It’s ridiculously expensive to own, or even so much as buy, a car in Singapore. Have you seen these Hollywood stars try to guess Singapore car prices?
What about the price of a second-hand car? Let’s do the math.
For illustration purposes, let’s just focus on a 5-year-old Toyota Corolla Altis 1.6A (pictured), the most popular car model in Singapore, which will set you back by about $70,000.
In order to ensure the lowest downpayment, you want to be able to qualify for the maximum loan in terms of largest amount and longest tenure. That means your car’s Applicable Open Market Value (OMV) needs to be $20,000 or less (in order to qualify for a loan of 60% of the car price). The older the vehicle, the lower the Applicable OMV probably is, but it’s always a good idea to check.
Income requirement for the loan
To qualify for a car loan, your monthly instalment should not exceed 1/3 your monthly salary.
To get the maximum loan possible of 60% of the car price, you should go for the maximum tenure of 5 years. (Do note that the maximum tenure is dependent on the number of months left on the COE, capped at 5 years.)
Assuming the car price is $70,000, the maximum loan you can get is $42,000. Over 5 years, the monthly instalment rate with a car loan interest of 2.8% works out to $798. (Therefore, to qualify for the loan, you need a minimum monthly income of at least $2394.)
Monthly expenditure: $798
The minimum downpayment of a car depends on the difference between the car’s price and the loan amount mentioned above.
Assuming your loan amount is 60% of the car price, your downpayment will be the remaining 40%, which is $28,000. (You also have to pay an LTA transfer fee of $11.)
Amount to be paid upfront: $28,011 + 1st month’s instalment of $798 = $28,809
According to Singapore law, car insurance with 3rd party coverage is mandatory.
There are several factors that determine how much you pay per year. Use a comparison site to make sure you’re not paying more than you have to.
Still, expect your insurance to come up to about $1,200… at least. This amount has to be paid upfront and in full, and your insurer will issue you a cover note.
Make sure the insurance policy is already in force when you purchase the vehicle and covers the full period of the vehicle’s road tax.
Amount to be paid upfront: $1,200
For a 5-year-old Toyota Corolla Altis, the road tax should be $742 for a 12-month renewal.
Amount to be paid upfront: $742
When buying a second hand car, always check the mileage and how well the previous owner maintained it.
Depending on how many miles are already on the second hand car, you can probably expect to be replacing some parts.
Even the most optimistic driver should expect their maintenance and servicing costs to set them back by, on average, at least $360 a year.
Monthly expenditure: $30
Whether a new or second hand car, it’s going to need petrol. Find best credit card for petrol and you might be able to keep that down to about $180 a month.
Monthly expenditure: $180
So, what’s the total damage?
You’ve seen the numbers, let’s do the math.
In this calculation, the total upfront payment amounts to $30,751, while each month’s expenditure will cost you $1008.
Only in Singapore.
By Peter Lin, MoneySmart, June 2015
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