Financial Information on Car Ownership in Singapore

One of the biggest perils of car ownership anywhere in the world (and especially in Singapore) is not fully understanding the financial implications of one’s purchase. In Singapore, there are some very specific factors that affect the value of a car and the overall cost of ownership. As Singapore is still one of the most expensive places in the world to buy and maintain a car, it is well worth one’s time to understand the basic elements that make up the costs of owning a vehicle here.

We suggest looking at the cost of car ownership in Singapore from 2 perspectives: Buying a car and maintaining one.

Owning a Vehicle in Singapore
The 2 main factors that impact the cost of car ownership in Singapore are:

• The vehicle tax regime including import duties, additional registration fees (ARF) and road tax.
  
  
• The Vehicle Quota System which limits the vehicle population growth in Singapore to approximately 3% per annum. The tool which is used to limit the number of cars registered in Singapore is the Certificate of Entitlement or COE. Each vehicle registered in Singapore must have an accompanying COE which is “attached” to the vehicle throughout the vehicle’s lifespan. For more information on the Vehicle Quota System and COEs, please visit www.lta.gov.sg (The Land Transport Authority) and www.onemotoring.com.sg (a central motoring portal).

The purchase price of a new car is made up of the following components:

More details on the breakdown of the base cost can be found at www.onemotoring.com.sg.

Here, you will also find information on average OMV amounts for each make and model currently sold in Singapore. Theoretically, one can work out approximately how much profit each dealer makes when they sell a car to you!

Recurring costs
In addition to incurring the cost of acquiring a vehicle, there are other costs associated with keeping the vehicle on the road. Here are some of those costs:

Road Tax Formula and example (as extracted from www.onemotoring.com.sg):

For privately registered petrol-driven cars:

1,000 cc < EC <= £ 1,600 cc

$500 + 0.75 x (EC – 1,000)1,600 cc < EC <= 3,000 cc$950 + 1.5 x (EC – 1,600)EC > 3,000 cc$3,050 + 2.0 x (EC – 3,000) * Effective from 1 September 2002.

Example:
If your car's engine capacity (EC) is 1600cc, the vehicle’s annual road tax will be:

ROAD TAX

= $500 + 0.75 x (1600 - 1000)

= $500 + 0.75 x (600)

= $500 + 450

= $950

One of the most common misconceptions on the affordability of a car is the “low monthly installment” syndrome. This happens when prospective buyers are woo-ed into buying a car on the premise that the monthly installment is low. However, many consumers do not factor in other “costs” and can end up in a horrendous situation from a financial perspective.

Also, we find that the majority of car buyers do not take enough time to consider their ownership horizon and therefore do not make the best purchase decisions from a financial perspective.
When buying a car, take your time to consider how much it will cost you overall, your intended ownership period and of course, your motoring needs.

Note: For the latest or further information, we suggest you visit www.onemotoring.com.sg

Published with permission from fussfreeauto

Credits: Chris Tay