You’ve probably heard it before, but here it is again: Your car is your second biggest investment after your home.
Whoever thought of that — our guess is a car salesman — doesn’t understand that an investment is supposed to offer you returns. The last time we checked, a car doesn’t put money in your pocket.
Owning a car in Singapore, even an entry-level model, is a signal that you've finally arrived in the world. But it also means that you've also stepped onto a recurring financial treadmill of instalment payments, fuel, insurance and maintenance bills.
One way to free yourself and help #UnlockSingapore is to simply forgo car ownership and #RideTogether.
Still, we know that there are worthwhile reasons to scrape together the money for a set of wheels (like the envious look on your brother-in-law’s face when you arrive for a family meal in a German executive sedan).
To help you decide on whether the cost of car ownership is worth winning the game of intra-family one-upmanship, here’s what it really costs to own and operate an entry-level car priced at a theoretical S$100,000 in Singapore.
You may want to sit down for this.
The down payment
Unless your lottery numbers came good and you can pay for your car in cash, you’ll have to finance it.
Technically, this is known as “borrowing like there’s no tomorrow”.
The law says you can only borrow up to 70 per cent of a car’s price. If your car cost the dealer more than S$20,000 to buy from the factory, the loan cap is 60 per cent. You’ll need at least S$30,000 in cash as down payment on a S$100,000 car.
A Certificate of Entitlement (COE) only lets you keep the car for 10 years in Singapore.
But what would happen if you invested S$30,000 and forgot about it for 10 years?
Even if you put it in a product that guaranteed your principal sum but offered relatively low interest rates, you’d most likely see a return on your investment. Money can grow with time, but only if it hasn’t been handed over to a car dealer.
So in this case, not buying a car would be the second biggest investment after your home!
If you buy a S$100,000 car, pay a 30-per-cent deposit and repaid the rest over seven years, this is how the Math works out:
- Cost of car: S$100,000
- Deposit: S$30,000
- Loan: S$70,000
- Interest: 2.28%
- Loan tenure: 7 years
- Monthly instalments: S$966
That’s S$11,592 a year — enough for a holiday to distant locales. Yes, a car will take you places, but not having one could make you a globetrotter.
Road tax for a car with a 1.6-litre engine costs around S$740 a year.
This may not sound like much but works out to just over S$2 a day — whether you use your car or not.
Even if you won a car in a lucky draw, you would still have to feed it, maintain it and park it.
According to the Land Transport Authority, the average car travelled 17,500km a year here in 2014 (the last year for which such information is available).
A car with a fuel consumption of 8L/100km in the city would need 1,400 litres of petrol to cover that distance. Assuming a cost of S$1.85 a litre for mid-grade petrol (after discounts), that equates to about S$2,600 a year.
Let’s assume you’re in your mid-20s, work a desk-bound job and are the first-time owner of a Mazda 3 (one of Singapore's best-selling cars). Insurance would cost a little over S$2,400 a year — about S$200 a month.
The law requires you to insure your car and it's a big help if something unfortunate happens. But that’s a lot to spend on something you hope you’ll never need.
You could instead spend that money on a stupendously Instagram-worthy omakase meal every month.
Maintenance and parking
A servicing package for a new, entry-level car costs about S$500 a year. Parking costs at least S$80 a month in an HDB carpark, and about four to five times that amount for a season-parking spot in the central business district (CBD).
Factor in about S$10 per day for electronic road pricing costs if you work in the CBD, and parking fees for mall outings at the mall. This adds up to about S$70 a week.
What if you added that to your grocery budget instead? You could feed yourself the good stuff — think organic milk and grass-fed beef — without wincing.
Mother Nature pays a price when you use your car. According to figures from Uber, private cars in Singapore emit 3 million tonnes of C02 per year, enough to fill the National Stadium 300 times.
Car-sharing could help reduce those emissions, or at least spread them around: If there are two people in a car instead of one, each of them accounts for half a journey’s total emissions.
Running and paying for a S$100,000 car in Singapore can cost up to S$2,000 a month — excluding the S$30,000 down payment you’d need.
The kicker? The average car spends nearly 96 per cent of its time just sitting around.
Buying a car may seem like a way to signal your success, but it also puts you on a financial treadmill that runs for years — even after your car is fully paid up.
Perhaps the easiest question to ask yourself is: Will you own your car, or will your car own you?
Along with public transportation, ridesharing may be an option that could also help to #UnlockSingapore. #RideTogether.