Yes, You Can Still Buy a New Car

No need to worry. LISA-ANN LEE tells you what your op­tions are.

Simply Her (Singapore) - - Life Made Easy | Money -

Own­ing a car in Sin­ga­pore has be­come more costly since the Mone­tary Au­thor­ity of Sin­ga­pore (MAS) in­stro­duced car-loan mea­sures early this year. What you should know: Loans are now capped at ei­ther 50 or 60 per cent de­pend­ing on whether the cost of the car be­fore taxes and sur­charges – also known as its Open Mar­ket Value – ex­ceeds $20,000. The loan pe­riod is also shorter – five years in­stead of 10. But de­spite th­ese re­stric­tions, buy­ing a new car is still doable.

SCE­NARIO #1:

Your fam­ily is ex­pand­ing and you need a big­ger car. Should you buy a new one? First, says David Ting, ed­i­tor of mo­tor­ing mag­a­zine Torque, this de­pends on how much “cold, hard cash you’re able to put down for a big­ger car”. Whether you get one new or sec­ond­hand, you’ll need to fork out half the price as down pay­ment.

Ju­lian Kho, as­so­ci­ate ed­i­tor of Sgcarmart.sg, points out that get­ting a new car is “still very ex­pen­sive”. A $100,000 car needs $50,000 as down pay­ment – not a small sum.

It also de­pends on how much value there is on your car (the resid­ual value) af­ter you pay off your cur­rent loan, which can then go to­wards the down pay­ment on your next ve­hi­cle.

SCE­NARIO #2:

Your car is five or six years old. Should you sell now and get a sec­ond-hand one or keep it un­til it reaches the 10th year of its COE? Ju­lian says that given the cur­rent mar­ket con­di­tions, you might not be able to get a good price for your car, so it makes more sense to keep it.

Both he and David say they would choose to keep their car till the end of their COE, or “un­til 2015 or 2016, when the COE sup­ply is ex­pected to start in­creas­ing sig­nif­i­cantly”.

When that hap­pens, says David, there should be a cor­re­spond­ing drop in COE premi­ums and buy­ing a new car then would cost less.

SCE­NARIO #3: Your fam­ily MPV is 10 years old. Should you set­tle for a smaller MPV now?

What kind of car does your fam­ily re­ally need? If you have a large fam­ily with kids and par­ents to ferry around, there is lit­tle point in get­ting a smaller MPV. “There’s a prac­ti­cal limit to how much smaller an MPV can go be­fore it be­comes too small for your fam­ily or isn’t more multi-pur­pose than, say, a reg­u­lar hatch­back or wagon,” says David. Con­sider a sec­ond­hand model in­stead.

SCE­NARIO #4: Your work re­quires you to drive – should you buy a sec­ond-hand or new car?

Both David and Ju­lian sug­gest that given cur­rent mar­ket con­di­tions, a sec­ond-hand car makes bet­ter fi­nan­cial sense, es­pe­cially when you con­sider the ve­hi­cle’s loss in value as it ages, and the cost of get­ting a new car.

How­ever, older cars tend to con­sume more petrol. And, there’s not a lot of choice avail­able to buy­ers as most mo­torists who own cars four to eight years old are hold­ing on to their rides – the MAS’ down pay­ment re­quire­ment makes it dif­fi­cult for them to get a re­place­ment ve­hi­cle.

Used-car deal­ers are also hes­i­tant to take on more cars be­cause buy­ers are now much harder to come by, ex­plains David. “The quan­tity and va­ri­ety of used cars avail­able this year (and prob­a­bly next year too) aren’t great com­pared with 2010-2012, so you won’t be spoilt for choice,” he con­cludes.

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