Singapore boasts of one of the best public transportation systems in the world. It is often rated as efficient, comfortable, safe, reliable and affordable. Most Singaporeans are satisfied with the public transport system and majority of the population travel by trains, buses or taxis. As Singapore is a relatively small country with limited space, the Government policy is to restrict private vehicle ownership. This policy is implemented by various financial disincentives which makes vehicle ownership an expensive and unattractive option in Singapore. As a
Before you decide to buy a car in Singapore, it is important to take into consideration the following:
- Do you really need to buy a car in Singapore?
- Are you aware of the average cost of buying and maintaining a car in Singapore?
- What is the process of getting a car in Singapore?
- What are the financing and insurance options available in Singapore?
Do you really need to buy a car in Singapore?
Most people do not consider owning a car as a necessity in Singapore for the following reasons:
- Singapore is a relatively small city and getting around is neither time consuming nor difficult. One does not need a car for daily life - be it shopping, work, recreation, etc. The shopping and business districts are centrally located and most residential neighbourhoods are self-sufficient. Hence, the need for extensive travel is almost non-existent.
- The city has one of the most efficient and technologically advanced public transportation systems. All modes of public transport (trains, buses and taxis) are air-conditioned, clean, safe, reliable and above all affordable. The entire city is well connected and accessible due to the well integrated transport system that enables seamless travel. Taxis are easily available and the travel experience is comparable to driving your own car.
- The cost of buying and maintaining a car in Singapore is extremely high. Additionally, there are limited parking space options available and this discourages car usage.
Taking into account the above factors, buying a car in Singapore is not a recommended option. It would be prudent to try and live in Singapore without a car for 3-6 months, before you make any conclusive purchase decisions. If you still feel the need to drive around independently, you can always consider renting a car for a few days.
Average cost of buying and maintaining a car in Singapore
Car ownership costs can be categorised into initial purchase costs and recurring costs.
Initial Purchase Costs
- Certificate of Entitlement (COE) - The Vehicle Quota System is an initiative to control the number of cars on Singapore's roads, by determining the number of new vehicles allowed for registration per year. The vehicle quota for a given year is implemented through the monthly release of what is known as Certificate of Entitlement or COE. The COE is a certificate that entitles you to to register and own a vehicle for 10 years. If you wish to buy a car in Singapore, you must participate in a COE bidding exercise. This is an auction of sorts where you have to bid for the certificate in order to fall within the pre-determined quota. Most often, the demand for COEs outweighs the limited quota that is released. This imbalance often results in unaffordable COE costs.
- Open Market Value (OMV) - OMV is the value of the car as assessed by the Singapore Customs, taking into account purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car from country of manufacture to Singapore. To get an estimated OMV of a particular car model, please click here.
- Goods and Services Tax (GST) - GST is 7% of the Custom Duty. For more information on GST click here.
- Registration Fees - SGD 140
- Additional Registration Fees - 100% of OMV
- Excise duty - 20% of OMV
- Vehicle number Plate - usually around SGD 25 - 30
- Radio licence fee (if applicable) - SGD 27
Note: The above mentioned costs were accurate as of March 2009 and exclude the car dealer's profit margins.
To find out on the exact amount you may end up paying for a car, you can refer to the latest costs of cars.
Recurring costs
- Motor Insurance - Motor insurance is compulsory in Singapore and you must show proof of insurance each time you renew your road tax. Insurance premium depends upon the type of policy.
- Road Tax - Road tax rates are variable depending upon your car's engine capacity. A surcharge ranging from 10% to 50% on the road tax, is applicable for cars that are more than 10 years old. For more details on how to calculate road tax, click here.
- Petrol costs - for current petrol prices click here
- Parking charges - for details click here
- Vehicle Inspection charges - the frequency of inspections depends on the age of your car and the price quoted by the respective inspection centre
- Electronic Road Pricing - electronic system of road pricing based on a pay-as-you-use principle. For details click here.
- Car Maintenance costs - depends on how frequently you use your car and the amount of wear and tear it undergoes
Process of getting a car in Singapore
There are three methods of getting a car in Singapore
- Buying a new car
- Buying a used or second-hand car
- Self-importing a car from overseas
Buying a new car
Most car dealers will arrange for the COE on your behalf and is often a part of the package deal offered by them. However, you can exercise the option of first obtaining the COE yourself, rather than going through the car dealer, and then buy a car. Most buyers will opt for the dealer provided COE as it is more convenient.
Immediate delivery deal - Applicable to cars that are packaged with an 'Open COE' (COEs are categorised by vehicle type. There is a separate category for cars and an open category for any type of vehicle). In this case, you don't have to wait until the dealer bids for the COE and you can get your car immediately once the paperwork is completed and number plate is ready.
6 week deal - In this case the dealer will get you the rightful COE for your car and not the Open Category COE. Since bidding takes place fortnightly, it will take up to 6 weeks before you can get the car. However, you must exercise caution as there is a chance of you paying a high price for the COE, as dealers usually bid aggressively in order to secure the COE within the set time frame.
3 month deal - This is the cheapest alternative, as the dealer will bid up to 6 times (in each successive tender) until he can secure the COE at the maximum price you are willing to pay. However, there is no guarantee that you will always get the COE at your desired price. Moreover, most buyers do not wish to wait this long and take the risk of having to pay a high price in the end.
When you buy a car from a dealer you must pay close attention to the Sales Contract which governs the terms and conditions of the purchase/sale. The common terms in a sales contract must include:
- Model Description, Color and Accessories
- Price - This is the most important factor that requires scrutiny. It is important to confirm if the price of the car includes COE, road tax, registration fees, insurance etc.
- Deposit amount payable on signing the contract. Make sure that the deposit is refundable if your loan is not approved.
- Subsequent payment terms
- Expected delivery period
- Warranty/After sales service packages
Buying a used/second-hand car
There is a large market for second hand or used cars in Singapore, as they are less expensive than new cars. Advertisements for used cars can be found in the classified section of 'The Straits Times' or on Internet websites. Most large dealerships in Singapore also deal with used cars. Buying a used car involves the following steps:
- Arrange for a car inspection and check its condition with the the Automobile Association of Singapore
- Check the value of the car according to the Land Transport Authority (LTA) by submitting the registration number of the vehicle for assessment
- Check the remaining years of the Certificate of Entitlement
- Apply for transfer of ownership (in person) within seven days of making the purchase, either at the Land Transport Authority (LTA) or any authorised Electronic Service Agents' premises. Most major motor distributors are Electronic Service Agents.
- In order to transfer the vehicle, the current registered owner and you (the buyer) must complete a transfer of vehicle application form and submit it together with the following documents.
- Identity Card (NRIC or Passport, as applicable) of the registered owner and buyer
- Original motor insurance certificate in buyer's name. Note: the insurance policy of the motor vehicle should already be in force on the transfer date and should cover the full period of the vehicle's road tax.
- Original and valid vehicle inspection certificate, if vehicle inspection is required prior to road tax renewal
- Transfer fees amounting to 2% of the value of the vehicle as assessed by the Registrar of Vehicles will have to paid by the buyer to the LTA
Self-Importing a car from overseas
Self-importing a car into Singapore is a complicated and highly expensive procedure.
Importing a new or used car involves the following steps
- The car you wish to import should first be compliant with a lengthy list of technical requirements
- De-register the car in your home country
- Arrange for shipment of the car by engaging a shipping agent
- Obtain a Cargo Clearance Permit
- Pay permit and processing fee, Customs Duty and Goods & Services Tax (GST)
- Register the car with the Land Transport Authority
- Obtain COE, insurance etc.
For a step-by-step guide click here.
Financing and Insurance Options
Financing your Car
- Most car buyers resort to car loans as a means of financing their purchase.
- When a bank grants you a car loan, the bank owns the car until you have repaid the loan amount in full. Most banks will lend you a loan quantum of up to 95% - 100% of the purchase price or the bank's valuation, whichever is lower.
- Most car loans are term loans and the maximum repayment time is pegged to the age of the car. The maximum loan term for a new car is up to 10 years and for a used car is the remaining years of COE left. Interest rates vary from 3.25% to 3.50% depending on the loan term.
- You can choose to apply for a loan through your car dealer who generally ties-up with a particular bank and acts as their agent.
- Different financial institutions offer different loan rates and terms. You are advised to do your research before making any decision.
- There are certain eligibility criteria that is common across most banks:
- You must be a Singapore Citizen or Singapore Permanent Resident and at least 21 years old
- A local guarantor is required if a foreigner wishes to apply for a loan
Motor Insurance
- In Singapore, it is illegal to drive a car without valid motor insurance.
- The minimum requirement is that the insurance policy should cover for injury or death to other parties.
- Most insurers in Singapore adopt a "risk factor rating system" when setting your premium. In other words, the premium is based on factors other than the vehicle's value or the price you paid for it. Some of the common risk factors include: engine capacity, age of the vehicle, driving experience of drivers etc.
- You are advised to ask your insurer to provide you with a summary of key contract terms and obligations with your policy. You must make sure that the insurer has disclosed the following details to you:
- The premium payable
- The excess (for insured and drivers - named and unnamed)
- The scope and period of coverage
- Restriction on drivers (if any)
- Restriction on repairs
- Non-standard exclusions
- Special accident reporting and claims procedures
- The insurer's cancellation and refund policy
- Most car dealers will recommend insurance companies to you. Different insurance firms offer different motor insurance packages. You are advised to compare prices across various insurance companies and do your research before making any decision.
