Singaporeans love cars: although cars in Singapore can can cost five to six times more than they do in other countries, there has been a steady demand for new cars in the country. Land Transport Authority records show that more than 87,000 new cars were registered in 2016, up 52% from 57,000 new registrations in 2015. The strange thing is that this has been happening despite the fact that Singapore has one of the best public transportation systems in the world: it’s not like you need a car to get around the city.
If you have decided to buy a car or are seriously considering doing so, here are some tips that could help you in the process. If you think you will be needing help financing your purchase, you can also read about the best car loans that you can get in Singapore and how much they cost on average.
1. Decide Whether Your Budget Can Afford A Car
As cars are so expensive, a majority of buyers take a bank loan to finance their purchase. However, you still have to arrange a substantial sum as a down payment. If you decide to buy a Toyota Corolla Altis, one of the most popular models in Singapore, not only do you need to arrange about S$31,000 just for the down payment, you also need to pay a monthly instalment for your five-year car loan in excess of S$1,000.
But why should a car cost so much? A Toyota Corolla Altis costs S$102,988 in Singapore, while its open market value (OMV), which indicates the purchase price and associated costs for delivery of the car to Singapore, is only S$18,690. The remaining amount consists of taxes and duties. Some of the additional taxes and duties come from a few major pieces:
- Additional registration fee – this is calculated at a tiered rate, which ranges from 100% of the OMV to 180%.
- Certificate of entitlement – anyone who wishes to register a new vehicle in Singapore must first buy a certificate of entitlement (COE) from the Land Transport Authority. This represents a right to use the vehicle for a period of 10 years. The COE for a Toyota Corolla Altis? A hefty S$50,889.
- Car buyers also have to bear GST, excise duty, and the dealer’s profit margin.
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