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The true cost of driving in Singapore

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What about the benefits?

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True cost of driving in sg includes ST premium fee

 

must pay to read the page  :grin:

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[source: The Straits Times 30 June 2019]

 

“Going by the discourse on the Internet and coffee shops, few things get Singaporeans as worked up as food. One exception would be the Central Provident Fund (CPF).

 

It is understandable why CPF is an emotive topic. After all, Singaporeans feel, and rightly so, that the CPF is their retirement savings. And as such, they should be allowed to access as much of it as they wish when they retire.

 

The fact that the retirement sums have been raised over the years must add to the raging controversy.

 

The Government has tried to explain that the Retirement Sum Scheme is necessary to safeguard against retirees blowing all their CPF savings in one go.

 

Also, it needs to adjust for inflation and rising longevity.

 

No matter how logical these explanations may be, they hold little water for the person of average means. He or she will have to contend with modest monthly payouts, instead of a tidy lump sum after working for 30 or 40 years.

 

Funnily though, most people fail to see that owning a car is like forgoing another retirement sum.

 

In fact, owning a car quite likely involves a far bigger allocation of funds.

 

Let us make the following assumptions for a 1.6-litre family sedan used over 10 years:

 

• Cost of car: $100,000

 

• Preferential Additional Registration Fee (or in layman's term, scrap value): $10,000

 

• Loan cost: $9,800 (based on 2 per cent interest for a 70 per cent loan over seven years)

 

• Parking and Electronic Road Pricing (ERP) charges: $18,000 (based on Housing Board season parking, $2 per work day on ERP charges and the rest on commercial parking charges)

 

• Insurance: $10,000

 

• Repairs and maintenance: $8,000

 

• Road tax: $7,400

 

• Fuel: $30,000

 

• Total: $173,200

 

Let us also assume that a person buys three cars during his working life. (Most buy more, but let us be conservative here.)

 

Assuming prices and rates remain constant, that would bring his total lifetime motoring outlay to $519,600.

 

Now, we have to subtract the cost of alternative transportation.

 

Let us pick the lowest denominator - public transport.

 

For a family of four making four trips a day each, and if each trip costs $1 on average (taking into account the various concessions), the total transport expenditure would come to $58,400 over a 10-year period, or $175,200 over 30 years.

 

To be simplistic, let us ignore the value of time in this comparison, because it can be argued that while a bus trip takes twice as long as a car ride, the person on the bus can use the time to read, play games or catch up on his favourite TV show.

 

So, if we subtract the total cost of public transport from the cost of motoring over 30 years, we arrive at $344,400.

 

That is a substantial sum. In fact, it is roughly double the Full Retirement Sum for those turning 55 this year.

 

That sum will be larger if the car in question costs more than $100,000. And it will be even larger if a person buys more than three cars over 30 years (a great likelihood, given that Singaporeans typically change cars once every five years - although the trend might have started to reverse).

 

But even if you limit yourself to three cars over your working life, and you restrict yourself to $100,000 per car - something in the ballpark of a Toyota Corolla Altis, Honda Civic or Volkswagen Golf - the opportunity cost is substantial.

 

That is, if we assume the money is put into relatively safe investments such as fixed annuities or government bonds with an estimated annual return of 3.25 per cent (an average of the CPF Ordinary Account and Special Account rates).

 

If you had invested $114,800 (the premium of car ownership over public transport usage across 10 years) over 20 years, you would have an additional $102,842.

 

So if you do not drive, you stand to have about $450,000 more in your retirement nest egg.

 

That's almost half a million dollars more.

 

Of course, it is hard to assign a purely monetary value to having your own car.

 

The freedom of choice you get from having immediate access to mobility is priceless (or, at least, it feels priceless).

 

If you feel like going anywhere, you just hop into your car and go - whatever the weather or time of day. No long walks or waits. No uncertainty.

 

The level of privacy and comfort available to a car owner is inaccessible to a public transport commuter.

 

There is also the joy of driving.

 

You don't have to be a true blue petrol head to enjoy a car that is smooth, powerful and which handles and rides well. Even the most humble of cars can be enjoyable. More so if your driving skills are above average.

 

With increasing connectivity, a motorist can stay in touch with the outside world if he wishes to.

 

With hands-free options, he can do so safely as well.

 

The downside of motoring would include the occasional accident and fine, encounters with inconsiderate road users, time wasted looking for parking space, and the mechanical glitches that are sometimes hard to identify or fix. Not forgetting the heartache of seeing the first scratch or dink on a new car's shiny body.

 

The biggest frustration is, of course, getting caught in traffic jams.

 

On the other hand, a motorist will not have to risk MRT delays or breakdowns, unpredictable bus services, jostling with the crowd, poor first-and last-mile connections, inclement weather or being unable to go to places where there are no bus or train services at all.

 

But by and large, a bus, train or cab ride in Singapore is not too bad - especially now that many of the issues related to technical glitches and fleet shortages have been addressed. More so when compared with equivalents in other developed cities where commutes cost more (and cars cost less).

 

Even so, the advantages of having a car in Singapore may well outweigh the disadvantages if we consider the most important factors that make a trip pleasant: speed, predictability and comfort.

 

And for families with young children or old folk, the car may seem indispensable.

 

On the other hand, if we consider monetary value alone, it is clear that relying on public transport makes more sense financially.

 

A middle ground would be to pare down your motoring cost. One way would be to use your car beyond 10 years.

 

Extending the lifespan of a 1.6-litre car by 10 years costs less than $50,000 (going by current prevailing quota premium and forgone scrap value). If kept well, a car can easily run for 30 years.

 

You may have to spruce it up a little and you will have to pay slightly more for road tax. But the upside is that you won't have to incur any more interest charges.

 

A car's fuel efficiency may even improve with age. My 13-year-old Toyota Wish is 10 to 15 per cent more frugal now than when it was new.

 

In short, if you have to have a car, a modest choice goes a long way in contributing to your financial well-being in the long run.”

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That’s why some people advocate getting a car that cost not more than 50% of your annual income.. maybe does make financial sense as the cost of owning car that comes with very high cost does come potential impact to retirement.

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That’s why some people advocate getting a car that cost not more than 50% of your annual income.. maybe does make financial sense as the cost of owning car that comes with very high cost does come potential impact to retirement.

Like that many Sgporeans will not have cars

 

assuming most earn 120k-150k here even in MCF ( i know i know, many will say forummers here are on min 500k annual salary, but most are big cannon fairies)

 

then not many 60k cars to choose

 

Attrage or Bezza will be best seller

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my buddy used to say if no car not smoking non gaming casino 4d toto dont use branded goods no chionging etc [drivingcar]

 

he said in 30 years can save 1 million liao  [:p]

 

but after 3 decades we check our childhood friend whom dont touch the above also dont even have half million lor  [lipsrsealed]

 

why huh  [shakehead]

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my buddy used to say if no car not smoking non gaming casino 4d toto dont use branded goods no chionging etc [drivingcar]

 

he said in 30 years can save 1 million liao  [:p]

 

but after 3 decades we check our childhood friend whom dont touch the above also dont even have half million lor  [lipsrsealed]

 

why huh  [shakehead]

 

errr.. what is annual income? 

 

Anyway there's only a limit to how much can save.. expenses only way is UP

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errr.. what is annual income? 

 

Anyway there's only a limit to how much can save.. expenses only way is UP

 

my buddy claimed that those expenses if dont touch can save big amount of cash

 

both of them got 5 figure wage too

 

but I guess somehow or rather people will still spend money elsewhere

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my buddy used to say if no car not smoking non gaming casino 4d toto dont use branded goods no chionging etc [drivingcar]

 

he said in 30 years can save 1 million liao [:p]

 

but after 3 decades we check our childhood friend whom dont touch the above also dont even have half million lor [lipsrsealed]

 

why huh [shakehead]

What if we save so much and die suddenly? Also cannot enjoy the money right? Sometimes owning a car is more than the dollars and cents.

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What if we save so much and die suddenly? Also cannot enjoy the money right? Sometimes owning a car is more than the dollars and cents.

 

thats why I dont have savings  [bigcry]

 

every day thinking maybe tomorrow end of the world liao  :a-rip:

 

PS. morning got my license immediately fly down to AD put Dep liao  [drivingcar]

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Like that many Sgporeans will not have cars

 

assuming most earn 120k-150k here even in MCF ( i know i know, many will say forummers here are on min 500k annual salary, but most are big cannon fairies)

 

then not many 60k cars to choose

 

Attrage or Bezza will be best seller

True true.. maybe adjust to the type of Budget for car should be 1 year household income to be comfortable? Sounds ok?

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 I dont smoke, gamble nor drink and my wife is happy to let me have this vice. 

 

Change cars!!

 

If everything in life must use calculator then might as well don't eat out don't travel and save every single penny.

 

but then again, we would all be living in vain.

 

Keep calm and continue driving. 

 

Enjoy your ride!

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i will question the main assumptions in the article.

 

why do we need to buy a new car?

 

how about an old 10 year old car? it will definitely be cheaper and affordable

 

having said that, if you're 60+ years old, and you have been driving old cars throughout your life, why not buy 1 new car while you can "enjoy" the smell and smooth ride etc?

 

the differential is about $40k between an old and new car for a Toyota Altis... 

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