Yes, You Can Still Buy a New Car
No need to worry. LISA-ANN LEE tells you what your options are.
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.
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.
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.