Complete Guide To Buying A Car In Singapore

Owning a car continues to be an aspirational goal for many Singaporeans, and is even regarded as a necessity for some, despite efforts by the government to discourage car ownership encourage a car-lite culture. Yet, buying a car in Singapore is very costly.

It is hard to deny the convenience and empowerment having a car affords you, not to mention boosts in productivity and time-saving. That is, until everyone has the same idea and we all get stuck in traffic jams, thereby killing any benefits owning a car conveyed in the first place. With the aim of regulating the car population in a “free market” manner, the uniquely Singapore Certificate Of Entitlement (COE) system was born.

Here is everything you need to know about financing and buying a car in Singapore.

Cost Of A Singapore Driving License

Obviously, if you want to drive the car you’re planning to buy, you’ll first need to first get a driving license.

Regardless of whether you plan to buy a car or not, earning a driving license is a very useful asset. You would have the freedom to rent a car, borrow it from someone you know, or drive a company vehicle for work purposes.

Here is How Much Does It Cost To Get A Driving License in Singapore.

In general, it costs most people at least $2,000 and above. The actual cost you end up paying will differ depending on a few main factors:

– Whether you’re getting an auto or manual license
– Do you take private lessons or attend a school (private lessons are about 10% cheaper)
– Do you take the majority of your lessons during peak time slots or off-peak ones
– The number of lessons and attempts you need before passing

Read Also: Driving School VS Private Instructor: How Much Does It Cost To Get A Driving Licence in Singapore?

Cost Of Buying A Car In Singapore

There are five main components that determine What is The Price Of Buying A New Car In Singapore.

# 1 Open Market Value (OMV)
# 2 Additional Registration Fee (ARF)
# 3 Excise Duty & GST
# 4 Certificate of Entitlement (COE)
# 5 Local Dealer’s Margin

# 1 Open Market Value (OMV)

Think of a car’s OMV as a baseline ‘sticker price’ of the car. OMV prices are what we see people in other countries are paying for the exact same car.

# 2 Additional Registration Fee (ARF)

In Singapore, all cars are subjected to the ARF, which is a form of tax imposed on all cars during registration. The amount of ARF payable is based on the OMV of the vehicle. The following rates are for cars registered with COEs obtained from the second COE bidding exercise in February 2023 onwards:

For example, a Mercedes GLA180 Progressive (A) that has an OMV of $37,756 will incur the following ARF cost.

# 3 Excise Duty And GST

Excise Duty is a form of tax imposed on specific goods. In Singapore, we have excise duties on alcohol, cigarettes, petrol, and of course, cars.

The Excise Duty on cars in Singapore is 20% of OMV. Once the Excise Duty of 20% is added to the OMV, a further 9% GST will be taxed on both the amount for the OMV and Excise Duty.

So, a Mercedes GLA180 Progressive (A) that has an OMV of $37,756 will incur an excise duty of $7,551 (20% of $37,756) and a GST of $4,078 (9% of $37,756+ $7,551).

# 4 Certificate Of Entitlement (COE)

The COE is a “market-driven” certificate that allows a car to be driven on Singapore road for 10 years. COE prices can increase steeply during a period of high car demand, which in turn causes prices of cars to increase.

Based on the recent 1^st bidding on March 2024, COE prices are around $83,000 for Cat A cars and $96,010 for Cat B cars.

Using the Mercedes GLA180 Progressive (A) as an example. We can see that the basic cost of a car would comprise of the following.

# 5 Dealers’ Margin

Last but not least, the car dealers that are selling you the car would also need to cover their own overheads and earn a profit for themselves. We call this dealers’ margin.

Essentially, if you sum up the OMV, ARF, Excise Duty and GST, and COE, and compare that against the actual sales price, the difference you end up with is the dealers’ margin.

Dealers’ margin could range from as little as about 15% for affordable brands to as high as 50% or more for luxury car brands.

Cost Of Owning And Maintaining Your Car

After purchasing your car, there are further costs to upkeep and use it.

Road Tax

You can check with LTA for the road tax payable by you each year or use a road tax calculator for an estimate. It typically starts at around $500. For a Mercedes GLA180 Progressive (A), this is at $784 per year.

Motor Insurance

The exact amount differs depending on which insurer you use and your driving/claims history. On average, you can expect a new car owner to pay about $1,250 per year for comprehensive insurance coverage.

Parking Costs

If you live in an HDB block, parking will cost you at least $110 per month. Add in the cost of parking elsewhere (e.g. office) and this could easily be an additional $100 or more.

Innovations like the New Parking.Sg App Promises To Potentially Help Motorists Save Money but eliminates the opportunity to hedge the timings when tearing traditional parking coupons.

Across the board, parking charges have a nasty habit of going up every now and then, which begs the question: Should We Be Concerned About Increases In Car Park Charges?

Petrol

If you spend an average of $150 per week on petrol, this adds up to $600 per month. Add on about $50 a month for ERP charges and you would be looking at about $650 per month.

Given how petrol expenses can add up, ensure you get the Best Credit Card Petrol Discounts In Singapore.

Maintenance

This is trickier to calculate depending on how problematic your car is, how often you drive, how well you maintain it, and the workshop you go to. When your car becomes older, the chance of major servicing required with parts being replaced increases substantially.

If we assume servicing costs you about $500 per year, with an additional sum of $5,000 set aside for parts replacement over a 10-year period, you will be looking at a total cost of $10,000 for 10 years, or about $1,000 each year.

Interest Costs

If you take a car loan, you should factor interest costs as part of the total cost of ownership of your car, spread over a ten-year period.

Buying A Car In Singapore. Can I Afford It?

If all the above costs haven’t dissuaded you from considering buying a car, you can refer to our detailed cost estimates of owning various categories of cars, starting from the humble Mitsubishi Attrage at the low-end, to a Porsche or a Ferrari or the Tesla 3.

We also compiled our choice of Cheapest Cars You Can Buy In Singapore Today.

Second-hand cars may be an option, though you may wonder if Is It Really Cheaper to Buy a Second-Hand Car when you factor in possible higher maintenance costs.

Some people (about 6%) Choose To Get Off-Peak Cars to save on COE, ARF, road tax, and other fees.

Ultimately, buying a car is a serious financial commitment that requires a careful calculation that weighs affordability with the Opportunity Cost Of Owning A Car.

This article was originally published on 18 May 2018 and has been updated with the latest information

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