Just Had a Kid and Want to Buy a Car? Here’s What You Need to Consider
Anybody who insists owning a car in Singapore is a luxury and not a necessity obviously didn’t have kids. Ok, that’s a bit of a stretch but I’m sure you know what I mean. A few daily mishaps in Singapore can make any sane person want to rush out and buy a car immediately.
Try relying on the forever-breaking-down MRT and snail-like buses to rush to the childcare centre after work, and then rush home again by public transport in the dead of night, only to have to deal with making something to eat and spending five seconds with your kids so you aren’t an absent parent before collapsing into an exhausted heap. Now imagine doing that every single evening, and repeating the process in reverse every morning.
That’s why for many Singaporeans, having a child is the turning point which signals that it’s time to bite the bullet, cough up the COE money and get a car.
Here’s what to consider when purchasing your vehicle.
How long do you need to drive the car for?
Unfortunately, cars in Singapore have a short lifespan thanks to the COE system. The closer the COE is to expiry, the cheaper a car becomes. You will thus need to figure out how much COE you need.
For instance, if you just need the car for the period until your child no longer needs to be ferried to and from childcare and can go to primary school on the school bus, you’ll need to drive for a maximum of six or seven years and probably don’t need to buy a car that’s brand new.
What model to buy?
As a parent, you’re not exactly looking to buy a flashy car that will turn heads—that will come later, when your mid life crisis strikes. For now, your biggest consideration is that the car be functional enough to serve your family’s needs.
Obviously, your car will need to be spacious enough to accommodate the entire family, so forget the two seaters and cutesy Mini Coopers. You’ll want a car that’s safe, has enough boot space for stollers and prams, and can accommodate your child seats.
On the other hand, you don’t want to get a car that’s so huge that parking it requires the cooperation of everyone else in the carpark, and that people think it has right of way in bus lanes, nor one that’s so expensive you have to sell your kids into slavery.
PARF or COE car?
You’ll have to decide between PARF and COE cars. A PARF car is on its very first COE, and generally costs more, but when the car is finally deregistered (should you choose not to renew the COE) you’ll get a generous PARF rebate usually amounting to a five figure sum. A COE car has had its COE renewed at least once and is generally cheaper, but the disadvantage is that if you deregister the car you don’t receive the PARF rebate.
For most couples, the main consideration when choosing between PARF and COE cars is cost. PARF cars are generally more expensive and require bigger downpayments.
Congratulations if you are happy and able to pay for your car in cash. But for most couples, the only way to become a car owner is to take out a car loan. You can generally borrow 60% to 70% of the car’s selling price depending on the car’s OMV.
Don’t immediately take up the first loan the dealer suggests. If you’re buying through a dealer, ask them what discounts you can get by using their partner banks. Then do your own research by comparing the interest rates of the car loans being offered by the various banks. You can do this easily and for free by using MoneySmart’s car loan wizard.
Even if you can technically afford to take out a car loan right now, be wary as it could affect your ability to get a home loan. So if you haven’t bought your first home yet or are planning to upgrade any time in the near future, be conservative with your car loans.
That’s because the TDSR rules prevent the bank from lending you any sum of money that would make your total loan repayments (including car loans, student loans, credit card debt, etc) exceed 60% of your income. So the more money you borrow when you buy a car, the less money you can borrow for a home.
You’re not allowed to drive on Singapore roads without car insurance, nor would you want to, considering how desirous of death some drivers are.
Car insurance isn’t cheap, and will cost you a four figure sum each year. Again, don’t just sign up for the first insurance plan the dealer/your mother-in-law suggests. Compare the motor insurance offerings of the various insurers before making a decision. You can get car insurance quotes easily right here on MoneySmart, across more than 10 different insurers. Really doesn’t make sense to be wasting money when you can make sure you get the most appropriate insurance at the click of a button.
Unfortunately, you can’t just put your kid in the seat next to you and then drive off into the sunset. Until he/she has reached 1.35 metres in height, he/she will need to use a child seat or booster seat. If you don’t obey the rule, get ready to face a fine and demerit points.
There are other travel accessories you might want to consider that can make rides less frustrating for young children and their parents, such as a travel tray to stop your kid from dropping his toys on the floor, a baby mirror so you can see what’s going on in the back seat and seat protectors to save your upholstery from disaster. Do price research on all these products online to get a better idea of how much it will cost you to make your car baby-friendly.
Do you think owning a car is essential for parents with kids? Share your opinions in the comments!