Purchasing a car in Singapore is no easy feat. This country is notorious for the exorbitant prices of cars, thanks to the need to purchase a Certificate of Entitlement, as well as other costs like registration fees, Excise Duty, and more. But if you’ve been saving up slowly so you can eventually own that dream automobile you’ve always wanted, congratulations!
Here’s what you need to know if it’s your first time buying a car.
1. Check the COE prices
As you should be well aware, all vehicles in Singapore require a Certificate of Entitlement (COE). And if you want to register a vehicle, you must first bid for a COE in the corresponding vehicle category. If your bid is successful, it will give you the right to own a vehicle that you can drive on Singapore’s roads for 10 years. There are open bidding exercises conducted twice a month where COEs are released.
Timing is very important in purchasing a car – COE prices fluctuate constantly, and if you time your purchase right, you could save thousands of dollars. So bid your time and wait for a strategic time to strike. Most car dealers will advise you on the current COE situation and whether they think that it’s a good idea for you to bid for it, so ask for their opinions when you’re at the showrooms deliberating over your car of choice.
Learn everything you need about the COE and the entire bidding process here.
2. Be firm about which car model you’re looking for
With so many fancy cars out there, it’s easy to go off tangent and start admiring the stylish, sleek ones that glisten in the showrooms and call out to you. That’s dangerous, because coupled with a persuasive car salesman who has a glib tongue, and your pre-existing intention to purchase a car, you might easily be tempted to spend on one that’s beyond what you can afford.
Do some research online, especially if it’s your first time buying a car. What kind of car are you looking for? If you have a big family, perhaps a spacious 7-seater like the Honda Vezel? If it’s just you and your spouse, perhaps the cosy, compact Volkswagen Beetle would fit the bill? For the adventurous and the young-at-heart, the Jeep Wrangler is a great choice to consider – it’s recently been awarded SUV of the Year Award by Motor Trend.
Get a good gauge of how much your desired model will cost, narrow your selection to a few brands, and visit the showrooms to look at similar models that are around that price range.
3. Timing is everything
A new car model that’s recently been released in the market would obviously cost you more if purchased now, as compared to a couple of months down the road. If you’re not in urgent need of a car, it’ll be best to wait till the prices of your ideal car model have dropped. And remember, only purchase when the COE prices have dipped to enjoy the most savings! Every dollar counts.
Another good tip to remember would be to wait until the COE bids close, as most dealers tend to raise car prices just before the bid ends in case of price spikes. So try to avoid showrooms at that time. An ideal time to visit the showrooms would be in the middle of the year, during the slower months. If the sales staff are having a hard time to meet their quota, they might just give you more attractive prices to close the deal.
4. Have a budget in mind before visiting showrooms
One key thing you should stick to is your maximum threshold. Based on your financial capabilities, work out the maximum amount you can pay for your car, then stick to it as you’re visiting the showrooms. Anything above that threshold should be strictly left out of consideration, regardless of how amazing the car features are.
A comfortable range you should be looking at would be 70% to 80% of your maximum threshold, so you won’t be spending every single cent you can afford on this purchase. If you’re using all of your savings to purchase a car, you should probably stick to public transportation instead.
5. Negotiate the price of your car tactfully
Everyone loves savings, especially when it comes to big purchases like cars. But negotiating the price of your car isn’t the same as negotiating your purchase on say, Carousell. You shouldn’t be throwing out any number you deem fit. Always be friendly and upfront about your needs and budget, so the car dealer can correctly ascertain the best car model for you.
Next, ask about discounts, and if the car dealer quotes an amount, ask for a higher discount. Also, enquire about any accessories or services that will be thrown in for free, and assess how beneficial they would be to you and your vehicle. Conclude your first visit by letting the dealer know that you’ll be thinking about it, and that you’ll be considering other brands before making your purchase. After all, you shouldn’t make a hasty decision at the first showroom you visit. Drop by a few others and compare the total value you’ll be receiving at the end.
6. Weigh your options for a car loan before committing
In essence, there are three options you can choose from when it comes to financing your car: your car dealers’ in-house financing package, a bank loan via your car dealer, or loaning directly from a bank or financial institution. Choosing the in-house financing package is the most convenient way because you can settle everything together, plus they might also offer you sweet deals like overtrades, which enables you to pay a smaller downpayment by skirting car loan regulations.
Banks such as DBS, OCBC and UOB also offer loans through the car dealers, who will try to make it as attractive to you as possible because they earn a commission from the bank when you sign up successfully.
The last option would be to do your research and approach banks or financial institutions directly regarding your bank loan. This might be more of a hassle, but you get the chance to properly weigh all options and choose the most favourable interest rate.
7. Be aware of your loan limits & loan tenure
Firstly, you’d have to check the Open Market Value (OMV) of the car you’re intending to purchase. For cars with an OMV of $20,000 or less, the maximum amount you can borrow is 70% of the purchase or valuation price, while for cars with an OMV of more than $20,000, the maximum amount is 60% of the purchase or valuation price.
However, you have to take note that this indicative number is a maximum, and the actual amount is dependent on what the bank deems fit based on your monthly income, credit score and other financial commitments.
In addition, Singapore has a regulation that applies to your car loan as well: the Total Debt Servicing Ratio (TDSR). This regulation restricts you from using more than 60% of your income to repay loans, so if you have large housing loan instalments or credit card bills to pay off, you might not be eligible for the full 70% car loan. Do ensure that you have sufficient cash for the 30% down payment too!
The maximum tenure for a car loan is 7 years, but do take note that a longer tenure usually means a higher rate of interest. Most banks offer an interest rate of around 2.78% p.a. As with all loans, you should get the shortest tenure possible, but of course, do make sure that you’re able to manage the monthly instalments comfortably with your financial capabilities.
8. Educate yourself about car insurance
Now that you’ve decided to sink your money into purchasing a car, it’s vital to purchase car insurance to protect yourself from any unexpected situations! There are plenty of car insurance providers out there, so do your research to pick one that’s best suited for your needs.
Most providers offer three main types of insurance: Third-Party Car Insurance, Third-Party, Fire, and Theft Car Insurance, and Comprehensive Car Insurance. The Comprehensive Car Insurance is generally the recommended choice as it ensures that you can repair or replace your car in case of any accidents, vandalism, theft or weather issues.
The premium you’ll have to pay for your car insurance is also dependent on a multitude of factors, which weigh the risks you have as a driver and the probability of you making a claim. These factors include the kind of car you have, how old it is, your age and gender, driving experience and more.
There’s also something called the No Claim Discount, where insurance companies offer you a discount on your insurance policy when you renew it, because you haven’t made a claim at all in the past year. So try to keep your record as clean as possible to enjoy more savings!
9. Bring your family along for the test drive
It’s best to get opinions from a few family members or friends during the test drive. If you’re buying a family car, ideally the future drivers and passengers should be supportive of your car choice. You could also bring along someone who’s owned multiple cars and who can advise you on what to look out for.
Aspects such as the car size, positioning of the control functions, suspension ability, braking response, engine noise and more are key. Even small things such as the height of the car from the ground can make a difference when you’re getting in and out frequently. Do remember to try out parallel parking as well, because the angles and size of the vehicle will immensely affect the way you control it.
10. Evaluate your capabilities to upkeep the vehicle
Even if you’ve saved up a substantial amount of money to make your first car purchase, it is a long-term commitment and more costs are required to maintain it. Costs such as annual road tax (which starts at $500), parking costs, ERP costs, and petrol could all add up to quite a significant amount each month. So be sure that you’ve made careful calculations before deciding to be a car owner.
If you want a vehicle that’s built for adventure, you can’t go wrong with the Jeep Wrangler. This sleek automobile is both versatile and sturdy. Morning commutes, weekend getaways and off-the-beaten-track road trips are all done in comfort with this spacious and comfortable beast of a ride. With a Jeep Wrangler, you could revel in the open-air driving experience that brings you a feeling of unbridled freedom!
Curious? Schedule your test drive on a Jeep Wrangler.
Now that we’ve covered the essential car buying tips and tricks that first time car buyers need to know, go ahead and make that informed purchase. Congratulations on your first ride!