Everyone here knows Singapore has one of the highest car prices in the world. Beneath the car price stated in advertisements, do you really know how much the total cost of a car comes up to?
Breakdown of Car Cost
- Certificate of Entitlement (COE)
- Total Car Loan Value
- Road Tax
- COE and PARF Rebate
- Auto Insurance
1. Certificate of Entitlement (COE)
Anyone who wishes to register a new vehicle in Singapore must first obtain a Certificate of Entitlement (COE) in the appropriate vehicle category. A COE represents a right to vehicle ownership and use of the limited road space for 10 years. Indicative price for the last round of bidding (April 2017), for cars up to 1,600cc and producing 130bhp of power or less, was at $52,000. This price is usually already factored into the car’s retail price.
2. Total Car Loan Value
Using the example of one of Singapore’s best selling cars in 1st half of 2017, the Honda HR-V:
- Car Price: $112,999
- Down payment: $45,200
- Loan amount: $67,799
- Car loan over 5 years at 2.78% interest rate : $77,223
Total Price: $45,200 + $77,223 = $122,423
3. Road Tax
- Road tax over 10-year period = $6,820
4. COE and PARF Rebate
Believe it or not, you do actually get money back from the Government once you’ve decided to scrap your car. This is in the form of COE and PARF rebates, and it’s essentially a carrot to entice you to let go of your car.
Should you scrap your car before you’ve used up your 10 years of COE ‘life’, you will be ‘refunded’ the remainder of the COE that you’ve paid, using the following formula:
(COE premium paid x Number of months remaining) / 120 months
However, assuming you drive your car till the end of the 10 year COE tenure, your COE rebate will be $0.
- COE Rebate at end of 10 years = $0
As for PARF rebate, this is a percentage of money you get refunded from your ARF, or Additional Registration Fee, which is basically a tax you’ve paid on the value of your car. (PARF stands for Preferential Additional Registration Fee)
Again, how much you get depends on when you scrap your car, on a graduating scale of between 75% to 50% of your ARF. Therefore, if you scrap your car at the end of 10 years, you get back 50% of your ARF.
- ARF for Honda HR-V = $15,518
- PARF Rebate at end of 10 years = $7,759
5. Auto Insurance
Some car owners may try to save some money by taking a basic auto insurance, but with cars being such a prized possession here, it is advisable to take a comprehensive car insurance which includes the following coverage above the basic policy:
- Death or injury to other parties
- Damage to other parties’ car
- Medical costs arising from the accident
An indicative price for a comprehensive car insurance is around $1,275 per year, with No-Claim Discount (NCD) of 10% each year capped at 50%. It is a reduction in renewal premium to reflect a claim-free record. The cost for a 10-year cost auto insurance will come up to about $13,000.
Total cost of owning a car for 10 years = $122,423 + $6,820 – $0 – $7,759 + $13,000
Do note that the final cost does not include maintenance fees, parking as well as fuel charges.