Financial Considerations for Owning a Car in Singapore

Owning a car in Singapore is a significant decision that comes with various financial implications. Understanding these costs and planning accordingly can help you make the most informed choice. In this article, we'll explore the initial and ongoing expenses of owning a car in Singapore.

Initial Costs and Budgeting

When it comes to purchasing a car in Singapore, the upfront costs can vary widely. You can opt to buy a car outright for as little as SGD 5,000, which is often referred to as buying “outright.” However, this budget is limited and may not cover the car's maintenance and registration costs for very long. It would be wise to “check out” the wide range of vehicles available and filter for those under SGD 10,000.

If you decide to take out a car loan, you typically need to make a down payment of around SGD 5,000, and depending on the car's COE (Certificate of Entitlement), you can find suitable options around the price range of SGD 10,000 to 12,000 if the vehicle is likely to be registered within the next 12 months. However, a new car can range from SGD 80,000 to 100,000, and with a COE, the price can be significantly higher. A suitable down payment for a new car would be around SGD 30,000 to 50,000, depending on the cost of the COE.

Annual Costs and Beyond

The real challenge of owning a car in Singapore comes with the ongoing expenses. Even if you successfully secure a car within the budget, you must anticipate additional costs. The average annual cost to own and drive a car in Singapore is approximately SGD 11,000. This figure includes a variety of costs such as:

COE Depreciation: The COE depreciation is a unique feature of the Singaporean automotive market. For any legally registered vehicle, the COE has a yearly depreciation of SGD 5,300. This means that the COE's value will decrease by this amount every year. Registration Fees: Secondary plate fees are another significant cost, and they can add up over the years. Maintenance and Repairs: Routine maintenance and unexpected repairs can also significantly impact your budget. Cleaning and Upkeep: Regular cleaning and maintaining the car's appearance will add to your expenses.

Comparing 'Outright' Purchase and Loan Options

While the “outright” option is appealing due to the simplicity and potential for lower interest rates, it also comes with its own set of challenges. When buying outright, your initial investment is higher, but you don't have to pay back a loan. However, if you struggle with higher upfront costs, taking out a loan might be a more feasible option. With a loan, the interest rate is typically around 2%, which can be balanced by the relatively low down payment.

It's crucial to consider your long-term financial stability and your ability to cover these ongoing costs. Many new car owners underestimate the total cost of ownership and are caught off guard when they face unexpected expenses.

Conclusion

Owning a car in Singapore is an expensive proposition, but with careful planning and budgeting, you can navigate these costs effectively. By considering both the initial and ongoing expenses, you can make a more informed decision and ensure that you are prepared for the financial commitment of car ownership.