THE FIRST TIMER GUIDE TO BUYING A CAR

IMG_4729.JPG

 

  1. Establish Your Budget
  2. Car Loan
  3. Choose Your Car
  4. How to Buy

 

Many Singaporeans dream of owning a car but the reality is how many of us can truly afford to buy a car? Hence in this blog entry, I will share on the personal experience of my first car ownership. And why did I choose to make this decision, etc.

 

Please note that whatever I have written on this article is entirely penned in my own opinion and perspective. But of course, I am more than welcome to receive comments (be it positive or negative) with what you have in mind.

 

“Young people aspire to own a car but in reality no way. COE prices keep on going up… How do the young afford to own a car…”

 

Here is a video of a blind busker uncle singing his rendition of a Bob Dylan song, recounting the daily woes such as housing and transportation issues that many Singaporeans are facing. His busking performance thrust him to internet stardom on social media like Facebook with hit views of more than 300k.

 

Sea of commuters at Jurong East MRT station after ‘new signalling system checks’ cause delays

 

In recent years, breakdowns from our Mass Rapid Transit (MRT) have been growing in frequency. It is frustrating to be hit by train delay while trying to commute to work on time.

 

“Bloody one kind! I slap you ah!”

 

We all know that commuting by train during either morning rush hour or evening peak hour often involves being packed in like sardines. It can get extremely crowded and you better hope for no fighting incident like in this case.

 

I am all in to support in buying a car as long you can afford it though I have guy friends discouraging and telling me, “You no need to buy lah. Wait for someone to ferry you.”

 

The advantages and convenience of having a car is immeasurable yet many would argue that car is more of a liability than an asset. I will rather choose to say YES, car is an asset but a depreciating asset. Your car loses value as time goes on and there is little chance that a car will appreciate in value.

 

FullSizeRender.jpg

 

Many people see car ownership as a social status symbol, but is it worthwhile to spend a lump sum of money to own one? The answer to this question is “it depends”. It depends on your financial income, your lifestyle and how badly you are willing to fulfil your dream. Having your own car is comparable to having freedom – a car lets you go wherever you want but provided you can pay for it. This choice of lifestyle and freedom does not come free.

 

  • Convenience – The car is available whenever I want at my house and I do not have to worry about train breakdown or massive service disruption.
  • Comfort – The public transport system in Singapore is too crowded and breakdown too often. Having a car give comfort while traveling and don’t forget the privacy you get.
  • Freedom – Owning a car is it gives the freedom to travel and you are not restricted to fixed routes and timetable.

 

On the contrary, owning a car is very costly and you have to factor in the price of the car, road tax, insurance cost, fuel consumption, car servicing and more. All of these factors have to be taken into serious consideration before buying a car. The car will be a large expense and you have to work out your sums well… This pretty much boils down on your financial well-being and status. Given the fact that our economy outlook is slowing down, less and less Singaporeans has the affordability to buy a brand-new car. Most millennials like me can choose the option of buying a second-hand car in the market. There are some excellent bargains if you just find hard enough in the car market.

 

If you have decided to buy a car and also have the budget, the following are some of the points that could help you in your decision-making process of car ownership:

 

  • ESTABLISH YOUR BUDGET

First and foremost, I have to emphasize that this depends on your financial status. You need to know exactly how much money you have to afford the car. If you are affluent and have high spending power, you can easily own the latest car model that you desire. But if you are like me, you will do your homework diligently first and find a car that fit your budget. Spending more than what you can afford implicates that these big expenses will eat into your cash flow, making it harder to allocate cash for other investments that could potentially grow your wealth.

 

  • CAR LOAN

You will need to apply for a car loan if you do not have the financial means to pay the car in full cash up front. It is subjective to individual and for my situation, I paid my car in full cash. The pro is I do not have to worry about monthly payment and I also save on interest rate. I chose a car that I can afford. However, if you are not cash rich and need financing, you will require an in-principle approval of your loan first from the bank to know what exactly your budget is. When finding the right loan, you need to note the interest rate as well as the loan term. Car loans in Singapore typically charge flat interest rates and all have interest rates of around 3%, and come with durations that range from 1 to 7 years. Flat interest rates mean interest payment is a constant amount each month over the loan term. Monetary Authority of Singapore (MAS) has also eased the car loan guidelines which buyers can borrow up to 70% of the purchase price for cars with an open market value (OMV) of $20,000 or less.

 
carblog.jpg

Scenario A

This Daihatsu Copen has a selling price of $40,000 with 54 months of remaining COE.

Selling Price: $40,000

OMV: $15,179

COE Remaining: 4 years 6 months (54 months)

Car Loan Amount: $40,000 X 70% = $28,000

Down Payment: $40,000 – $28,000 = $12,000

 

A 3% flat rate of $28,000 of loan over 4 years ($28,000 X 3%) will cost $840 of interest every year, the loan will incur you $3,360 in interest. Total paid on loan is $31,360 and this translate to a monthly instalment of $653.

 

In this Scenario A, as you are maximising your loan term, you will be paying an additional $3,360 for the interest incurred. Whether or not to take up car loan, it is up to you to gauge personally.

 

  • CHOOSE YOUR CAR

Once you know how much you can loan and what you want to buy, you can go ahead to search the car that you want in the market. For me, I browse through sgCarMart to get the latest information for used cars for sale in Singapore. With the advice from car finance specialist, I felt that it isn’t worth getting a loan because of the interests. I have a few car models in mind like the lowest range of BMW, Mini Cooper, Volkswagen Convertible and I also get my experienced drivers friend to give me their sound advice. I made a few comparisons of car models in the market and narrow down to my potential choice to Daihatsu Copen that is best tailored to suit my needs. I was actually hoping to get a second-hand BMW z4 but I was told there is maintenance nightmare after certain mileages. This is how I came to a conclusion to buy a 2-door roadster Daihatsu Copen, it is affordable! It is sporty! I want an inexpensive convertible and the Daihatsu Copen is uniquely cute! Wonderful choice for a first-time female car owner with no complicated in-vehicle technology functions. It is simple! The Daihatsu Copen has now become my reliable daily ride to get to where I want. This means I could stop kaypoh (hokkien phrase meaning busy body) friends who are grab hitch drivers to invade my privacy and know where I am heading to. Yes, grab hitch rides in Singapore are very reasonably cheap but most of these drivers have full-time jobs like in insurance field and they use this as an opportunity to find more prospective clients. Worst still, there are some who use it as a tool to xian cha bor (hokkien phrase meaning impress girls!).

 

  • HOW TO BUY

Visit a car dealership to conduct test drives. This is when you evaluate the condition of the car in person and determine whether should you make the decision of buying it. Do not make any impulse buying! And do not let your emotions overtake you and show too much buying interests as this will give a buying signal to the car salesman. When that happens, it is going to be challenging to buy the car at a more attractive discounted price. I did subtlety sound out my buying interests but at the same time, I try to find as many fault (eg, small car dent) I can on the car to bargain for discount.

 

Next, ask and get the insurance quote! Your driving record is one of the primary factor that will determine what you’re going to pay for car insurance. The insurance quote for younger people are higher as we are deemed as less experienced driver and has higher likelihood to get into an accident. The cheapest insurance quote I could get rounding up is $1,900 from EQ.

 

The dealer will then send the car for required Vicom inspection before the deal is finalized. Paying a small deposit before sending the car for a check is only fair to the dealer to show your sincerity in buying the car. Be sure the deposit is refundable should the inspection report is unfavorable and the car is in a worst condition than promised.

 
18192377_10212486368975524_2474106323497926002_o.jpg
 

Once you’ve done all of these points, the good news is that the technical part is over and you just need to wait for the collection of car. I must say it is very exciting to buying a car and having that great sense of belonging knowing the car is yours. That one special car, the one we dreamed about owning as a kid has now become a reality as an adult. Slapping down your cold hard earning to make this major decision is a great feeling and driving the car off is turning your dream into a reality. Happy & Satifised car owner!


Back to Top

1 Comment

  • Nicole August 13, 2017 at 6:26 pm

    Nice Daihatsu Copen! Looks cute.

    Reply

Leave a Reply

%d bloggers like this: