Looking to buy a car in Singapore? Here's all you need to know about getting your first vehicle - from COE to financing
Buying a car in Singapore can be confusing and complicated. To make matters worse, driving, leasing, and owning a vehicle is gridlocked with confusing three-letter acronyms. But don’t worry, a clear road to mobility lies ahead. We sat down with Damien Pang (owner of car sourcing firm Nordad) to find out the best way to get behind the wheel.
For starters you’ll need to buy a Certificate of Entitlement (COE) and this is usually done at the same time as you buy the car. The Land Transport Authority (LTA) issues the COEs according to a quota system to control the number of vehicles on the road. Each COE lasts for ten years and is tied to a specific car, (so a three-year-old car will come with a COE that has seven years left). This means the price of a COE fluctuates wildly, add that to inflated car prices and you can be looking at a very big ticket item. A brand new Corolla could buy three houses in Detroit, but then again this is Singapore and a car is a privilege you need to pay for…or it is it?
Car sourcing
Due to the high capital investment, getting an agent to represent you in this process can help ensure you buy the right car at the right price. It saves money, time and takes a lot of the stress out of it. In short, sourcing agents are responsible for finding, securing and buying the vehicle. They also handle all the paperwork associated with the purchase (finance, insurance etc.).
Buying options – new or used?
This can be a complicated decision. When buying a more expensive car, we recommend buying a used rather than a new car because of the additional taxes importers incur. Cars older than two years are not taxed the same way. That being said people should know their rights for both decisions:
- Buy new
You can buy new cars from authorised dealers or from parallel importers. Parallel imports are quite a bit cheaper but don’t have a “trusted” agent stamp so servicing can be an issue. Generally, however, there are workshops in Singapore that are more than capable of servicing your cars. - Buy used
If you think you’re going to be in Singapore for less than five years it’s worth considering a used car. There are lots of used car dealers in Singapore but Turf city and AML megamart are two of the larger ones. It’s a good idea to read up on your rights as a consumer, as new laws in Singapore mean that dealers must provide a six-month warranty with their cars.
Financing
Recent tightening of regulations around car financing means you need to pay a 50 percent deposit for cars with an Open Market Value (OMV) of $20,000 and above, and 60 percent for cars with values under $20,000. The loan period is a maximum of five years, but interest rates on car loans in Singapore are very low. Most of the major corporations charge around 2.28 percent. Ask your dealer or agent what your repayments will be so you don’t over commit.
Insurance
Singapore has an extensive range of insurance companies, from the traditional NTUC, AXA and AIG, to the newer ones like Aviva. Generally car dealers, or their agents, will help to arrange insurance for the buyer. Insurance prices will vary according to the make and model of the car.
Buying cars in Singapore is quite an expensive and complicated procedure. If anyone wants further insights or would like to talk to me personally, please feel free to contact Damien anytime.
Meanwhile, good luck car shopping!
Images: SG Car Mart