tenure. This is in the form of COE and PARF rebates, and it’s essentially a carrot to entice you to let go of your car.

Should you scrap your car before you’ve used up your 10 years of COE ‘life’, the COE rebate will be ‘refunded’ based on the remainder of the COE that you’ve paid, using the following formula:

(COE premium paid x Number of months remaining) / 120 months

However, assuming you drive your car till the end of the 10-year COE tenure, your COE rebate will be $0.

  • COE Rebate at end of 10 years = $0

As for the Preferential Additional Registration Fee (PARF) rebate, this is a partial refund from your Additional Registration Fee (ARF), which is basically a tax you’ve paid on the value of your car.

Again, how much you get depends on when you scrap your car, on a graduating scale of between 75% to 50% of your ARF. Therefore, if you scrap your car at the end of 10 years, you get back 50% of your ARF. 

  • ARF for Honda HR-V = $9,988
  • PARF Rebate at end of 10 years = $4,994

5. Auto Insurance  

Some car owners might try to save some money by taking a basic auto insurance, but with cars being such a prized possession here, it is advisable to take a comprehensive car insurance which includes the following coverage above the basic policy:

  • Death or injury to other parties
  • Damage to other parties' car
  • Fire
  • Theft
  • Medical costs arising from the accident

An indicative price for a comprehensive car insurance is around $1,275 per year. This can be offset with the No-Claim Discount (NCD), which is a reduction in renewal premium to reflect a claim-free record. NCD starts from zero for a new driver, and this is based on the moment you buy your first car insurance. Subsequently, the NCD rises by 10% for every year you do not claim against the auto insurer, capped at 50%.

Assuming you are a very careful driver and can hit the 50% NCD, the cost for a 10-year auto insurance will come up to $8,287.50.

Total cost of owning a car for 10 years = $110,506 + $7,440 - $0 - $4,994 + $8,287.50 = $121,239.50

As you can see, the cost of owning a car is relatively high. So make sure you insure your dream car with the right car insurance.

Do note that the final cost does not include maintenance fees, parking as well as fuel charges as these vary for each person.

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