What is the TRUE Cost of Owning a Car in Singapore? You Don’t Want to Know…

The true cost of owning a car in Singapore

Jeff Cuellar



A car isn’t for everyone – especially in Singapore. While that statement may piss you off a little bit, that’s just the way the system is rigged. The hideously inflated cost of owning a car is meant to discourage the vast majority of Singaporeans from owning a car.


Well, officially prices are at Kaiju-like levels to prevent Singapore’s roads from becoming too overly congested (and to get you to take public transport). That’s why the Vehicle Quota System (VQS) and Certificate of Entitlement (COE) are in place – to crush your dreams of car ownership.

But let’s say that you choose to defy the Gods by saving up all of your hard-earned cash to purchase a car. You buy the car with a 50% down payment and take out a 5-year car loan. End of story?

No my friend – that’s not even the true cost of a car. This is:



Final Note: Buying a car is a huge decision that can have a major effect on your financial situation. Think about the total cost of a car – and imagine all of that money in an investment portfolio earning 8% each year.

Unless you absolutely NEED a car because you have a job that can support the expense, it’s really much better to put that money to work either growing your retirement nest egg. Who knows? You might even be able to purchase a property down the road that you can rent out to start getting passive income!

If a liability that loses 10% of its value every year is worth more to you than building an investment portfolio that earns 8% ever year – well… that’s up to you. But if you want to learn more about investing, give our Investing Learning Center a look.


*This article was corrected on 26 Aug 2014 to reflect the changes in removal of car depreciation to the overall total.

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.

  • MDP


    Good article.

    Would like to point out an error in the calculation of total cost:

    The last 3 items (Depreciations & lost ARF) should be omitted from the total cost.

    Reason: They are already included in items 1 and 2 (50% downpayment & total loan payments).

    So need to remove: 317,00+62,088+15,850 = 109,638 from the total cost.

    $404,757 – $109,638 = $295,119 over 10 years

    Another point omitted in the calculation:
    When the car is scrapped, owner is given 50% of the ARF as a cash incentive = $ 15,850.
    So the net cost over 10 years is $295,119 – $15,850 = $279,269

    That’s about $27,900 per year
    => approx. $2,300 a month! Definitely not a small sum.

    However your calculation puts the monthly figure at $3,372 per month (almost 50% overstated).

    Hope this helps clarify.

    • Jonathan Cheah

      it should be 365257 – 109638 – 15850 = 239769
      Which comes to $1,998 monthly.

      And just state the obvious, no one pays full retail prices for petrol. Knock a further 5grand off the 10yr total with a 20% fuel discount.

    • CuellarJ

      Hello MDP,

      Thank you for your comment and for being a MoneySmart reader. While I agree that the cost of a car is ridiculously expensive in Singapore.

      The last three items are meant to show the depreciation costs that mount up over time (whether people accept this as an additional “money loss’ that adds to a vehicle’s lifetime expense or as a “double costing” is a matter of perspective).

      The last items are meant to show that an owner’s depreciation cost is actually money that goes down the drain no matter how often you use it (thanks to the “straight-line” depreciation model that was adopted – which equates to 10% depreciation every year).

      If you made your 50% down payment and continued making loan payments over a 5-year period with a car loan, you’re basically making payments on a purchase that loses values nearly as fast as you’re making payments. Again, depending on your perspective, that might be seen as a double-loss to some car buyers.

      Thank you for your message!

      • Guai Zi Zhao

        I strongly disagree… The down payment and loan calculation have already taken into account that the car will lose ALL ITS VALUE in 10 years and the way you included depreciation is merely taking out a part of that cost and dividing it. How you can logically add it back onto the initial cost is totally bewildering. The only calculation which you may want to include on these costs is opportunity costs along the lines of inflation/interest rates.

  • Loke Fook Seng

    Agree with the first comment. The depreciation items are double count. Nevertheless, owning a car is helluva expensive.

    Three ways to change this: 1) have more roads for cars which means allocating more land for roads, less land for residential and other things, 2) much, much more convenient and better public service and 3) promoting work from home.

    For the first, the target population needs to be revised downwards. Also a re-balancing of cost more to road usage instead of car possession needs to be in place to encourage greater shift to public transportation. For the second, some excess capacity must be built in to remove congestion and waiting time and the commuting time from office, home and place of interest to the collection point of the public transport system must be reduced from present. For the the third, there must be a lifestyle change that needs a mindset change for the employer and the employee and also the government. Often, public service taking the lead may be necessary to catalyze the change.

  • markatmoneysmart

    Hey Everyone, thanks for the feedback on the article. We’ve corrected the mistake in double counting the depreciation of the car. Apologies for the slip and thanks again for pointing out the error!