Experienced car owners may already know the costs associated with having and maintaining a car but first-time owners may be caught out by some of the extra expenses they haven’t budgeted for. It’s not enough to cover the monthly instalment and petrol costs, there are also many other expenses that can add up.
With the price of the Certificate of Entitlement (COE) dropping to an eight-year low in early July, it’s no surprise that more people in Singapore are now interested in getting a new car. COE supplies are also set to increase from August to October, which may also lead to lower car prices.
Before heading to the car showroom this weekend, make sure you’ve considered these 5 pointers:
1. The down payment
Loan requirements in Singapore help ensure that you haven’t overstretched your capacity by taking on too large a loan.
Hence, you are only able to loan up to 70 per cent for a car, which means you need to cover the 30 per cent down payment yourself.
That’s S$30,000 for a S$100,000 car, which, in Singapore, will get you a midsize sedan.
Are you able to cover this or will you need to take a personal loan?
2. The loan instalment
Car loans in Singapore generally offer between 2.7 per cent and 3 per cent interest on the principal amount.
This is important to note because paying interest on the principal amount means that the shorter the loan period, the less interest you will incur.
3. Miscellaneous expenses
Of course, you know that you need to fill up your petrol tank before you can drive off but are you aware that there are other costs you need to cover if you own a car?
Parking charges both at home and at the office will cost you a couple of hundred dollars a month at least.
You will also need to factor in paying for parking everywhere else.
And while you may try to avoid it, fines and summons do happen so you need to set aside some money for that.
4. Maintenance costs
To ensure your car is running smoothly so you can avoid costly repairs later down the road, you need to send it for servicing every six months or 10,000 kilometres.
Depending on what needs to be done and how old your car is, you can expect to pay between S$200 and S$1000 each time.
You may also want to spring for grooming packages, which will cost on average S$50 for a basic session.
5. Road tax and insurance
Another compulsory cost is the road tax; a 1.6-litre car will cost you S$744 a year.
And your car will be purely ornamental if you don’t have car insurance.
This typically costs around $850 a year, if you’re driving a midsize sedan with a No Claim Discount rebate of 50 per cent.
You will pay more if you’re driving larger cars or sport cars.