How To Enable Yourself To Change Your Car Every 2 Years

As I pull into the carpark, I am distracted by beauty. I check out the looks, the curves, and I want to find out what goes under the skin. Before your mind wanders too far - I am talking about cars. As car lovers, we all possess a certain car-lust, and it is both our gift and our curse. On one hand, we are blessed with an eye for beauty, and can see what the common man cannot see when looking at a car. On the other hand, we are unfaithful to our cause, and we are constantly searching for a new experience. I’ll admit it. I am not a faithful car owner. While I am still happy with my Audi A4, and I still have two good years left with it, I am constantly scouring used car platforms in my free time, like a young man on a dating app. I imagine what life would be like with each viable car I spot, and I “swipe left” (or is it right?) to shortlist it. One of these days, when the time is right, I will replace my car with a younger, prettier thing. I sometimes wonder what my car would say if it could talk. If, like me, you spend too much time thinking about your next car, you will definitely understand that you are not one to buy a new car and use it for ten years. Here’s how I enable myself to change my car every two years or so.

Everyone knows that car ownership is an expensive endeavour in Singapore, and changing your car prematurely aggravates that situation further. Unless money does not matter to you, buying a new car and selling it before five years is pretty much financial suicide. This is largely due to the fact that Singapore’s car depreciation structure is such that cars lose most of their value in the first 5 years, after which it tapers out and remains fairly constant throughout the remainder of its COE lifespan. By that same notion, buying a used car (especially marquee brands), can lead to significant savings for you. There are a few exceptions to this rule though. Because of high demand, Mercedes-Benz and Toyota models generally retain more of their value during resale, and are also more marked up by used car dealers when compared to other brands. While still cheaper than buying new, the savings are not as significant, and are unlikely to be better value buys than say a used BMW, Audi, Mazda, or Honda.

When it comes to used cars, I find that it helps to define what is worthwhile to you. I personally choose to compare ARF values on the car against their depreciation value. To me, a car with ARF value of $25,000 - $30,000 should depreciate at no more than $12,000 / year, a car with ARF value of $30,000 - $40,000 should depreciate at no more than $13,500 / year, and a car with ARF value of $40,000 - $60,000 should depreciate at no more than $15,000 / year. Of course, these are numbers that fit my comfort level and are specific to me as a car buyer. You can deduce your own comfort zone and set your own financial perimeters. While this isn’t a fixed formula that works for everyone, it is important to set out some financial perimeters before you start shopping, so as to help streamline your search and prevent overspending.

Not all cars are built equal, and more importantly, not all cars are built equal in the eye of the beholder. Simply put, everyone has a different perception of what cars are viable to purchase used. For example, some people may stay away from a used Volkswagen in general, but perhaps they are not aware that there is a difference between the 7-Speed dry clutch DSG as opposed to the 6-Speed wet clutch DSG found paired to the 2.0 litre engines in VW’s lineup. It is important to identify which brands and which models fit your usage, and fit your risk appetite for reliability. Do this research, and in return, you will find yourself in a position where you don’t incorrectly deprive yourself of a good option, or incorrectly shortlist a poor option. Everyone has their own comfort levels when it comes to servicing and maintenance, and the research will help you define what that comfort level entails.

Armed with your research and your own financial perimeters, you can then create your own purchase checklist, which is essentially a list of all the things you need to see in the used car before it can be shortlisted. This list of things can include considerations like financial factors, car specifications, equipment, ownership details, and usage details. To illustrate this, I’ll share my personal purchase considerations. For me, I typically look at marquee brand units that are 7.5 to 8 years in age, have at least 70,000km of mileage, and have a depreciation rate of not more than $15,000 / year. They should also have a minimum ARF value of $30,000. When looking at BMW, Volvo, and Audi units, I usually look for units with only 1 previous owner, while I allow up to 2 previous owners for a Mercedes-Benz or a Lexus.

My own checklist is designed to provide minimal financial risk, as many of the marquee brand units at this age, are sold reasonably close to export / scrap value (which means I can scrap the car at any time without losing too much money). Marquee brand units also generally keep very well and maintain relatively good levels of interior and paintwork quality. With a minimum ARF value of $30,000, I am also able to have returns of at least $15,000 upon scrap, which I can use as a substantial amount of the down payment for my next 7.5 to 8 year old marquee unit. You can design your own checklist to provide benefits that are important specifically to you. If done right, you could be on your way to seeing that inner car-lust satisfied, with a new driving experience coming your way every two years.

You may not choose to buy a car now, but browsing to research your options does not bite! Have a look at Carousell's used car listings!

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