A Singapore Graduate's Guide to Buying Their First Car (2020 Edition)

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So you’ve just graduated. Time to be a corporate slave for the next 35 years. Which car would you want to buy as your metal steed to navigate through this next stage of your life?

After around 16 years of education, you’re now looking to make your mark in the corporate world. With your newfound income, public transportation suddenly doesn't seem that appealing any more.

You’re deciding if you should buy a car to enjoy the freedom that motoring brings you, but buying a car in Singapore seems extremely complicated.

With the high costs of ownership, you’re browsing through a whole list of cars you potentially might buy, but you don’t know what you should look out for in your process of shopping for a car. Here’s a brief guide for the fresh graduate considering what car to buy:

1. What Type of Car are You Looking For?

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What exactly do you want from your car?

You could be looking for a compact hatchback, a family sedan, or even a sports car! First, it is crucial for you to decide the type of car you are looking for. This could be affected by your career and family plans.

For example, if your family does not currently have a car, you might want to seek a family sedan or an SUV that has sufficient carrying capacity, rather than a compact hatchback that is only equipped for the occasional rear passengers.

Conversely, if you are single and don't foresee yourself starting a family any time soon, you may have free rein to purchase a sports car instead.

At the end of the day, you have to first decide what you want out of your car—a practical family car that can continue to be used even when you eventually have children, or a small car exclusively for your commute to and from work?

2. Upfront Costs VS Actual Costs

When purchasing your car, you need to be aware that the listed price of the car is not the final price you pay over the course of your ownership. Hence, you have to budget beyond the upfront cost listed by the dealer.

Even after considering factors like your car loan, there will still be other costs that you have to consider in your calculations. Here are a few costs that vary according to the car’s make and model:

- Parts and Maintenance

Depending on the type of car that you buy, costs of parts and maintenance will vary.

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If you choose to purchase a continental make, costs of parts and maintenance will likely be pricier than cars from Asian makes.

Furthermore, if your car has a turbocharged engine, the servicing frequency may be higher than a car that does not have a turbo. More frequent servicing also means more charges paid to your workshop.

Therefore, you ought to do some background research on the reliability, cost of parts and maintenance, and the service interval for your potential purchase, even if you intend to purchase a new car.

- Road Tax

Most people usually determine the annual depreciation of a car based on its selling price (subtracting the PARF and scrap value if it is a new car) divided by the number of years of COE remaining. The value obtained provides the annual cost of purchasing the vehicle.

Although the annual depreciation is an effective guide to how much the car will cost you, other factors that affect the cost of running the vehicle are not reflected through it. One such cost is the frequency of maintenance and cost of parts, as we have explored above.

Another significant cost is the road tax, which differs according to your car's engine capacity.

Here’s an example using two cars from our used car listings: a 1.4l SEAT Ateca and a 2.0l Mazda CX-5 (Pro tip: You can use the “Save Vehicle” function to compare cars that you are interested in!)

As you can see, both vehicles cost about the same, although the SEAT’s annual depreciation is $10,816 as opposed to the Mazda’s $10,095.

This means that the Mazda should be the cheaper car to buy, right?

Wrong!

Let’s take a look at the respective road tax prices of each car:

Including the Mazda’s annual road tax of $1,210, the total annual depreciation of the 2.0l CX-5 adds up to $11,305. On the other hand, the 1.4l SEAT’s annual road tax comes in at only $624 per year, making its total annual depreciation $11,440.

Taken this way, the annual cost of these two cars are not actually too dissimilar. Hence, road tax is another factor to take into account when calculating the actual cost of ownership.

If you intend to buy a car that is past its 10-year COE cycle, do also take note that there is an incremental 10% year on year increase in the price of the road tax, up to a maximum of 150% of the car's original road tax price.

- Insurance

A few factors influence the price of your potential car’s insurance premium, such as its make, model, and also your driving experience.

It would thus be wise to check and compare quotations between insurers, before deciding which insurer to take up.

Luckily, Motorist has a comprehensive insurance quotation service that helps you do just that.

3. New or Used?

We now come to the perennial dilemma: should you buy a new or used car?

You may want a new car simply for that “new car feel”, so that you can be the proud owner of an untouched vehicle—and that’s a valid reason for wanting a new car! However, you should also weigh the pros and cons of buying new VS buying used based on a few other factors too:

- Buying New

The key advantage of buying new is that you will be making your purchase in the knowledge that it is a brand-new car.

Apart from the psychological pleasure you receive, buying new also means that you can be worry-free about any potential hidden problems arising from accidents, wear and tear, or from a lack of maintenance, which are all legitimate concerns if you choose to buy used instead.

Even if there are issues with your car, you will be covered by your warranty, and this is a safety net that does not come with a used car.

Authorised dealers for brands like Kia, Mitsubishi, Honda, and Hyundai all provide five-year unlimited mileage warranty for their cars.

Do also note that the terms of warranty are usually negotiable, so you could negotiate for a lower upfront purchase price in exchange for a limited mileage warranty, or a lower period of unlimited mileage coverage.

- Buying Used

Having looked at some reasons for buying new, let us explore why buying a used car could be a viable option for you too.

Although you will be trading off the worry-free experience of buying new from an authorised dealer, used cars tend to be cheaper, and you will be able to have a wider selection of car models as well.

Assuming a budget of $60,000, shopping from a list of new cars will only allow you to buy such cars as the Perodua Bezza ($54,999 at the time of publication), or the Perodua Myvi ($58,999 at the time of publication).

Now consider two examples of what you can get for similar money on our used car listings:

For the same price as a Perodua Myvi, you could instead get a smashing COE renewed Mini Cooper, which is definitely far more fashionable and fun-to-drive than the Perodua. The only minor drawback is that the Mini has 113 months of COE left, as opposed to a fresh 120 month COE as would be the case with a newly-registered car.

If the budget, rather than the remaining period of COE is your main concern, you could also snag this 2013 Mercedes-Benz C-Class for just $55,800!

By choosing to purchase a used car, you gain the ability to purchase more premium and fun-to-drive cars that would be out of your budget if you had chosen to purchase a new car at the same price range.

Apart from more variety for the same price, you will stand to enjoy the freedom to modify your used car however you like, since you will not be limited by any restrictions that will affect the validity of your warranty.

We have also written a guide for how to choose between buying a used car through direct sales or from a dealer here.

However, buying a used car is not all simple and rosy!

First, you will need to source for your own workshop, which may not be an easy affair as compared to going back to your authorised workshop with a warranty and servicing package.

Furthermore, if you are so unlucky to have bought a car with hidden problems, you will only be covered by Singapore’s Lemon Law if your car was purchased from a used car dealer.

Summary

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In searching for your first car, you have to know what type of car you want. You should also look out for actual costs rather than just focussing on the upfront cost of purchase. Finally, you have to decide if you prefer the security and convenience of buying a new car, or the wider variety that used cars offers.

This brief guide is of course not comprehensive. There are other aspects of car ownership that you should consider before buying.

These include the proportion of income you should be spending to service your car loan and maintenance. Other “hidden” costs also include season parking costs, and fuel costs, which are dependant on the fuel consumption of your car.

Read More: Revealed: The Top Five Traffic Police ‘Sniper’ Spots and Timings in Singapore

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