What isn’t clear is the daunting, stressful process of buying a car. From snagging the best deal to knowing your PARF from your OMV, don’t sweat it – here’s our comprehensive guide to buying a second-hand car in Singapore.
*Breakdown of prices can be found in point 2.
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1. Narrow down your dream car
If you’re going to spend the equivalent of a couple years’ salary on a car, it had better be a car you want to drive. Now, before you take my word and run to the nearest Porsche dealership, you might want to consider budget-effective options that appeal to you.
In addition to the Open Market Value of the car you’re keen on, check your prospective ride’s fuel economy, engine size (that determines your annual road tax), and even the maintenance costs that might rack up over the years. These factors will contribute to the overall cost of your used car.
2. Estimate the capital and total annual cost of owning a car
While a second-hand car costs a fraction of what you would pay for a brand-new one, the additional costs can easily add up. To prevent sticker shock, this free calculator will help you visualise the costs involved in owning a car. You can also see how much your new ride will cost you per month, as well as better compare the new and used prices of your car.
The calculator also helps you estimate the fuel, maintenance and parking costs for a wide variety of vehicle models.
Image adapted from: OneMotoring
As an example, the price difference between a new and used Toyota Corolla Altis 1.6 (A) can be up to 70%**. A brand new car costs about $97,988 while a used model with 5 years of COE costs just $29,800. For luxury cars like the BMW M4 Convertible, the savings can go up to 50%, with a new one at $447,888 and used at $219,000 with 5 years of COE remaining.
Although cheaper, the lower price of a used car also usually means higher interest rates, while its age also translates into more frequent and possibly more expensive repairs. Factor these costs into your purchasing decision – in some cases, a second-hand car isn’t exactly better than getting a new one. Buyer beware!
**Based on sales listings as of March 2020.
3. Do your research
Car forums are a great place to start your research – you will be able to get the lowdown on the general car-owning experience, along with common issues faced by existing owners. From annoying squeaking and rumbling to potentially fatal braking issues, pay extra attention to these when you perform your examination.
Also, popular, mainstream cars like the omnipresent Honda Vezel and Toyota Corolla would also be much cheaper to repair compared to fancy unicorns like a Lamborghini.
Consider both your preferences and practical concerns when selecting a car
4. Look for deals
Now that you’ve got an idea of the car model you’re after, it’s time to put in some elbow grease to look for your new car.
A good starting point would be online car marketplaces like Motorist, sgCarMart, or even Carousell Motors. These platforms make it easy to compare prices and understand market trends and price points. Many of them also offer insurance and loan options too, making them useful tools to understand and monitor the market wherever you are.
As with all online marketplaces, car sellers can be shady – it would be best to consult an experienced car owner if you choose to take this route.
Image adapted from: Carousell Motors
In comparison, cars from dealers offer more comprehensive guarantees backed by CASE and are usually better maintained. Many dealerships also offer in-house options for financing your purchase, while also settling the paperwork for convenience. It comes at a cost, though – you’ll have to fork out additional money to pay the middlemen for ease of mind.
If you opt for a brick-and-mortar option, a great place to find one would be Turf Club – home to more than a dozen used car dealerships. For Easties, the Ubi area also has plenty of options.
5. Decide between a PARF or COE car
No need to barf – it’s not too difficult a decision. PARF cars are essentially cars that are less than 10 years old, and will allow you to obtain a PARF Rebate when you deregister and scrap your car.
This rebate can be worth 50%-70% of the ARF (Additional Registration Fee) depending on the age of the car when scrapped. The ARF is worth 100%-180% of the open market value of the car, and gets higher as the OMV increases.
If you opt for a COE car that is older than 10 years, you won’t be able to cash in on the handsome PARF Rebate. However, like a PARF car, a COE car will yield a COE Rebate if you send it to the scrapyard before its COE expires. You will simply reclaim the value of the unused COE.
Aside from the lack of PARF Rebates, COE cars are also much cheaper than PARF cars, owing in large part to their advanced age. So, even though they might be cheaper, COE cars would also have a higher probability of causing maintenance issues in the long run.
6. Check the depreciation
Recorded on the odometer, the car’s mileage is a good way to check how “used” it is.
We’ve barely started and the numbers are already mind-boggling – so simply put, annual depreciation is a useful way of determining how much it will cost you each year just to own the vehicle. For a brand-new car, this is calculated simply by subtracting the scrap value from the initial cost of the vehicle and dividing it over the 10 years of its lifespan.
It’s slightly more complicated for used cars. Take the selling price of the car, subtract the minimum PARF amount, and divide it by the number of years left. Generally, a lower depreciation is preferable, but like all other purchases – cheaper doesn’t always mean better.
A similar concept to depreciation is devaluation. These are additional factors that lower the value of the vehicle – scratches, dents, repairs, or even the fact that it is an out-of-date car model!
7. Check the car thoroughly before agreeing to purchase
That’s it, your thousand-dollar machine within arms reach. Wipe your drool – it’s time to get to work! Grab a flashlight and some paper towels, and arrange for the examination session to take place in a quiet, well-lit place like a car park.
A white paper towel or tissue is useful for checking for oil leaks
During your examination, check if the car has any issues that the previous owner or dealer has not declared. Be extra careful and use all your senses to check for leaks, damage, repairs, and irregular noises. Take your time and do not rush. Having a comprehensive checklist makes for an exhaustive inspection.
For a start, check for tilting from a distance, which might be an indication of issues with the suspension or tyres. Stepping a little closer, ensure the paint job is smooth. Bumps and dents are bad, but discolouration and roughness are even worse. Those might indicate corrosion of the metal underneath – yikes!
Examine every nook and cranny with your flashlight, looking for damage and other irregularities. Make sure there’s a spare tire included, along with all the tools required for a tyre change. You should also pop the bonnet to check for oil splotches and that all the respective fluids are in order.
It’s best to check for spares before purchase, not when you break down on an expressway.
Next, get in the car and check the interior for any irregularities like funky smells, stains on fabrics and cracks on the upholstery. Ask to test drive the car, setting forth on your very first ride on your prospective new wheels – but stay vigilant, looking out for steering issues, braking irregularities and weird sounds and vibrations.
Once you’re satisfied, bring your car to a stop but leave the engine running. Check the exhaust for smoke, before turning off the engine, to check the underside of the bonnet and the rest of the car for leakage. If drippage occurs, anything but water is a red flag.
For those who know nothing about cars, you could opt to get your car checked by a service like that offered by STA Inspection or the Automotive Association.
Make sure to check the engine compartment but be careful – it might be hot.
8. Find ways to finance it
First, check if the OMV is above or below $20,000. Car loans for those above that amount are capped at 60% of the purchase price or valuation, whichever is lower. Those below $20,000 can get a larger loan at 70%.
You have to pay off the loan within 7 years, or before the COE expires. This means that if you buy a 6-year-old car, you will only have 4 years to pay off your debt. There are generally three types of loans you can get to finance your car if you don’t intend to maintain a diet of grass and leaves for the next few years.
- Firstly, the most optimal loan you can hope to get is a fixed interest rate loan. This means that the interest doesn’t change throughout the duration of the loan.
- Next, you might consider in-house loans provided directly from the dealership.
- Lastly, balloon scheme loans might be an attractive choice if you’re a first-time car buyer or relatively new to the workforce.
Although balloon scheme loans usually charge a higher interest rate than other loans, they exclude the PARF amount resulting in a lower loan quantum. This means that in effect, you fork out less per month, and are able to save up more of your monthly salary.
However, at the end of the loan, you have to pay the solid 5-figure PARF amount in full. Penalties for early repayment (e.g. if you choose to resell your car) are also higher. So, pick this only if you intend to stick to your car for the rest of its life, and if you’re disciplined enough to pay up at the end of the loan.
9. Factor in all of the hidden costs
Car insurance
Car insurance is mandatory in Singapore, and you will have to minimally purchase a plan with a third party cover so that when you crash into someone, your victim is covered. You can choose to dole out more cash for Third Party, Fire and Theft insurance or even comprehensive cover. Your insurance policy has to be in effect by the time your new car is transferred to your name.
Road Tax
Road Tax is paid annually, and increases with the engine capacity of your vehicle. An added road tax surcharge is also levied on vehicles that are older than 10 years, increasing by 10% each year until it turns 14. These costs are relatively minor, but you should factor them into your choice of car as they quickly add up!
For reference, a Toyota Corolla sedan with an engine capacity of 1794cc will cost you $972 per year in road tax alone. If the car is 12 years old, you will have to pay an additional $196, equivalent to a 20% Road Tax Surcharge.
Image adapted from: SgCarMart
Administration fees
Just for tagging your name to your new vehicle, you will incur an administration fee of $25. Vehicles 4-6 months from registration will incur an additional Vehicle Transfer Fee that you can verify using this LTA tool.
Vehicle inspections
Image credit: STAI
Car inspections are also mandatory for all cars older than 3 years. These take place once every two years, and increases to once every year for cars older than 10 years. They start at $64.20 but might cost more. In Singapore, this check can be done at STA, JIC and VICOM.
Maintenance costs
Maintenance costs can also add up for used vehicles. In addition to performing a thorough check before purchase, you might want to consider mainstream and popular cars like the omnipresent Honda Vezel and Toyota Corolla with cheaper repair costs compared to fancy unicorns like a Lamborghini.
Buying a second-hand car in Singapore
Buying a vehicle can be a complicated process, and finding a second-hand car might be even more daunting especially for a first-time buyer. It’s important to stay on top of all the processes and fees, even while being vigilant in checking the paperwork and the car’s condition.
With these tools, checklists and pointers, you can finally go forth confidently and purchase that dream car you have been lusting after for years – or most likely a Toyota Camry.