Buying a used car is common in Singapore where car ownership is expensive.
Sure, your second-hand car won’t have that new-car smell and it isn’t as prestigious. But it is more affordable – you can potentially get a Lexus IS250 or BMW 3 Series 320i Coupe for less than $19,000 or an Audi A3 Sportback for under $20,000.
As a result, the used car market is booming – according to LTA figures, nearly 9,000 cars changed ownerships per month.
- New vs used Singapore car prices – How much can you save?
- Car marts in Singapore – Where to look for your ideal used car
- What should you look out for before you buy a used car?
- Buying used car insurance in Singapore
- Used car loans in Singapore – How to finance your car
New vs used Singapore car prices – How much can you save?
Let’s compare a brand new Toyota Corolla Altis 1.6 (A), which costs $96,000, and another car of the same model registered on 10 June 2015, which costs $65,333.
The purchase price is definitely cheaper, but as any car owner in Singapore knows, it is not the only factor to consider.
|New Toyota Corolla Altis 1.6 A||
Used Toyota Corolla Altis 1.6 A
(Registered on 10 June 2015)
|Years left||10||6 years 8 months|
Maximum loan amount
(70% of car price)
(7 years tenure at 2.78% p.a.)
(6 years 8 months tenure at 3.3% p.a.)
|Total paid on loan||$80,038||$56,363|
(30% of car price)
(50% of ARF)
|Total cost of the car||$98,988||$66,312.70|
As shown in the table, a lower purchase price means that you pay less downpayment and need to take out a smaller loan. This means that you accrue less overall interest for the car loan.
But, take note that there are some instances where a used car is not cheaper:
1. When COE prices are high
When COE prices are high, the depreciation rate of the car is also high. This means that when you get a used car at high COE prices, you potentially stand to lose value due to depreciation.
COE, or Certificate of Entitlement, is a document that certifies the right of car ownership. The cost can be as high as $92,1000 (January 2013) and as low as $31,997 (August 2018), depending on supply and demand.
|Used (registered Jan 2016)||New|
|Depreciation (affected by its COE)||$9,460||$8,600|
|Loss per month||$9,460 ÷ 12 = $788/month||$8,600 ÷ 12 = $716/month|
2. When you get a used car that is “too new”
Depreciation does not occur evenly. Cars typically depreciate 20% in the first year and another 10% over the next 2 years. So, how much you save also depends on when in its 10-year life span you get your car. You could either be getting a steal or something not much cheaper than a new car.
3. When you get a used car that is too old and rickety
If the car is too old, you may rack up repair and maintenance costs later on.
The trick is in choosing a secondhand car that is not too new and not too old. A good range would be between 4 to 8 years.
4. When you accrue more interest on your car loan
As second-hand cars are deemed to be riskier, you may accrue more interest on your car loan. For instance, while the interest on a new car loan is about 2.68%, that of a used car loan can go up to 3.34%.
Still, buying a second-hand car has its merits.
If you’re low on cash, getting a second-hand car means that you pay less downpayment. You also lose less value with a used car because depreciation happens at a higher rate in the earlier years.
Also, if you’re looking to buy a luxury car, a second-hand one can give you considerable savings. Some have been known to shed as much as half their value in the first three years.
Car marts in Singapore – Where to look for your ideal used car
There are two ways to get a second-hand car in Singapore. You can either get it direct from a seller or approach a dealer. There are also online car marts where you can easily browse without having to head down.
Cars from a dealer are usually well-maintained and transactions are protected under the lemon law or CASE. There is also a wide variety of cars and the dealer will take charge of the paperwork.
On the other hand, when you buy direct from the seller, you save on commission fees that are paid to the middlemen. The downsides are that you may risk getting into shady deals.
Brick-and-mortar car marts
- Auto Car (210 Turf Club Rd, Singapore 287995)
- Car 88 (210 Turf Club Rd, b20, Singapore 287995)
- CarTimes Automobiles (61 Ubi Ave 2, #01-01, Singapore 408898)
- Commonwealth Car Mall (15 Commonwealth Lane, Singapore 149554)
- Republic Auto (Cycle & Carriage Auto Hub 209 Pandan Gardens Level 3, Singapore 609339)
- SG Car Choices (3 Ang Mo Kio St 62, #01-13 [email protected], Singapore 569139)
- Speedo Motoring (33 Ubi Avenue 3 Vertex #01-77, Singapore 408868)
- ST Carmart (210 Turf Club Rd, Singapore 287995)
- West Coast Car Mart (31 West Coast Highway Singapore 117864)
- Autobahn Motors (20 Jalan Kilang #02-00, Singapore 159418)
Online car marts
What should you look out for before you buy a used car?
When buying a second-hand car, go in with wide open eyes and a dose of scepticism. Ask, look, and check thoroughly before you ink the deal.
To help you, here’s a checklist to bring along when you go second-hand car shopping.
1. Is it a PARF or COE car?
Is the car under the Preferential Additional Registration Fee (PARF) or Certificate of Entitlement (COE) rebate scheme? This determines how much money you get after you de-register your car.
A PARF car is less than 10 years old. You get between 50% and 70% of its ARF if you scrap it before it hits its 10th year.
A COE car is one that has lived through one round of COE and had its COE extended either by 5 or 10 years. Although they are cheaper to buy, you will not get a PARF rebate but a COE rebate if you de-register the car before the COE is up. The amount depends on the quota premium you have paid and how many years are left on the COE.
2. How “used” is that used car?
Check the mileage of the car to see its condition. A car could be 5 years old but spent most of its life in a carpark. Or, it could be 3 years old, but have traversed all corners of the island as a Grab vehicle.
According to LTA, the average private car travelled 16,700 kilometres in 2017. So, anything between 15,000 kilometres and 18,000 kilometres a year is considered okay. A car that’s been around the block and then some will likely require more maintenance because of wear and tear.
Take the car on a test drive and see if it drives well. Check how it turns and brakes and ensure that it is in a good condition.
Also, don’t be afraid to ask how many owners the car has had, or if it has been in any accidents. If there are any modifications done to the car, do clarify with the dealer or seller, as it will affect the car’s insurance.
During inspection, check the exterior and interior. On the outside, are there distorted reflections or mismatched colours? Are there any poorly aligned body panels? Check the engine oil and coolant levels as well. Also, is there a spare tire at the back?
In the car, do all the lights, windows, mirrors, locks, air-conditioner, rain wipers and other accessories work? Does the hand brake pull up easily?
For a full check list, use CASE’s Standard and Functional Evaluation (Safe) checklist for second-hand car buyers to help you inspect your car thoroughly.
3. Is it certified? Any warranties?
A second-hand car is more likely to need more maintenance. Some dealers offer Certified Used Cars which are second-hand cars that meet the mark in terms of quality and condition. They cost more upfront but may save you more in the long-run. Check also to see if the car’s warranty is still valid.
4. When is the road tax due?
Always ask how much road tax that second-hand car needs to pay and when the tax is to be renewed.
If you buy a car that recently had its annual road tax paid for, you have easily saved anything between $510 and $1,214 (depending on your car’s capacity). For COE cars past 10 years, the savings become even more substantial because the road tax is 50% more.
Buying used car insurance in Singapore
Car insurance is a must in Singapore for every car owner. The higher the coverage, the higher the premium. There are three types:
1. Comprehensive cover
This is the broadest and most common motor insurance (also because many car loans demand it). On top of third party coverage, it also covers you for repairs or replacements because of an accident, theft or vandalism.
2. Third party, fire and theft
Covers accidental loss or damage because of a fire or if your car gets stolen as well as third party cover.
3. Third party cover
This is the minimum coverage needed in Singapore and also the cheapest. It pays the other guy when you damaged their property, caused an injury or (touch wood) caused a death. You get nothing.
For auto insurance, it is important to factor in “excess,” which is what you agree to pay out of your own pocket before the insurance company steps in to pay. Understandably, plans with lower excess will incur higher premiums.
For more on motor insurance, read Car Insurance in Singapore – Everything You Need to Know to Get the Cheapest Rate 2018. You can also use MoneySmart’s Car Insurance Wizard to find a car insurance policy that works for you across nearly 30 insurance companies.
Used car loans in Singapore – How to finance your car
You can borrow up to 70% of the car’s Open Market Value (OMV) with a maximum loan tenure of 7 years. For used cars, the interest rates are higher and the loan tenure also depends on the age of the car. There are 3 types of used car loans:
1. Fixed interest rate financing
The interest rate doesn’t change during the tenure of the loan. In ideal scenarios, this is the best type to get.
2. In-house financing
If you are unable to qualify for a car loan, or if your car is simply too old, you can get a loan from the dealership instead. The interest rates are higher, but could be a viable option under some circumstances. Watch out for administrative fees that your dealer may ask you to pay.
3. Balloon scheme financing
Loans under this scheme that exclude the PARF of your car, which makes your monthly loan payments lower, but the interest rates are higher. One caveat is that you’ll have to drive the car till the COE runs out or pay a higher penalty for early repayment.
Compare car loans based on car loan rates using MoneySmart’s car loan calculator. For more information, read Car Loan in Singapore – Guide to Financing Your Car in Singapore (2018).