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FINANCIAL IMPLICATIONS
OF CAR OWNERSHIP IN SINGAPORE
One of the biggest perils of car ownership anywhere in the world
(and especially in Singapore) is not fully understanding the financial
implications of one’s purchase. In Singapore, there are some
very specific factors that affect the value of a car and the overall
cost of ownership. As Singapore is still one of the most expensive
places in the world to buy and maintain a car, it is well worth
one’s time to understand the basic elements that make up the
costs of owning a vehicle here.
We suggest looking at the cost of car ownership in Singapore from
2 perspectives: Buying a car and maintaining one.
Owning a Vehicle in Singapore
The 2 main factors that impact the cost of car ownership in Singapore
are:
- The vehicle tax regime including import duties, additional registration
fees (ARF) and road tax.
- The Vehicle Quota System which limits the vehicle population
growth in Singapore to approximately 3% per annum. The tool which
is used to limit the number of cars registered in Singapore is
the Certificate of Entitlement or COE. Each vehicle registered
in Singapore must have an accompanying COE which is “attached”
to the vehicle throughout the vehicle’s lifespan. For more
information on the Vehicle Quota System and COEs, please visit
www.lta.gov.sg
(The Land Transport Authority) and www.onemotoring.com.sg
(a central motoring portal).
The purchase price of a new car is made up of the following components:
| OMV |
Open Market Value or import value of the
car as assessed by Singapore Customs |
$20,000 |
| Import Duty |
Currently 20% of the OMV |
$4,000 |
| GST |
Currently 5% of import value |
$1,200 |
| ARF |
Currently 110% of OMV |
$22,000 |
| Registration fee |
Currently at $140 |
$140 |
| Sub-Total |
Base cost before local accessory
installation, number plates, COE, insurance, road tax, etc and
any dealer profit. |
$47,340 |
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Note: Table and figures last updated 31 December
2004.
More details on the breakdown of the base cost can be found at
www.onemotoring.com.sg.
Here, you will also find information on average OMV amounts for
each make and model currently sold in Singapore. Theoretically,
one can work out approximately how much profit each dealer makes
when they sell a car to you!
Recurring costs
In addition to incurring the cost of acquiring a vehicle, there
are other costs associated with keeping the vehicle on the road.
Here are some of those costs:
| Road Tax |
Variable (see example below). |
Engine capacity. |
| Radio licence fee |
$27 per year. |
Do you have a radio in your car? |
| Petrol |
Petrol is available in various grades and
just as an indication, as at 2004, the duty on premium grade
fuel is 35% of pump price without GST, or $0.44 per litre (whichever
is higher). |
Your vehicle’s fuel economy, driving
habits and travel patterns. How well your vehicle is maintained
is also a factor (eg, tyre pressure, state of engine oil, etc). |
| Parking |
Variable. |
Where, you live, work, hang out, etc. See
our useful tips section on Parking
Charges. |
| Inspection fee |
Dependent on the inspection centre you
choose and if you can benefit from a discount scheme (eg, through
the AA). |
Age of the car will affect the frequency. |
| Insurance |
Vehicle and driver dependent. |
Your vehicle type, your driving record,
your profile (eg, age, occupation, etc). |
| Maintenance |
Variable. |
Your vehicle choice (some are more reliable
than others), driving habits and distance travelled. |
| Electronic Road Pricing |
Variable. |
Which roads you choose to use, the day of
the week and the time of the day you use these roads. |
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Road Tax Formula and example (as extracted from www.onemotoring.com.sg):
For privately registered petrol-driven cars:
| EC <= 600 cc |
$400 |
| 600 cc < EC <= 1,000 cc |
$400 + 0.25 x (EC - 600) |
1,000 cc < EC <= £ 1,600
cc |
$500 + 0.75 x (EC – 1,000) |
| 1,600 cc < EC <= 3,000 cc |
$950 + 1.5 x (EC – 1,600) |
| EC > 3,000 cc |
$3,050 + 2.0 x (EC – 3,000) |
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* Effective from 1 September 2002.
Example:
If your car's engine capacity (EC) is 1600cc, the vehicle’s
annual road tax will be:
| ROAD TAX |
= $500 + 0.75 x (1600 - 1000)
= $500 + 0.75 x (600)
= $500 + 450
= $950 |
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Important Note
One of the most common misconceptions on the affordability of a
car is the “low monthly installment” syndrome. This
happens when prospective buyers are woo-ed into buying a car on
the premise that the monthly installment is low. However, many consumers
do not factor in other “costs” and can end up in a horrendous
situation from a financial perspective.
Also, we find that the majority of car buyers do not take enough
time to consider their ownership horizon and therefore do not make
the best purchase decisions from a financial perspective.
When buying a car, take your time to consider how much it will cost
you overall, your intended ownership period and of course, your
motoring needs.
Note: For the latest or further information,
we suggest you visit www.onemotoring.com.sg
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