We all have complained and heard friends from overseas asking why cars are so expensive here in Singapore. With only 9081 km of roads in Singapore, we can only imagine how clogged the roads would be if cars and vehicles were similarly priced to other countries.
Remember pictures and stories of multiple day traffic jams in China and having fogged up city centres in places in Shanghai? A similar situation could happen in Singapore if the government chooses not to tax and put quotas on vehicles in Singapore. All about car loan in Singapore.
This would be a serious issue and would cause harm not just to the environment in Singapore, but to the economic efficiency and relatability that Singapore is known for. So what constitutes to vehicles been so expensive in Singapore
Car in Singapore: Certificate on Entitlement (COE)
COE is the right to own and use the registered vehicle for 10 years. There are different categories for cars with certain engine capacity and commercial vehicles. Bidding for COE takes place twice a month and prices are determined by demand and supply and the COE quota is determined by how many vehicles were de-registered previously.
|Category||Description and engine capacity (cc) and power (bhp)|
|CAT A||Cars up to 1600cc and 130bhp|
|CAT B||Cars above 1600cc or 130bhp|
|CAT C||Goods Vehicle & Bus|
Most dealers advertise prices inclusive of COE and with the number of bids they are willing to bid for the COE. Generally, the higher the number of bids the more it will cost you in total giving the deal more capacity to bid and secure a COE for your future car.
Also, in the event you choose to deregister the COE before the 10th year, there is a rebate which is a prorated amount of your COE which is the number of months and days remaining on the vehicle's COE.
Road tax has a positive correlation with engine capacity(cc). For a small vehicle (under 1600cc) would generally have a road tax of $742.90 per year and below, or a total of $7429 over the course of 10 years. But a larger car (above 2000cc) could cost $1212.10 per year and above, or $12121 over 10 years.
We would recommend you do not skim when it comes to auto insurance and take up basic auto insurance. Ensure that you have an insurance that minimally covers the following:death or injury, damage to vehicles affected, fire, theft, other medical cost caused by accident.
There are also many factors to consider when calculating insurance cost. Generally younger(20’s) and less experienced drivers are charged a higher premium by insurance companies.
Also, men tend to fetch a higher insurance premium. Also, the No Claims Discount (NCD) rewards drivers who have not made a claim on the policy for at least one full year. A 10% discount is rewarded and rises by 10% for every year you do not claim against the auto insurer, capped at 50%.
So, DRIVE SAFELY!! Average yearly price of car insurance for mid-priced sedan ranges from $1500 to $2400 with no NCD depending on age and if there are any additional named drivers.
Car in Singapore: Taxes and Rebates
There is a standard $220 registration fee
There is also a 20% excess duty of the car's OMV(Open Market Value). Furthermore, there is the typical Goods & Services Tax(GST) of 7% on all consumption goods.
You will also have to pay the Additional Registration Fee (ARF), which scales off the OMV of your car. The OMV of the car is bracketed and charged an increasing percentage as shown below.
|Vehicle OMV||ARF Rate|
ARF is certainly a large cost as it effectively doubles the total price of the car. But, some of your money still can be recovered at the end of 10 years. Preferential additional registration fee (PARF) rebate may be granted if the car is eligible for PARF benefit. The PARF rebate is computed based on the age of the car when it is de-registered.
|Age of Car at De-registration||PARF Rebate (For cars registered with COE obtained from May 2002 tender exercise and onwards)|
|Not exceeding 5 years||75% of ARF paid|
|Above 5 years but not exceeding 6 years||70% of ARF paid|
|Above 6 years but not exceeding 7 years||65% of ARF paid|
|Above 7 years but not exceeding 8 years||60% of ARF paid|
|Above 8 years but not exceeding 9 years||55% of ARF paid|
|Above 9 years but not exceeding 10 years||50% of ARF paid|
|Above 10 years||Nil|
Assuming you keep your vehicle for 10 years, you can get back 50% of the ARF paid. Hence, this decreases the total cost of car ownership over the 10 years.
As of 1 January 2018, to 31 December 2020, Vehicle Emission Scheme (VES) has been implemented to reward vehicles which produce less pollutants with rebates while disincentivizing buyers from buying vehicles which produce more pollutants with surcharges. The table below is divided into bands and vehicles are tested for pollutants like CO2(g/km), HC(g/km), CO(g/km), NOx(g/km), PM (mg/km). The worst performing pollutant is counted and is banded accordingly.
More information and latest update about tax structure can be found on https://onemotoring.lta.gov.sg/content/onemotoring...
Car loans and the incurring interest would also translate to a higher total cost of the car over a 10-year period. Do take note that there are some legal limitations on the amount that can be loaned from the bank or other institutions. The loan-to-value (LTV) is the ratio in percentage of vehicle OMV which can be borrowed by a consumer. The Maximum loan tenure is the maximum duration of the loan.
|Open Market Value (OMV) of motor vehicle||Maximum LTV*||Maximum loan tenure|
|Less than or equal to $20,000||70%||7 years|
|More than $20,000||60%||^|
Hence, do ensure that when you are planning and considering a vehicle that you consider and speak to the lender on how much a loan you can receive and if you have enough up-front cost to afford the vehicle.
Car Loan Singapore: Maintenance Cost
Just like you, your car does get “sick” and requires a visit to the “doctor”. Hence, it is very much important that you bring your car in for servicing regularly before large problems arise. The cost however varies a lot depending on the type of vehicle and usage of vehicle.
Hence, there is a general rule for average Singaporean car which is under 20,000 km per year. We recommend bringing the car for maintenance either every 10,000 km driven or every 6 months, whichever comes first. Don"t miss ou car loan calculator in Singapore to know more.
Usage cost would be dependent on the driver and where you drive your vehicle: for a mid-sized Japanese vehicle with good fuel mileage, $1.77/liter 95-Octane petrol after discount and driving 17,500 km in a year. One could easily spend $2000 to $2500 yearly on petrol alone.
Furthermore, costs will add up if for example you enter an ERP gantry to and from work 5 days a week and pay for parking daily. This could easily add up to $500 a year not including the cost of season parking at your house which averagely cost about $100 at new flats.
To conclude, it is very expensive to own and use a car in Singapore. It is important that you consider all these costs when you plan for your new car. However, here at Lendela we want to help you get the best deals from the banks with the lowest interest rate and best terms so you can fulfil your dream of owning your first car.