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Vehicle Dollars and Sense

By SGCM_editorial on 14 Mar 2014

Attached Image Buying a car in Singapore is both exciting and nerve-racking, for the joy of having your own set of wheels is accompanied by the toil of paying for it by instalments. Before you sign on the dotted line, think carefully about these:
 
THE RIGHT MACHINE
Buy the vehicle you need and not the one you want, because the latter usually ends up costing you more than it’s worth. It doesn’t matter if you’re a petrolhead – if you have two toddlers, for instance, it’s more practical to get a saloon instead of that sporty coupe you’ve been eyeing.
 
BUDGET CONSTRAINTS
According to a financial consultant who spoke to Torque, you should allocate no more than 35 per cent of your monthly income to servicing loans. Assuming that 20 per cent of your salary goes towards your home mortgage, you’re left with just 15 per cent for your car loan. So if you draw $3,000 a month, your monthly car instalment shouldn’t exceed $450.
 
‘HIDDEN’ COSTS
These motoring-related expenses aren’t obvious upfront, but definitely make a big impact on your wallet. Parking, petrol, road tax and motor insurance can be a drain on your finances. For example, year-long season parking in an HDB multi-storey carpark would cost $1,080 ($90 x 12 months). That sum alone is more than the annual road tax for a 1.6-litre petrol car.
 
TEN-YEAR TEMPTATION
Although it appears more affordable, choosing a 10-year, 100 per cent car loan is actually a decision you can ill afford. Zero downpayment means a larger loan quantum that takes longer to repay, and the total interest in the long run will be higher. Car buyers should also be aware that longer loan tenures mean that their ride will be in negative equity for a longer period.

 This article was written by Jeremy Chua, writer for Torque. 

torque, buy, car, budget, loan and 1 more...

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  • 1
Fastfive1 Mar 14 2014 02:41 AM

Earning 3k and only paying $450 per month for the car loan? Hardly anyone does that. I know a guy who earns $2.8k and has to pay $800 monthly for his car. That's without his other miscellaneous expenses. Most people stretch themselves super thin. That explains the recent increase in the number of cars for auction.

 

I think the 100% loan crap is no longer relevant so why is it even being brought up? Unless you mean in-house loans.

Bonafidestack Mar 14 2014 09:41 AM

Most Singaporeans are not able to afford a car if we are look at this "formula".

 

This seems like a old article, Nowadays with such extravagant COE prices, where can you still find 400/mth installment. 

 

The "convenience" that we are paying is really expensive. 

LiuDeHua Mar 14 2014 09:42 AM

Other than all these, another important aspect to consider is whether to buy new or used car.

 

Lots of people are fixated on only buying new, which i think is quite silly. Buyers should always compare both new and used when making purchase decisions. 

Matoonia Mar 14 2014 10:01 AM

Something wrong with the title. "Vehicle Dollars and Sense" should be changed to "Vehicle Dollars don't make sense". Now this makes sense

  • 1
 
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