Sunday, November 15, 2015

Buying a private passenger car in Singapore


For new cars, there are two types of dealers - authorised and parallel importers.

Authorised dealers 

ADs have the backing of the car manufacturers therefore in terms of servicing, maintenance, recalls etc, you can have a piece of mind. The catch? They are generally more expensive and they will only bring in models that can sell.

Buying a car from authorised dealers are generally pretty transparent. The advertised prices should include GST, COE, road tax and registration fee but exclude car insurance as that may vary according to drivers. You will have to fork out a 50% deposit and the rest to be serviced by car loans. Don't forget to ask for freebies like window films, petrol vouchers etc.

Parallel importers 

PI can bring in almost any model you fancy and they are generally cheaper. The catch? They may not have the resource in terms of servicing, maintenance and recalls etc therefore if the dealer is no longer around when a recall is made, you have to fix the issue yourself. Choosing the right parallel importers is key because choosing the wrong one may end with endless headaches.

Buying from parallel importers on the other hand may include hidden charges. That is why it is important to list out all the charges on paper as well as what the dealer is expected to provide including freebies etc.


Buying used car on the other hand can be a headache or fun at the same time. Apart from checking for the car condition, you need to be aware of the financial part of it.

There are two types of used car - PARF or COE cars. PARF cars means the cars are less than 10 years old and still has a PARF value while a COE car means it is over 10 years old and no longer has a PARF value.

PARF value is the amount of money you are eligible to when you deregister the car at the end of its COE lifespan which is 10 year. You can choose not to deregister the car but take note of the following:

- if you decide to renew the COE for the car, you will have to forfeit the PARF.
- if you renew the COE for 5 years, you will not be able to renew the COE again at the end of that 5 years.
- if you renew the COE for 10 years, you can renew the COE again at the end of the 10 years at the prevailing PQP, which is the average COE price for the last few months.

For cars registered before March 2008, the PARF value is 55% of the OMV, otherwise it is 50%. OMV can be obtained from the car registration details with LTA which the dealer will provide.

For used car, the depreciation value is the most important factor when it comes to the financial part of the purchase. A depreciation is calculated based by the following formula

Car price - minimum PARF value / 10 - car age = depreciation value


$50,000 - $10,000 / 10 - 5 = $8,000

Obviously, the lower the depreciation value, the better it is. What it simply represents is the amount that your car loses every year in terms of resale value. So if the depreciation value is $12k/year, then it means the car loses $100/month in terms of resale value.

Depreciation value is greatly affected by demand. So the current high COE and MAS car loan regulation, buyers are turning to used car instead and driving prices up.

Used car requires a 40% deposit of the car price. You may try for a lower deposit by applying for car loan with finance houses instead of banks.

In terms of the condition of the car, there are a few areas you can concentrate on

1. Mileage.

Lower should be better but not necessarily.

2. Number of owners.

Lower should be better because a car with too many previous could mean that the car is problematic hence the change of hands. Still, it does not necessarily mean so.

3. Physical outlook

Like body panel, the interior cabin, seats, panels etc.

4. Paint job

Some cars have been involved in an accident and may be repainted. You can check the engine mounting to see if the colours differ.

5. Alignment.

Straighten the wheels and view from the front and back. If the tyres are not aligned visually, it could means serious problems or the car have been involved in an accident.

6. Engine.

Turn the engine on and hold the steering wheel. A car with damaged engine mounting will vibrate.
Open the bonnet and look for loose wiring etc or worn out belts etc and look out for any funny noises.
Turn on the aircon and check that all fans are working.
Let the engine run for a while and check for oil leaks. Best done after a test drive. Oil leaking from the top of the engine are fixable by changing the gasket. Leaks elsewhere could be a crack in the engine housing which could mean serious problems.

7. Tyres.

Check if they are worn out for which you may ask for replacement. Check also that they are worn out evenly. Uneven wear could mean alignment problem which could mean additional cost for it to be fixed, if it is fixable in the first place.

8. Suspension.

Best to bring your family along for a test drive and load the car with maximum passengers and get their feedback on comfort levels.

9. Aircon.

Ensure it is working and cold enough.

10. Lights

Ensure all are working including the indicators.

11. Stereo

Ensure all the functions like disc playing and all speakers are working.

Should any of these are not working, try to get the dealer to agree to fix it or come to a compromise. Else, look elsewhere.

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