Tips on Buying and Financing a CAR (in Singapore)

New Year liao, 2015, anyone getting new car?
Don't forget Singapore is the MOST expensive city in the world to own a car!



It's really scary to see 50K to 100K cars loans!! yikes!!
COE from 65K to 75K! and still a piece of paper!

If got family may be necessity
Money pricing is relative thing also
Dun go for vw lotproblems
Go for jaguar Volvo Nissan ba

Interestingly, there was recent news in the Straits Times saying that Singapore would be importing 50 new models of cars, so that there would be a greater variety of cars for us to choose from.

I think the article misses the point - we are still one of the most expensive places in the world for the purchase of a car, and taxes can make up easily 70% to 75% of the total cost of a car. Financing has now been limited to 50% of the total price of the car, stretched to a maximum of 5 years. This means an "entry-level" Toyota family sedan will cost around $150,000. This implies a loan of $75,000 to be paid off in 5 years, certainly nothing to sneeze at.

What I do hear around me from friends who own cars - those who have COEs expiring in 2015-2016 are thinking of buying a second hand car costing around $20,000 to $30,000. They may have to spend more on repairs and maintenance , but at least there is less upfront capex and you also suffer less depreciation.

Being the world's most expensive place to own a car can mean 2 things:

1. Because it is the most expensive, having a car demnonstrates my ability to finance it

2. Because a car is highly visible, unlike the portfolio of value investors, it suggests that I am wealthy.( never mind if its a cherry, kia or proton)

The car is the most visible possession and provides independant movement. The perception of independence, freedom is very compelling, and people will justify to own one:

My family & I have quality time
My work place is far away
I can avoid the taxi surcharges
I can travel anytime I want

and from here on, it sounds more like a taxi driver...

I can ferry my parents around
I can fetch my kids to school
I can fetch my wife after work
I can go to places that has poor public transport
I can drive to Cameron Higlands

Even the Gov understands the psychology, that despite capping loan quantum, they allow the cost of the COE to be included.

I believe that if they separate the COE and the cost of the car from loans, i.e. no loans for COE, the prices will crumble.
But they will never do that... its an extremely easy revenue!

(04-01-2015, 08:27 PM)Porkbelly Wrote: I believe that if they separate the COE and the cost of the car from loans, i.e. no loans for COE, the prices will crumble.
But they will never do that... its an extremely easy revenue!

Under current loan curbs (which is about 50%?) - you are already effectively paying in cash for an amount roughly equivalent to COE prices. For expensive cars, its even more. The assumption is the buyer has no offset for his new car price, from old car scrap etc.

So why has COE not crumbled yet?

(04-01-2015, 09:38 PM)thefarside Wrote: So why has COE not crumbled yet?

I believe the answer lies in the inherent demand for cars as a showcase of one's wealth and status, and not just for practical means. We should also be aware that there are many cash-rich families who are willing to fork out the requisite 50% DP to own a car in order to ferry their family around.

And of course there's always the batch who can afford to borrow a significant amount to have the bragging rights to drive around this small island.

Since I have no desire to look good or to appear wealthy, I guess I will never own a car here?

the prices of COE seems to mirror the economic situation of Singapore and globally. If one draws a trend in COE prices, one will notice the price has a strong correlation to the economic events (2008, 2003, 1998).

So my hypothesis is that as long as ppl think times are good, their jobs are stable. Therefore, they "think" they are able to afford the car DP and loan repayments. As many ppl think this way, the demand drives up COE prices which is of limited supply. The rich too has a similar mentality where if times are bad, they will not try to buy a second or third car. Better to squirrel the money for something else.

http://www.straitstimes.com/news/singapo...d-income-a

Quote:The average monthly household income was $10,503, up from $8,105 five years before.

With 10k monthly income, 120k car is not really out of reach for many families.

Well... the $$$ really beefed up the gov revenue.

Quote:http://www.singaporebudget.gov.sg/data/b...diture.pdf
Vehicle Quota Premiums, i.e. receipts from Certificates of Entitlement (COE), are estimated
to increase by $0.3 billion (or 13.2%) to $2.8 billion. Motor Vehicle Taxes are also projected
to increase by $0.1 billion (or 8.7%) to $1.7 billion. These increases are due to the higherthan-expected
number of vehicle de-registrations which led to more COE quotas issued in
FY2013, an increase in net car registrations using COEs carried over from the previous year,
as well as more commercial vehicles being renewed.

My opinion is that car should only take up max 10% percent of the household's total net income. One household can have 10k gross but net 6k. So 600 monthly repayment is the max they can afford for the car including road tax and insurance and to do so they would probably need to fork out a higher deposit on the car.

(05-01-2015, 12:02 AM)Life is a game Wrote: My opinion is that car should only take up max 10% percent of the household's total net income. One household can have 10k gross but net 6k. So 600 monthly repayment is the max they can afford for the car including road tax and insurance and to do so they would probably need to fork out a higher deposit on the car.

Why "10k gross but net 6k"? If you are partly considering to CPF contribution, you might miss out the cap of 5K per month.