11 Essential Things to Note When Purchasing A Car in Singapore

Personal Finance

11 Essential Things to Note When Purchasing A Car in Singapore

July 3, 2018

Whether you are a student, a working adult or a retiree, commuting around the Garden City is an essential part of everyone’s everyday lives. Although Singapore’s transport system is well-planned and competent, it does get tiring when we have to squeeze in with the crowds during rush hours or when we have to stand throughout the long journey home. In today’s fast paced and busy world, time is precious. To save time and to increase comfort, purchasing a car becomes the option for people.

As compared to 2015, new car purchases have almost increased by 60% and Singapore is known to be a country with a high volume of cars. To travel in comfort and to increase convenience, more Singaporeans opt to purchase a car.

However, a car is a big-ticket item.

It is probably your second largest investment after your home and getting a car is a form of financial commitment. Do ensure that you have enough funds for the purchase of the car and always remember that the whole idea of buying a car is to make your life more comfortable, not wear you down financially and mentally.

Below are several important points to note when purchasing a car in Singapore;

1. Be clear and decisive on the car suitable for you, know what you really need your car for. Don’t end up with a Mini Cooper for a large family.

Purchasing a car is a huge financial commitment, so it is important to understand what you truly need and what kind of car really suits your lifestyle. Be sensible when making your decision. Yes, getting a car can be extremely exciting, especially when getting your first car but be careful not to become overenthusiastic when making your purchase.

Avoid going over what you can afford and do not be blinded by fancy decorations and designs which you may not truly need. Be careful not to be swayed by the charismatic salesperson as they may convince you to purchase a car that you do not need just to earn more commission.

For example, if you are buying a car to increase convenience for you and your family, do make sure your car has the correct features and enough space for your family members and all the barang barang. You might not actually need that fancy stereo system or extra lightings in the car. Everyone has their own needs and lifestyle, so do find a car that fits yours. A good way to find out is to bring the car out for a test drive.

2. Visit as many dealers as you can before making a decision

There are plenty of cars and car dealers available around Singapore. Make sure to check out as many cars as possible before purchasing in order to find the best car for yourself at the best price. Look out for deals by the different dealers as well as the add-ons given by the salesperson. Take your time and carefully weigh the pros and cons of each car before deciding. Try your best and negotiate hard to attain the best deal and price!

3. Always ask for a better price or a discount, don’t end up paying more than you should!

When it comes to purchasing cars, never be shy in asking for a lower price. Remember, when you pay for a car, the total price includes the commission for the salesperson, so each dealer may offer a different price. It wouldn’t hurt to ask for a discount and it doesn’t matter even if the discount is small, for it could help in paying for the down payment or for the instalments!

4. Avoid risks and issues by choosing established companies such as authorized dealers

You don’t want to be scammed and end up losing your money while making the purchase of a comfortable ride. Whether you have decided to purchase a new or old car, the reputation of the car company is extremely important. Choose companies that have been around for many years or even decades as they may have reputations that they want to preserve. Do not approach dodgy dealers just to save a few bucks!

One way to make sure that the company is safe is to check if they are CaseTrust accredited. Other ways are to do a company check on Accounting and Corporate Regulatory Authority or read up forums and reviews by other customers about the company.

5. Protect yourself by reading the terms and conditions and log card

This is the part where you have to put in a little more effort, but it will be worth it. Remember all the tiny words and paragraphs at the bottom of the pages? Read all of them. Read all the terms and conditions written, look out for uncertainties or loopholes or hidden fees that were not mentioned.

Check through all the documents and remember to keep them safely for they will be needed in future resales or value calculation.

Also, remember to obtain a log card from your dealer. A log card is very important as it certifies that you are the owner of the car. If you did not manage to get a log card from the company, you can log on to one.motoring to check if the car is under your name using your SingPass.

6. The importance of confidentiality and keeping your details safe

Never pass your passport or identification cards to your dealer. Do not give them carte blanc and do not sign on blank documents. Although it can be really convenient to leave everything to the dealer, it is still safer to check through important documents by yourself. There is always the chance of the dealer inflating the price or adding any hidden terms.

7. Don’t want to end up with a car that breaks down frequently? Always get a professional to inspect the car

Always pay attention to the smallest detail when getting your car. Check all the doors, windows and seats. Look out for the slightest noise, cuts or problems in the steering or the brakes. Other than that, also remember to visit trustworthy and certified mechanics to give the car a good check. Do your background checks on the companies and read up forums and reviews about their services.

Do not scrimp on the costs of checking and this is definitely beneficial in the long run. It will help should you resell your car in the future and always remember that you and your passengers’ safety come first. If your mechanic discovers problems that is very difficult to fix, consider getting another car.

8. The clickety-clack of carbon footprints

In Singapore, there are strict rules to control emission levels and to encourage drivers to switch to cars of lower carbon emission.

Different schemes apply depending on when the car is registered:

  • Cars Registered from 1 January 2018 to 31 December 2019 – Vehicular Emissions Scheme (VES)
  • Cars Registered from 1 July 2015 to 31 December 2017 – Carbon Emissions-Based Vehicle Scheme (CEVS)
  • Cars Registered after 1 September 1998 – Tax Structure (click here for more details)

CEVS only accounts for the amount of carbon dioxide cars produce, whereas VES takes note of the five main pollutants; carbon dioxide, carbon monoxide, hydrocarbons, nitrogen oxides and particulate matter. Hence, certain car models may have to pay larger taxes.

9. Getting a car loan is actually more common than you think

The first thought of loans make people frown and is seen as a form of heavy liability. However, it is actually very common to take on car loans in Singapore today. If you are able to pay the full amount upfront, good for you. If not, think of it this way – taking a car loan actually helps to ensure that you still have enough money to continue with your usual lifestyle and expenses. Remember, getting a car is to make your life better, not wear you down financially. Financial consultants also advise to have minimally 3-6 months’ worth of living expenses left.

Other than your expenses, you will also need to consider the car’s recurring costs. Main recurring costs generally include Car Insurance, Car Maintenance, Road Tax and Petrol.

On average, a basic car’s maintenance fee in Singapore is estimated to be around $200 every six months and $425 for major servicing. Car Insurance costs as estimated sum of $1800 per year. Petrol fees costs around $2.30/litre. An average driver in Singapore drives 17,500km per year which requires 1,000 litres of petrol. That would mean a fuel cost of $2,300 annually. Other costs may include parking fees and ERP charges.

Purchasing a car can be a huge burden on your finances, but it may be necessary for you or for your family. Choose to be able to live comfortably and commute conveniently.

Always remember to list out all your expenses and assets so as to borrow the right amount. Ensure that you will be able to pay for the instalments. The last thing you want to end up doing is borrowing like there’s no tomorrow and drowning in bills and debts.

Be careful and clear when getting car loans. Check out the different promotions and interest rates offered by the different banks and decide on one that best meets your needs. Get a reliable loan partner that provides fast and open communication. Most banks offer loans with a tenure of 5 years so do compare the rates and benefits before deciding on your bank.

10. What is mileage, and what do you need to know about it? (for second hand cars)

Car mileage refers to the total distance the car has travelled over a given time. It is a clear indication of how often or little the car has been used and this affects the value of the car. The lower the mileage, the better. An average car travels 20 000 km per year so any distance significantly more may be considered a “high mileage”. A car may also be considered “old” once their total mileage reaches the huge 100,000 km mark. However, cars which have been maintained properly are still reliable even if they have a higher mileage. Newer and recent cars are also able to go for longer distances over the years.

When buying second hand cars, be extra careful in checking the car and ask for the reason of resale. Make sure there are no major issues that cannot be fixed or are too costly to be serviced.

11. Here’s a short general guide for a car sales contract

Below is a mini checklist for what your sales contract should consist of to ensure that you have all you need for a good and safe ride.

  1. Description (Model Name, Year of Manufacture, Engine Capacity)
  2. Accessories (List of Accessories purchased)
  3. Price (Not just the final price, but a breakdown of all costs. Know what you are paying for)
  4. Colour (Make sure it is the colour that you want)
  5. Deposit Amount (Deposit made upon signing)
  6. Payment Terms (Are there any other payments to be made in the future and the deadlines for them)
  7. Delivery Period (When should the car be delivered)
  8. Warranty/ Service Packages (Warranty period)

Remember, buy a car that really fits your needs and lifestyle and always shop around to get the best deal. Do a thorough research and make full use of your negotiation skills. Getting a car or a car loan is a huge deal that will affect your finances for the next few years, so make a wise choice in choosing the right car and the right loan partner.

 

11 Essential Things to Note When Purchasing A Car in Singapore