Singapore Expats Forum

Duffers Guide to Buying a 2nd Hand Car in SG ?

Discuss anything relating to automotive here, from car leasing to buying a vehicle.

Sponsored by:
Image
AVIS Car Rental
Travailes
Chatter
Chatter
Posts: 227
Joined: Wed, 04 May 2011

Duffers Guide to Buying a 2nd Hand Car in SG ?

Postby Travailes » Tue, 19 Jul 2011 2:12 pm

I'd be grateful if any of you knowledgable people can explain the full car buying process here. I'm looking to buy a second hand car but am confused what prices include and don't. Is the ticket price what you pay or is COE / OMV values on the ad additional ? And what do you get back when you sell the car ? Apologies - all seems much more complicated than at home.

Secondly, how much does insurance cost on average ? Comparable to UK in terms of car group, age, job etc ?

Thanks in advance.

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 34262
Joined: Thu, 11 Nov 2004
Location: Still Fishing!
Contact:

Postby sundaymorningstaple » Tue, 19 Jul 2011 2:20 pm


User avatar
Strong Eagle
Moderator
Moderator
Posts: 10411
Joined: Sat, 10 Jul 2004
Location: Off The Red Dot
Contact:

Postby Strong Eagle » Tue, 19 Jul 2011 8:09 pm

What you pay to the owner includes everything... price of car, remaining COE, remaining road tax. With COE's now above $40,000 expect that every year of remaining COE will be worth about $4000, maybe a bit less. 5 years - $20,000 plus the value of the car.

christay
Member
Member
Posts: 30
Joined: Sun, 07 Nov 2004
Location: Singapore
Contact:

Buying a used car

Postby christay » Wed, 20 Jul 2011 5:41 pm

OMV / COE etc are relevant but the relevance changes depending on the car and it's age.

For example, for a one year old car, COE is almost totally irrelevant as the price is calibrated against what a brand new car costs today. For a 8-9 year old car, OMV / COE is completely relevant as most of those cars, save the exotics, are priced at "paper" + "body" + a small premium.

The easiest way to calibrate the price is to go to any used car internet advertising portal and look at the price range.

It is easiest to value a car on relative depreciation since the OMVs are different for different cars.

Get a handle on the annual depreciation for the model you are interested in and use this range to price the car you are interested in. The OMV allows you to derive end value at year 10. For cars older than 10, the end value is assumed to be zero.

As an earlier post suggests, onemotoring is the best place to get unbiased accurate information on OMV/COE.

When buying a used car, you will pay the agreed price, the transfer fee to LTA, and insurance.

Spend time on the net, its easy to get price ranges down if you research enough.

Good luck!

Travailes
Chatter
Chatter
Posts: 227
Joined: Wed, 04 May 2011

Postby Travailes » Thu, 28 Jul 2011 1:04 am

I'm still confused !
I have seen an MPV for sale at $59,800.
COE states $13,301 - OMV $23,216
Registered Feb 2007.
If I keep the car for 2 years what can I expect back ?
Thanks

User avatar
Strong Eagle
Moderator
Moderator
Posts: 10411
Joined: Sat, 10 Jul 2004
Location: Off The Red Dot
Contact:

Postby Strong Eagle » Thu, 28 Jul 2011 10:02 am

Travailes wrote:I'm still confused !
I have seen an MPV for sale at $59,800.
COE states $13,301 - OMV $23,216
Registered Feb 2007.
If I keep the car for 2 years what can I expect back ?
Thanks


This car was purchased and put on the road on 2007, probably around August. You have 6 years of COE left at about $1330 per year.

$13K + $23K = $46K. The difference between this and asking price of $60K is $14K or an addition $2.3K per year for the remaining COE time of 6 years.

Current COE is about $50,000 or $5000 per year. This car is being sold with a COE premium of $1330 + $2300 = $3600.

Other factors do come into play such as condition, but you really only need to see how much the COE costs per year after you pull out OMV from asking price.

christay
Member
Member
Posts: 30
Joined: Sun, 07 Nov 2004
Location: Singapore
Contact:

Postby christay » Mon, 01 Aug 2011 5:11 pm

Strong Eagle wrote:
Travailes wrote:I'm still confused !
I have seen an MPV for sale at $59,800.
COE states $13,301 - OMV $23,216
Registered Feb 2007.
If I keep the car for 2 years what can I expect back ?
Thanks


This car was purchased and put on the road on 2007, probably around August. You have 6 years of COE left at about $1330 per year.

$13K + $23K = $46K. The difference between this and asking price of $60K is $14K or an addition $2.3K per year for the remaining COE time of 6 years.

Current COE is about $50,000 or $5000 per year. This car is being sold with a COE premium of $1330 + $2300 = $3600.

Other factors do come into play such as condition, but you really only need to see how much the COE costs per year after you pull out OMV from asking price.


Respectfully, need to correct the above, this is not how one should look at the local value of a car. The market looks at car values this way:

Car was registered in Feb 07 so on the road in Feb 07 (not August).

The car is now approximately 4 and a half years old, with 5 1/2 years to go.

For cars registered in 2007, PARF benefit in year 10 will be 55% of OMV (assuming ARF paid was 110% - you get back 50% of ARF paid). ARF levels have changed over the years (prior to mid 2004, it was 130%, sometime in 2008, it went down to 100%). Each car's residual can only be ascertained with exactness by downloading it's rebate info, the seller can do this for you.

Please note, rebates today will be clearly different from when the car is 10 years old, so if the seller prints out for you, please check the effective date of deregistration on the printout.

So, residual value in year 10 is 55% of 23216 or 12768 assuming the car body is worth zero at year 10 (this might not be the case, but we assume this for a conservative calculation).

If you buy the car at 59,800, the annual depreciation will be (59800-12768)/5.5yrs =8551 per year. From this figure, this car could be something like a Wish / Stream / Picnic or similar.

The OMV is relevant to calculate the rebates at any point in time up to year 10 only. The table for rebates can be found on one motoring. After year 10, this figure is redundant as no PARF benefit applies.

The COE does depreciate at 10% per year till year 10, but is only relevant when you are buying a car at almost export value. (actually is depreciates on a daily basis: COE paid /3650 per day

Export value is determined by:

PARF rebate (today) + COE rebate (today) + car body value (for export).

Cars are generally valued at close to export value (in today's inflated market), when they are 7 years or older. Some 2005 cars are also trading at export value, but these are usually very high rebate cars with low demand locally (for example, the old shape S class).

A year ago, 2005 cars were being valued close to export value, but because of rising COE premiums, these cars have more or less maintained their values and therefore, after a year, have not depreciated (much), and therefore, are now trading at a bigger premium to their export value.

The above generally applies to bread and butter cars, not the exotics / very expensive marques.

For cars that are not trading close to export value, the valuation methodology will always be (in today's market):

1) Based on depreciation (there will be a market range for each model)
2) On a comparative basis eg, Corolla versus Civic, Stream versus Wish, etc. after accounting for difference in OMV and popularity.
3) Based on discount versus a brand new car (for cars that are less than 3 years old give or take, if less than 2years old, this method is more likely to apply than not).

Hope the above is helpful, no disrespect meant to the previous poster.

Chris

User avatar
Strong Eagle
Moderator
Moderator
Posts: 10411
Joined: Sat, 10 Jul 2004
Location: Off The Red Dot
Contact:

Postby Strong Eagle » Mon, 29 Aug 2011 5:35 pm

No disrespect taken, Chris. Good information.

Just to make it a little bit simpler... when you are looking at used cards (under 10 years old), it is easy to compare year on year costs for each car.

For example, you are looking at a car with a COE that expires in Aug, 2015, which means that there are 4 years left to drive the car before the COE must be renewed or the car scrapped.

The seller is asking S$25,000. The OMV is $10,000. You will get 55 percent of that back, or S$5,500 at the end of ten years (but not if you renew the COE). That's called PARF.

With a bit of arithmetic (25,000 - 5,500 = 19,500 / 4 = 4,875 per year), a figure referred to as 'depreciation'. Cars in roughly the same class should have roughly the same depreciation or cost per year, varying somewhat based upon mileage and overall car condition.

When it comes to buying a car more that 10 years old, there is no PARF refund. Thus, whatever you pay for the car divided by the number of remaining COE years is your cost per year.

Assuming all other factors are the same, except for age, the car mentioned above with 4 years left, should not sell for more than about $19,000 because there is no PARF refund at the end of the second ten years.

PARF cars and COE cars are those cars which are reaching the end of their COE life. For example, a car with one year COE left and an original COE amount of S$15,000 and a PARF value of $6,000 would sell for something above $21,000 because the new owner will be able to collect these rebates at the time the car is scrapped.

User avatar
Strong Eagle
Moderator
Moderator
Posts: 10411
Joined: Sat, 10 Jul 2004
Location: Off The Red Dot
Contact:

Postby Strong Eagle » Mon, 29 Aug 2011 5:45 pm

Travailes wrote:I'm still confused !
I have seen an MPV for sale at $59,800.
COE states $13,301 - OMV $23,216
Registered Feb 2007.
If I keep the car for 2 years what can I expect back ?
Thanks


To answer this question, let's do a bit of arithmetic as though the car were to be kept for the full COE, then scrapped.

a) Registered Feb 2007 means COE expires Feb 2017 which means from Aug 2011, car has 5.5 usable COE years left.
b) OMV of $23,216 means PARF of 55 percent of that amount or $12,769.
c) Total car cost is $59,800 - 12,769 = 47,301.
d) Per year cost is 47,301 / 5.5 = $8,551 per year.

Thus, without significant changes in the COE (up good, down bad), you can expect to sell this car two years from now for about $17,000 less or roughly $42,000/$43,000.

christay
Member
Member
Posts: 30
Joined: Sun, 07 Nov 2004
Location: Singapore
Contact:

Postby christay » Tue, 30 Aug 2011 10:36 am

Strong Eagle wrote:No disrespect taken, Chris. Good information.

Just to make it a little bit simpler... when you are looking at used cards (under 10 years old), it is easy to compare year on year costs for each car.

For example, you are looking at a car with a COE that expires in Aug, 2015, which means that there are 4 years left to drive the car before the COE must be renewed or the car scrapped.

The seller is asking S$25,000. The OMV is $10,000. You will get 55 percent of that back, or S$5,500 at the end of ten years (but not if you renew the COE). That's called PARF.

With a bit of arithmetic (25,000 - 5,500 = 19,500 / 4 = 4,875 per year), a figure referred to as 'depreciation'. Cars in roughly the same class should have roughly the same depreciation or cost per year, varying somewhat based upon mileage and overall car condition.

When it comes to buying a car more that 10 years old, there is no PARF refund. Thus, whatever you pay for the car divided by the number of remaining COE years is your cost per year.

Assuming all other factors are the same, except for age, the car mentioned above with 4 years left, should not sell for more than about $19,000 because there is no PARF refund at the end of the second ten years.

PARF cars and COE cars are those cars which are reaching the end of their COE life. For example, a car with one year COE left and an original COE amount of S$15,000 and a PARF value of $6,000 would sell for something above $21,000 because the new owner will be able to collect these rebates at the time the car is scrapped.


Strong Eagle,

very concise. But the last paragraph, I think you meant something else?

For a Car with 1 year left, original COE of $15000 and PARF of $6000, the current residual value of COE is 10% of $15000 + parf $6000 = $7500 which is the total current paper value (assuming the 9th birthday has passed).

The COE depreciates on a daily basis from day 1 till Day 3650, or 10% per year.

So the car will sell today for $7500 + body value (probably a k or two) and just before the 10th birthday, will be worth $6000 + whatever the body is worth then, say a k or two).

Within the industry,

"PARF" cars are cars that are PARF eligible: less than 10 years old, never laid up before.

"COE" cars are cars that are older than 10 years old, and not PARF eligible and have had their COE renewed at least once before.

Selemat Hari Raya

Chris

christay
Member
Member
Posts: 30
Joined: Sun, 07 Nov 2004
Location: Singapore
Contact:

Postby christay » Tue, 30 Aug 2011 10:51 am

Strong Eagle wrote:
Travailes wrote:I'm still confused !
I have seen an MPV for sale at $59,800.
COE states $13,301 - OMV $23,216
Registered Feb 2007.
If I keep the car for 2 years what can I expect back ?
Thanks


To answer this question, let's do a bit of arithmetic as though the car were to be kept for the full COE, then scrapped.

a) Registered Feb 2007 means COE expires Feb 2017 which means from Aug 2011, car has 5.5 usable COE years left.
b) OMV of $23,216 means PARF of 55 percent of that amount or $12,769.
c) Total car cost is $59,800 - 12,769 = 47,301.
d) Per year cost is 47,301 / 5.5 = $8,551 per year.

Thus, without significant changes in the COE (up good, down bad), you can expect to sell this car two years from now for about $17,000 less or roughly $42,000/$43,000.


This is correct. I would like to add a caveat or 2:

Depreciation on a straight line is very rudimentary.

Generally, for cars that are older than 5 or 6 years, but younger than 10, depreciation will be straightline-ish.

If the car is young, like a year or 2 old, the depreciation curve looks more like a hyperbola, steep up front, and gradually tapering off after year 5 or 6.

For COE renewed cars (those with their COEs just renewed not too long ago), they currently trade at a HUGE premium to the actual current COE residual. This is because the market values them on a straight line basis, which in the long run is accurate, but if you own the car for just a year or 2, it is likely to be inaccurate and you can be in for a nasty surprise if you sell it prematurely.

The last Caveat which you already mentioned before is this:

All the above applies assuming there is no big fluctuation in COE values. This is extremely hard to predict.

For those of you who are here for a short period, say 2 / 3 years or so and would like to buy something and are concerned about limiting your capital loss, I do think the most appropriate age of the car would be about 5 / 6 years old, where the depreciation is the most predictable. In fact, if you do your sums correctly, it will be a very, very accurate forecast.

While cars in Singapore are expensive (total quantum), if you understand the mathematics well enough, you can limit your capital loss on an annual basis to make it more palatable. But you must be prepared to buy used, and be on guard because the used car business here has the usual hoops for the uninitiated to jump through. We have no lemon laws here, and consumer protection is only just becoming somewhat enforceable.

This is the only country to my knowledge where your exit value (assuming buy not lease) can be determined with a very high degree of accuracy due to the tax rebate system. Just buy smart, and it won't be as expensive as you might have thought initially....

babooseng
Newbie
Newbie
Posts: 1
Joined: Tue, 13 Sep 2011

Postby babooseng » Tue, 13 Sep 2011 9:11 pm

Dear christay; Strong Eagle

Your advice have been most helpful. Would appreciate it if you guys could also help to shed some light on how to calculate the depreciation and the parf rebate (if any) of an OPC (Off-Peak) used car.

Thanks again,

christay
Member
Member
Posts: 30
Joined: Sun, 07 Nov 2004
Location: Singapore
Contact:

Depreciation for OPC.

Postby christay » Fri, 16 Sep 2011 10:29 am

1st assumption: the car is under 10 years old and PARF eligible.

There are types of OPCs on the market (based on assumption above).

a) Registered as OPC when new
b) Registered as normal car and converted to OPC at some later date.

Let's explain b) first, easier.

The depreciation is exactly the same as for a normal PARF eligible car but there are 3 benefits:

1) Road tax rebate/discount of up to $500 per year
2) Usually some form of insurance discount of up to 15%
3) A nice cheque from the LTA every 6 months for $1100. This is in lieu of the normal OPC rebate one would have gotten if the car was registered as an OPC from day 1.

Ok, a)

When registered as new, the LTA grants an OPC "discount" of up to (important) $17k.

Depreciation will be identical to a normal car if:

1) The COE was more than 17k at point of registration.

The 17k discount is counted as a discount from the COE component first.

If the COE is less than 17k, then the balance of the discount is taken off the ARF, which thus, reduces the PARF at year 10. (PARF at year 10 is calculated as a % of ARF paid, eg, now PARF at year 10 is 50% of ARF. ARF is now 100% of OMV).

So lets use a simple example:

COE 10k
OMV 10k.

A normal car's PARF at year 10 would be 5k (50% of ARF which was 100% of OMV).

For an OPC, the first 10k of the 17k discount would be taken off the COE. There is a balance of 7k left over.

This 7k is taken off the ARF, so actual ARF paid would be onl 3k instead of 10k.

PARF at year 10 would therefore be 50% of 3k.

Depreciation calculated correspondingly.

If your usage patterns make owning an OPC sensible, the best thing to do is to find a normal registered car, with a low COE, try to buy the car cheap, and then convert it to an OPC.

You will enjoy the full PARF benefit of the normal car, and then still get the $1100 cash rebate every 6 months.

I did this for myself. It works brilliantly. Very low depreciation after adding back the 2.2k per year cash rebate + 500 road tax discount.

christay
Member
Member
Posts: 30
Joined: Sun, 07 Nov 2004
Location: Singapore
Contact:

Forgot

Postby christay » Fri, 16 Sep 2011 10:32 am

Forgot something important:

I mentioned OPC rebate of up to 17k.

If the COE was 2000, and the OMV was 10,000, then the total OPC rebate when registering the car new would be only 12k. Thus, you would have not enjoyed the full 17k discount. Plenty of people got "misled" during the low COE period 2/3 years ago by this.

Desmonaut
Newbie
Newbie
Posts: 6
Joined: Sun, 22 Jan 2012
Contact:

Buying a classic car

Postby Desmonaut » Sun, 22 Jan 2012 12:21 pm

Hi
I have a few options on mid-80s to early 90s cars - ferraris and mercedes. Now most have their COE renewed till 2019 or 2020. One needs its COE renewed.

Would appreciate any advice on what this means financially. I know I can drive these cars on teh road now, but what happens in a couple of years? The reduction in the COE obviously makes it less attractive, but by how much? Any other parameters/tests I should look out for?

Cheers, Deboor


  • Similar Topics
    Replies
    Views
    Last post

Return to “Cars & Motorcycles”

Who is online

Users browsing this forum: No registered users and 0 guests