Car Costs in Singapore and Why Taking Car Loans is a Good Idea
Owning a car in Singapore has evolved from being a necessity to become a status symbol in recent years. People readily take out hefty car loans just to get the car of their dreams; most of the time without much financial planning. Cars in Singapore don’t come cheap because of the Certificate of Entitlement that further adds to your already expensive car. While it works towards reducing the number of cars in Singapore, it makes it difficult to own a car even if you want to.
It has become a luxury good that everyone wants to get their hands on but are at times unsure as to how much it really costs. From getting your driving license to buying your first car and then keeping up with its maintenance fees, you’ll definitely need a huge sum of money. Disregarding the convenience of owning a car and all its benefits, it is imperative to arm yourself with the knowledge of how much getting a car in Singapore will really cost you. Read on to find out more about the true costs behind owning your own set of wheels.
Cost of Your Singapore Driver’s License
The first step to owning a car is getting a driving license. There are a total of three tests that you have to pass before successfully obtaining your license. Usually, most Singaporeans will go for their driving tests when they are young to get it out of the way.
Basic Theory Test: This costs $6.50 and is a 50 questions MCQ test that ensures that you know all the basic traffic rules and regulations
Final Theory Test: After passing your basic theory test, you will have to take your FTT for the same price before you can proceed to book your practical car test. Similar to the BTT, it consists of 50 MCQ questions where you need to get a minimum of 45 points to pass.
Practical Driving Test: The final stage before you can get your license costs around $256. You will be tested by certified Instructors from the Singapore traffic police who will evaluate and judge your driving skills in the circuit and on the roads.
Besides paying for these tests, you will also have to factor in the costs of driving lessons and various miscellaneous administrative fees. Depending on whether you opt for a private driving instructor or driving school, the total amount of fees will differ. For the driving schools, they typically charge anywhere from $70 to $80 for a 100-minute class and it is compulsory to take around 20 lessons before you can qualify for the practical test. On the other hand, private driving Instructors charge an estimated amount of $30 per hour for non-circuit lessons. You will have to pay an extra $20 to $30 for circuit lessons. The advantage of going for private Instructors is that you might not need as many lessons before booking your practical test. In the long run, you might be able to save more with a private instructor if you are able to pick up the skills fast enough.
5 Factors Affecting The Cost of Buying A Car in Singapore
1. Registration Fee
The Land Transport Authority has imposed a registration fee of $200 that you will have to pay once you register your car.
2. Open Market Value (OMV)
As Singapore does not produce its own brand of cars, vehicles are imported from countries all around the world. As a result, you will have to pay the OMV of the particular car you decide to buy. This fee is inclusive of the purchase price, freight cost, insurance, and all other fees part of the transport and sale of the car to Singapore.
3. Additional Registration Fee (ARF)
This refers to the compulsory tax imposed on all cars when they are registered. The amount of tax you need to pay is reliant on the OMV of your car.
4. Excise Duty and GST
You can think of this as the import tax of your car that costs 20% of your car’s OMV. Plus, you will need to pay another 7% GST which will be charged after the OMV and excise duty has been added.
5. Certificate Of Entitlement
The costs of getting a COE fluctuates depending on the overall demand and supply of cars. Owning the certificate means that you have 10 years to own and use your vehicle.
6 Factors Influencing the Cost of Maintaining Your Car in Singapore
1. Road Tax
This normally costs roughly $500 and you can easily get the exact value by using a road tax calculator.
2. Motor Insurance
Insurance is absolutely necessary for a good as expensive as a car. It will protect you from incidents of road accidents and car theft, among other things. The only downside is that you will have to fork out roughly $2000 in annual premiums.
Petrol prices are always changing and depending on how often you drive your car, your bank account can take a hit of a few thousand dollars every year just to keep your car running.
Parking fees may seem insignificant at first but when you add up the costs of parking your car at home, work and anywhere you visit, you can end up paying a few hundred dollars a month. For instance, parking your car under an HDB is enough to cost you a minimum of $110 a month.
Drivers usually send their car for basic servicing once in six months which can cost roughly $200. However, taking into consideration the occurrence of incidents that might require you to replace car parts, you might need to pay an additional $400 or so.
6. Loan Interest
Car loans are very common in Singapore and can last around ten years. As such, you will need to pay for the loan interests that come with your car loan. While sourcing for low-interest loans may help, the overall cost of owning an average car is $120,000.
Why Singaporeans Take Out Car Loans
While cars provide you with greater convenience in your everyday life, it is admittedly very expensive. Unless you can afford to pay $100,000 upfront without compromising on your daily necessities, it is probably wise to take up a car loan.
The total cost of owning and driving a car in Singapore is a hefty sum that not everyone can afford to pay. While car loans can greatly help you, be sure to only borrow what you need and try to pay off your debt as quick as possible to reduce your interest.
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