How Much Do You Need to Buy A Car In Singapore?

Cars are known to be exorbitant in Singapore. Or should I say disgustingly expensive?

We have this thing called Certificate of Entitlement (COE) that is unheard of in many countries around the world. This COE alone can be more expensive than the car itself! Of course, the reasoning behind this was to regulate the car population in Singapore, so as not to clog up the small island of ours and everyone spend their time in traffic jams.

There are two parts to tackle this question. First, how much does the cheapest car in Singapore cost to own and operate? Second, to calculate the salary to afford the car costs comfortably, considering other living expenses? Ready? Let’s begin!

Step 1: Calculate monthly installment

Assuming you take the maximum loan tenure which is 5 years and the loan is also capped at 60% of the car price, since the Open Market Value (OMV) for Chery J3 should be less than S$20,000. For your information, the maximum car loan will be 50% of the car price for cars with OMV higher than S$20,000.

Here are the breakdown of the car price to be funded by:

Loan = S$50,400 (60%)

Cash = S$33,598 (40%)

And here are the loan details using the installment calculator

Interest Rate = 1.48%

Term = 5 years

Total Interest = S$3,730

Monthly Installment = S$902

Step 2: Determine the Road Tax Payable

You can use this calculator to get your road tax.

The amount for Chery J3 as a 1600cc car would be S$744 per year, or S$62 per month.

Step 3: Estimate Car Insurance Premiums

The insurance premium varies with a few factors such as age, job nature, and car type.

I requested a quote using a 30-year old male, working indoors, and driving the Chery J3.

The annual insurance premium was about S$2,500. We will also not go into details of the amount of excess etc. as we are just getting an estimate.

This works out to be S$209 per month.

As age catches up and with good and clean driving records, this premium is likely to lower.

Step 4: Estimate petrol cost

Chery J3 is expected to do 9.2km per litre of petrol. This is poor fuel efficiency by today’s standard.

Assuming an average of 50km per day, or 1,500km per month.

The prevailing petrol price is about S$2.10 per litre. But the stations would usually give discounts with credit cards. Let’s assume a 15% discount, and petrol price will be S$1.79 per litre.

Monthly petrol cost = S$292

Step 5: Estimate Parking Costs

How Much Do You Need to Earn Before You Even Think of Buying

Most drivers would buy season tickets at the carparks near their homes. Some may even need to pay season parking at their work place. Lastly, shopping on weekends can also incur expensive parking too which we need to include.

Season parking for home carpark would be S$90 per month, assuming a HDB multi-storey carpark as most Singaporeans stay in public housing.

Season parking for office varies greatly as it depends on the location. Let’s assume S$200 per month.

Parking at shopping centres can be quite expensive. Let’s average out to assume $2.20 per hour. Assuming 20 hours of such parking per week, or 80 hours per month, the monthly cost will be S$176.

Occasionally you will need to park in URA carparks and need the parking coupons. Let’s assume you buy two sets of coupons per month for S$20.

Total monthly parking cost = S$486

Step 5: Estimate ERP Costs

Depending on the route you take, if you journey to central area during the peak hours, expect to pay a lot for it.

Let’s assume $2 per day, less Sunday which the ERP gates are not in operation. It would cost about $40 per month.

Step 6: Estimate Car Fines

Occasionally you forgot to insert the cashcard into the card reader and passed the ERP gantry. Or you have not prepared enough coupon duration to park your car and you got caught by summon lady.

This should be infrequent and we assume a it will average out to S$20 per month for the fines.

Step 7: Estimate Car Servicing and Repair Costs

car repair in sinapore

Car servicing ranges from the regular ones to the major ones. The regular ones, assuming no other repairs, would cost around S$200 and to be done at every 10,000km or 6 months of driving.

The major servicing comes around every 40,000km of driving where you would need to change out the fluids and worn out belts and tyres in your car. We will add S$400 to the regular servicing every 2 years.

You hope that you didn’t get a lemon. If yes, your repair fees will sky rocket. A clutch replacement costs around S$1,200. I had a seat railing that rust and had to replace at S$800. Shock absorbers will go some time in the lifespan of the car and cost at least S$1,000 for four sets.

It is hence very difficult to estimate the required repair costs. Let’s set aside S$1,500 per year for the repairs.

Total servicing and repair cost per month = S$175

Step 8: Car Wash

car wash in singapore

Most Singaporeans do not wash their own cars. A trip to the petrol kiosk for washing will cost S$8 per week, or S$32 per month.

Step 9: Car Accessories

Assuming you are not a car vain pot and do not add unnecessary accessories in the car, but you would like to buy some fragrance to keep you calm during your hectic drive. It would cost about $7 per month.

Step 10: Sum It All Up!

The monthly amount is estimated to be…

Car loan installment = S$902

Road tax = S$62

Insurance premium = S$209

Parking cost = S$486

ERP cost = S$40

Fines = S$20

Servicing and repair = S$175

Car wash = S$32

Car accessories = S$7

Total = S$1,933

And do not forget the S$33,598 downpayment you have to pay in cash!

Required Monthly Salary

There are a few big ticket items Singaporeans fund their purchases with debt. They are using house and car. All these contribute to the debt servicing budget for loan repayments.

Comparing these two assets, I believe most Singaporeans prefer to have the house if they have to choose between the two. Hence, it is important to make sure you do not over commit to the car and realised you do not have enough allowance to take up a mortgage loan!

After sooooo many calculations, you need to earn at least S$5,000 per month to own a car in Singapore!

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