Advice for buying used car

[Pennywhistle]

Any advice appreciated. With baby #2 due in three weeks and after much consideration we have decided to buy a used car. This is after having traveled comfortably on the MRT for over the year we have been here and only taking taxis when totally necessary with my 1 year old. I just can't fathom the extreme anxiety I will have with a baby and toddler in a taxi (but that's another story).

I have been looking at sgcarmart and am trying to figure out if it's best to purchase from a car yard (read up on plenty of horror stories!) or someone selling a consignment car, or from someone selling their car themselves privately. Both husband and I are far from legal scholars and are fairly trusting people....so i'm totally terrified of going through the purchasing process.

We are looking at a car that expires in Dec or Jan this year or the following year so as not to commit an outstanding amount of cash if we need to leave / sell on short notice and hopefully it affords the most cost effective (oxymoron) way to purchase a car in Singapore.

If anyone has any advice, or more to add it would be greatly appreciated.

Cheers!

[sundaymorningstaple]

You think it's going to be bad having a toddler and an infant in a taxi, what till you are driving your own car without a co-pilot. In Singapore's bad driving environment, if you are trying to drive with one eye on the road and the other eye trying to keep an eye on the back seat, you are going to be just like the average driver here already. Also consider the fact that you will not be able to just stop as and when you like it when the kids start acting up. That's a lot of distraction. However, I can understand where you are coming from. Hard decision, when you start thinking about the safety of loved ones.

[Pennywhistle]

Ah yes! But I will have the added advantage of them strapped into a car seat safely and the ability to turn the radio up. Joking aside, it's the thought of having two unrestrained children in a taxi that gives me heart palpitations, not them tantruming or crying.

And we have also carefully considered the traffic conditions and will be restricting any driving in peak hours and especially through busy areas. Fortunately we live in a relatively quiet area (?!) in Singapore so can avoid total nightmare scenarios. We're fairly conservative drivers and certainly will be leaving room for others insanity while on the road. I do take into account your advice though and appreciate it, just know we have given it lots of thought.

Now....how to actually buy a car....that's a worry!

[PNGMK]

The car yards here are not actually that bad. Just insist on understanding the paper value of the car (so you know how much you're paying over the top) and watch out for them gouging you on in-house finance and insurance. Tell them to go stuff their coffee money up their backside if they ask.

[ScoobyDoes]

As hard as it is to believe, if you can afford the 50% down payment then buying a new car actually can work out cheaper.......in the long run.

It's all to do with OMV and PARF (you'll need to study hard!) and the rebates you get back upon scrapping your vehicle. Add to this maintenance costs and a possibility that newer models can be more fuel efficient than even ones that are 2-3yrs old then it does, strangely, all work out.

I've spent the last two months on these calculations and just picked up a new motor last week.

[Primrose Hill]

As hard as it is to believe, if you can afford the 50% down payment then buying a new car actually can work out cheaper.......in the long run.

It's all to do with OMV and PARF (you'll need to study hard!) and the rebates you get back upon scrapping your vehicle. Add to this maintenance costs and a possibility that newer models can be more fuel efficient than even ones that are 2-3yrs old then it does, strangely, all work out.

I've spent the last two months on these calculations and just picked up a new motor last week.

New car bought here in SG? Or PI?

[ScoobyDoes]

Here, from main dealer.

[Primrose Hill]

Here, from main dealer.

COE are rather prohibitive at the moment. How did you manage to achieve any savings?

[ScoobyDoes]

I didn't say owning a car was cheap, just that buying a new one CAN be cheaper than a second hand one if you do the maths right.

It's a costing over a 5-10yr period, taking into account COE and PARF rebates.

If you buy a 5yr old car now and run it for 5yrs you basically get nothing back. If you buy a new car and run it for 5yrs you can get an awful lot back and this is when knowing OMV and PARF is important. On any given day you know EXACTLY how much money you get back from the government......anything extra for selling the car or trading in can be regarded a bonus.

5yrs ago CatB CoE was also still $40-45k (Open Cat was $50k) so whilst it's almost double now, if i have a new car today and sell in 5yrs I get $40k back. With a 5yr old car using a CoE at $40k, if I scrap it at the end of 10yrs I don't get anything back. Whilst the new car price 5yrs ago would have been ~40k less, the value of the car itself depreciates much faster than the paperwork attached to it and after 10yrs you basically get nothing back for the car itself......unless it's something really special.

[Primrose Hill]

Thank you for the tip, Scooby. I guess I had not been looking at it that way. I had been looking at secondhand car, and PI ing it here. Saw some 2year old Beemers for GBP20-30k but COE is that much and more.
COE will drop in the next few months or year?

[ScoobyDoes]

Definitely not in the next few months......there is still a lot of people waiting CoE from non-guaranteed bookings made at CNY.

Guessing CoE pricing is just like walking into MBS and trying to throw a double six.

[x9200]

I didn't say owning a car was cheap, just that buying a new one CAN be cheaper than a second hand one if you do the maths right.

It's a costing over a 5-10yr period, taking into account COE and PARF rebates.

If you buy a 5yr old car now and run it for 5yrs you basically get nothing back. If you buy a new car and run it for 5yrs you can get an awful lot back and this is when knowing OMV and PARF is important. On any given day you know EXACTLY how much money you get back from the government......anything extra for selling the car or trading in can be regarded a bonus.

5yrs ago CatB CoE was also still $40-45k (Open Cat was $50k) so whilst it's almost double now, if i have a new car today and sell in 5yrs I get $40k back. With a 5yr old car using a CoE at $40k, if I scrap it at the end of 10yrs I don't get anything back. Whilst the new car price 5yrs ago would have been ~40k less, the value of the car itself depreciates much faster than the paperwork attached to it and after 10yrs you basically get nothing back for the car itself......unless it's something really special.

Sorry, but I don't get it. You buy a new car and after 5y you sell it. Where is this $40k back coming from when selling the car? If by any chance COE drops in coming 5 years people may just prefer to buy new cars rather than buying a 5yo. I understand that with a high COE you have a fixed component but it is only truly fixed if the scrapping takes place. I don't get the rest of the logic especially how this is related to the depreciation.

[Strong Eagle]

I didn't say owning a car was cheap, just that buying a new one CAN be cheaper than a second hand one if you do the maths right.

It's a costing over a 5-10yr period, taking into account COE and PARF rebates.

If you buy a 5yr old car now and run it for 5yrs you basically get nothing back. If you buy a new car and run it for 5yrs you can get an awful lot back and this is when knowing OMV and PARF is important. On any given day you know EXACTLY how much money you get back from the government......anything extra for selling the car or trading in can be regarded a bonus.

5yrs ago CatB CoE was also still $40-45k (Open Cat was $50k) so whilst it's almost double now, if i have a new car today and sell in 5yrs I get $40k back. With a 5yr old car using a CoE at $40k, if I scrap it at the end of 10yrs I don't get anything back. Whilst the new car price 5yrs ago would have been ~40k less, the value of the car itself depreciates much faster than the paperwork attached to it and after 10yrs you basically get nothing back for the car itself......unless it's something really special.

I don't think you have it quite right. You cannot sell a car and get a PARF rebate, you must scrap it or sell it for export... and the amount you get for either is calculated on OMV, regardless of the actual condition of the car.

If you hold a car for 5 years and scrap it you get 75% of the PARF back, if you hold it 9 years, you get 50% back. Given the current high cost of COE's, I can't see a way how a new car comes out cheaper than used.

[ScoobyDoes]

Guys, I was only talking about and doing calculations based on scrapping, not selling......you see I said earlier if you sell and get more it's already a bonus over what you get, as a minimum, with rebates.

It's best not to count on other people or variables like CoE in calculations. If CoE drops, right, nobody would buy an expensive 5yr old car so your option only is to scrap it or trade in with dealer for some kind of "over trade." Calculate only on worst case basis, return of CoE and PARF only, any extra is a bonus.

That's what I did, and yes, it was cheaper on cars like for like that were 2-3yrs old.

If you hold a car for 5 years and scrap it you get 75% of the PARF back, if you hold it 9 years, you get 50% back. Given the current high cost of COE's, I can't see a way how a new car comes out cheaper than used.

Whilst that is true for PARF, there is a big difference between getting back 50% of CoE at 5yrs and only 10% at 9yrs, especially at higher CoE prices.

[taxico]

COE are rather prohibitive at the moment. How did you manage to achieve any savings?

it really depends on how much you (need to) drive. my wife and i have no children and don't cook, so we eat out at least twice a day... in the last 3 years, i've done ~175,000 km in my own car, and probably about 40-50,000 km in my wife's car when we are out together.

my typical week day: to office 7am, head home 10am, to lunch 11.30am, to office 1pm, to gym 4.30pm, head home 5.30pm, to dinner 7.30pm, to office 8.30pm, head home 11.30pm.

it would take a big change in my life style to use public transport. assuming i take a taxi, it would not be any cheaper than owning a car... ($15 + $15 + $7 + $10 + $15 + $15 + $10 + $10 + $15 = $97/day in cab fare)

assuming i don't go out on weekends (again, we don't cook so this is impossible), i would pay $1,940 in taxi fares alone... and if we add in $150/weekend, that's more than $2,500 in a 4-week month.

a brand new japanese compact depreciates at about 12-15,000k/year. that works out to be an average of $1,125/month. ERP, parking, tax, insurance and maintenance run to at most a few hundred dollars a month.

my cost of using taxis would go up if i included my early morning and late night jaunts to various places/social purposes. additionally, there is a fair amount of time saved when you drive, and a good amount of time not spent sweating and waiting for taxis/buses.

it's not to say driving is a breeze (break downs, parking lot search, peak hour traffic, other drivers)... but if you need it, it may be well worth getting a car. one just needs to budget and plan accordingly. don't buy a 5.5 liter v10 bmw if you're on a tight budget and just need an off-peak run around.

Guys, I was only talking about and doing calculations based on scrapping, not selling......you see I said earlier if you sell and get more it's already a bonus over what you get, as a minimum, with rebates...

i agree with scooby. if you can afford a new car, the "value" is inherent, unlike in a second hand car that might be way over valued (ie, scrap value is a small % of the selling price) and when prices go south, you lose even more money.

second hand cars trade/depreciate at the same general rate as their brand new replacements. never made sense to me, but it is what it is.