How Much Does A Car Really Cost In Singapore?
This article is focused on helping you decide if you are truly prepared to own a car, including all its daily costs, hidden costs, and miscellaneous charges. This is because owning a car in Singapore is exceptionally expensive, as compared to other countries. Apart from the highly inflated retail prices of cars, there is a whole table of expenditure costs required to keep your car running. We will break down the various aspects of the expenditure below, including lta road tax renewal.
So that we can work with actual numbers, we shall use Singapore’s best-selling car in 2019, the Honda Jazz, as an example.
To give you an overview of the expenses, we have categorized different costs belonging in the main four categories below:
1. Purchase costs: an upfront payment to be made when purchasing the car
The upfront expenses include the following:
- The selling price of the car
- Interest fees from the car loan
- License plate number
- In-vehicle unit
When this article was written, the car dealer’s package for the Honda Jazz 1.3 was priced at $69,999. The exact same car costs RM75,000 in Malaysia, which converts to $25,000 SGD. In comparison, Singapore’s car is priced exceptionally high. What is the reason?
There are many additional necessary expenses to purchase a first-hand car locally. These extra fees are charged with the purpose of controlling the number of private transport vehicles on the roads. With a higher number of cars on the roads, it would translate to greater maintenance of the car-related infrastructures, such as road networks, parking spaces, highways, and petrol kiosks. Other issues include traffic jams and greater amounts of air and noise pollution.
Let us briefly understand what each charge is for:
- Open Market Value (OMV): selling price of the car in the deregulated market, before any additional fees.
- Registration fee: the fee to register your new car, which is fixed at $220 at the time of writing this article.
- Additional Registration Fee (ARF): calculation of this fee is dependent on the OMV of the car. ARF is cumulative and the respective charges are as follows: 100% for the first $20,000, 140% for the next $30,000, and 180% for an OMV of more than $50,000.
- Excise duty: import tax on cars coming into Singapore. A typical one-fifth of the OMV is charged.
- Goods and services tax: based on OMV and excise duty amount.
- Certificate of Entitlement (COE): as the bulk of the purchase price, you are spying for a unique license that allows an individual to possess a car locally for 10 years. The COE rate is decided by bidding from car buyers during the period of purchase, which results in a fluctuating price.
COEs are categorized into 5 groups according to your car’s engine capacity and vehicle type. Categories A and B are for smaller and bigger cars respectively, C is for goods vehicles and buses, D for motorcycles and E is open to all kinds of vehicles except motorcycles.
- Vehicular emissions scheme (VES): a scheme that promotes cars that damages Mother Earth less, so it either rebates or charges new owners.
- Dealer’s package: most likely inflated to cover the car dealer’s own operational costs. A higher price is common within 15% for standard cars and up to 50% for luxury models.
- Car loan interest
- License plate number: charge for an authentic vehicle registration serial.
- In-vehicle unit (IU): necessary machine to allow ERP and parking fees to be deducted from the cashcard.
2. Maintenance/running costs: costs incurred on a regular basis
Below is the compiled list of maintenance costs for your new car:
- Petrol
- Parking: charges vary depending on location and time. Sheltered parking will cost you more.
- Electronic Road Pricing (ERP): fee to regulate congested roads. This depends on your driving habits and how often you use ERP roads, on your way to work for example.
- Road tax: fee to pay every half a year or annually, according to the engine capacity of the vehicle. You can get an estimate using an online calculator.
- Insurance: it is illegal to drive without a valid driver’s insurance in Singapore. If you are an inexperienced driver, you will be penalized more heavily. Those who maintain good driving records will enjoy the best rates.
- Maintenance: sending your car for maintenance at workshops is a requirement to ensure your car is safe to drive. How often you need to do this depends on the make of your car and the model, but twice a year is the most common approach.
3. Hidden costs: costs that can be missed out by new buyers, such as parking fees
This includes driving fines, such as exceeding the speed limits, failure to park at legal spaces, failing to signal before taking a turn, and using your phone while driving. These are typical violations of traffic laws. You will be given demerit points for every driving offense you commit, and getting too many will result in you getting suspended from driving.
Regarding the Additional Registration Fee (ARF) we mentioned earlier, if you deregister your car after five years and before 10 years of ownership, you are entitled to receive a part of the ARF you paid for initially back in the form of a Preferential Additional Registration Fee (PARF) rebate.
4. The average yearly cost of keeping a car: a final number after accounting for all the above costs
After understanding the various costs required for a car, let us calculate how much it would cost to own a car annually. You will likely take out a monthly loan installment, maybe around $600 a month. You’d also have to pay maintenance and running costs, at $6,305.86. There is also the PARF rebate to consider, which can help to ease costs. Overall you’ll run an annual cost of about $12,600.
Apart from the annual fees, we also have the initial one-time fees to pay in the first year. Deposit cost, at 30% of the purchase price at around $18,000, the in-vehicle unit at about $155.80, a license plate number at $1,000. This brings the total to almost $20,000.
Conclusion
We have now calculated the cost to own a Honda Jazz 1.3 every year. Do note that the values we have calculated in this article are based on Honda Jazz 1.3. If you are looking at models that are more luxurious than the Honda Jazz, the numbers are likely to be much bigger. You can fit in the values for the model of the car you want into the values we have summarised in this article. Hence, only buy a car if you are well-prepared for the hole in your pocket.