7 Things to Look Out For When Buying a New or Used Car

When it comes to buying a used car in Singapore, there are a number of things we need to put into consideration. Especially when the lifespan of cars here is just ten years. Since you will be getting a new set of wheels, you might also want to sell your car or scrap your old car at the highest price you can possibly get.

At Oneshift, we understand that you’re looking for something which perfectly fits your needs and budget. This is why we have worked out a few things you may want to consider.

To further elaborate, here are 7 detailed reasons explaining why:

A new car usually comes with a warranty which lasts 3 years on average. Many of these also have mileage limitations attached to them, as part of their conditions. There are however, certain car brands which may go the extra mile by providing more coverage.

For instance, the new Kia Niro crossover hybrid comes with a 10-year engine warranty, meaning that if the owner decides to give the car up at any point within the initial 10 years, the engine coverage goes onto the next owner.

As for buying a used car, under the Lemon Law introduced in Sep 2012, if a defect is detected within 6 months, it can be assumed that the defect has been pre-existing, prior to the sale of the car. The new owner can request that the dealer make relevant repairs.

Do take note though, that the ruling does not cover issues which involve wear-and-tear, such as bushings, engine and transmission mounts which over time will wear down, and require replacement.

For car buyers who want minimum risk in the years to come, a way to ensure peace of mind, is to purchase an additional 3rd party warranty package which some dealers might offer.

While we all are aware that a new car would carry the latest features and options, a used car on the other hand would tend to have lesser spoils. From standard features like Electronic Stability Programmes, and four-wheel anti-lock brakes, which are common place, even with cars available within the used car market, there are other considerations as well.

The active and passive safety features are the most important. In newer cars, there tends to be a higher feature count. Advancements in radar and sign recognition technologies have added an additional active invisible layer to keep occupants safe.

The Volvo S90 for instance, is able to detect and respond to an on-coming car at a cross junction, and can automatically hit the brakes in order to avoid a serious T-Bone collision. The Mercedes-Benz E Class sedan features front seats that pull in the seat bolsters which are closer to the door, in turn, moving the occupant further away from the zone of an impending side impact, to reduce or even avoid potential injury.

At the end of the day, you must weigh in on what’s important, but also bearing in mind, that with more features, it’s likely that the cost of a used car with these extra features will cost more, and might come close in terms of price, compared to a new car with lesser features.

Once you have lifted the plastic sheets that cover the seats in a new car, don’t be mistaken in thinking that you can drive it normally like everybody else in the road. There are early servicing runs, which you should not miss. Having those initial oil changes done ensures that your engine’s longevity is looked after. To get a clearer picture, take a look at the guidelines for servicing intervals.

Similarly for used cars, it’s advisable that if a car has just been bought off the dealer, an oil and sparkplug change should be performed, regardless of service history. This is because there are many variables. The previous owner for instance, may have used a cheaper mineral oil, knowing that the car will be let go of, and would want to save on the running costs. As mentioned earlier on, bushings, engine and transmission mountings may become an issue with age.

The replacement costs can go into the thousands, especially for engine and transmission mounts. Additionally, some automatic transmissions may need a fluid change once they have clocked a high enough mileage.

As a rule of thumb, the average yearly mileage for a car in Singapore is around 20,000 to 25,000km. Meaning a car that is eight years of age should typically be between 160,000km to 200,000km.

Hence if you do come across a used car at dealership which displays high mileage, there could potentially be more costs to look out for. Wheel bearings, timing belt replacements, turning rods, and busted suspension dampers are just some potential nightmares you would want to avoid.

For example, the self-levelling suspension of some Mercedes-Benz models, changing out the faulty hydraulic pump and accompanying assembly could easily set you back by four figures.

Like new car showrooms, there are many of choices in the used car market, if you know where to look. While you may get the latest models and variants from a new car dealer, there are plenty of used car dealers with a ready supply of cars, which may even be just a year or 2 of age in some cases. You might also find yourself a car you always wanted, which has already ended its production run.

For instance, if you want a smaller SUV like a Toyota Rush, which incidentally has been discontinued, the only way to find one is at a used car dealership.

A little advantage of buying a used car is that there is no need to wait, as the car is already in stock. New cars need to go through a few rounds of COE biddings, and you might also find yourself on a waiting list, due to overwhelmingly good response for the car of your choice.

There’s an additional down side to buying new cars, as at times you may see such a large fluctuation in COE prices, that the dealer is unable to absorb the difference. This means that even after 3 to 4 COE bids, which will take approximately 2 months, you will need to do a top-up, or reconsider your options, due to the change in the cost of the car.

Buying a new car gives you the flexibility of picking and choosing the right kit to dress up your ride. Dealers will often offer original extras and kits, which you can choose to have installed under their care. Better looks aside, fit and finish of an original product will usually be better than an aftermarket item. Additionally, the financial impact of such modifications can be spread onto the monthly installments, as this will be factored into the selling price of your car.

When buying from a used car dealer, you might get lucky if you find a car equipped with the options or kit that you wish for. On the same note, however, you may also commonly end up in a situation where you like the car, but not what it comes kitted with. Imagine if you bought a Subaru WRX which comes equipped with an updated set of brakes and good rims, but also has an ironing board-styled rear wing installed by the previous owner.

Bringing the used car back to the official agent to have any optional extras retrofitted could prove costly, and if the car is older, there might be the issue of non-availability of parts.

How much money do I need to spend? That is the biggest question on top on everyone’s mind, when intending to make a purchase.

Under the MAS ruling, the maximum loan amount on a car is subjected to LTV (loan-to-value ratio). That is 70% for vehicles with OMV less than or equal to $20,000, and 60% for vehicles with OMV greater than $20,000. The calculation of used car loans is based on the applicable OMV.

For example if a used car has an OMV of $30,000, its residual OMV will be $15,000 during its 6th year. This means you can take up to a 70% loan of the vehicle’s sale price. You will be committing to paying a lower upfront amount for a car that is already cheaper.

Usually, a buyer would be better off from a financial standpoint when they commit to buying a used car, as the first owner would have already absorbed the bulk of the depreciation.

Another thing to take note of, is that the used car market is heavily influenced by new car COE prices. Dealers price their used cars in relation to the COE. A higher COE price will see dealers raising the selling prices of their cars, as they know that there will be a higher market demand from buyers unwilling to part with more for a new car.

Also, it is good idea to consider cars which have just a year or few months left – if you need one for short-term usage (in the event that you may be planning for something else of greater priority), as the loss is minimal. You will also be able to reclaim the remaining COE rebate, if any, and the PARF rebate. Some cars also carry a higher body value, which you can in turn reclaim from a scrap dealer.

Want to make things easier? Perhaps looking at key pointers illustrated in our infographic will help you decide which option is best for you!

Credits: Clifford Chow