Ready to get into the driver’s seat of your brand-new dream car? Well, you may want to hit the brakes on that purchase just for a moment. Before you drive off the lot with your new wheels, there are a few things you need to consider.

From scoping out the used car market to understanding the nitty-gritty details of a used car’s price — let’s zoom into everything you need to know about buying a used car in Singapore. 🧐

New car vs used car

You’ll be delighted to know that used cars in Singapore come with much friendlier price tags compared to new ones.

Take the Mazda CX-5 2.0 M-hybrid Luxury I7, which has a whopping list price of $266,888! Yikes, right? In contrast, the second-hand prices for the CX-5 are far cheaper, ranging from $30,000 to $120,000, depending on the car’s condition.

With such massive savings, it’s easy to see why it’s tempting to buy a second-hand car in Singapore. 🤩

Things that contribute to a used car’s price

There are many factors that contribute to a second-hand car’s price, including:

Certificate of Entitlement (COE)

Let’s kick things off with the COE. It’s a permit that allows you to own a vehicle in Singapore for up to 10 years. Second-hand cars with little time left on their COE will be significantly cheaper than cars with more time available on theirs.

A CX-5 selling for around $30,000 may have close to two years left on its COE, while a CX-5 that costs around $90,000 may have 5 years or more left on its COE.

COE rebates

Don’t forget about COE rebates! Upon purchasing a second-hand car, you’ll inherit any rebates attached to it. If you choose to deregister your car before its COE expires, you can snag a refund for the unused portion of your car’s COE.

If your second-hand car has a COE of $40,000 with 4 years left and you choose to deregister it, you’ll receive a tidy COE rebate of $8,000.

Just a heads-up, though, COE rebates may differ based on your vehicle type.

Expiring COEs

What if the second-hand car you’re interested in has a COE that’s nearly expired?

You’ll have to renew the COE within 1 month of its expiry date, and the renewal period will need to be for either 5 or 10 years. Let’s be real — this is Singapore, and COE renewals won’t come cheap. 🙁

For a 5-year renewal, you’ll need to shell out 50% of the Prevailing Quota Premium (PQP), which refers to the moving average of COE prices over the last three months for your vehicle’s category. A 10-year renewal will incur the full PQP amount.

Going back to the CX-5, the car falls under the B category of the PQP rates. As of October 2024, renewing its COE for 10 years would cost a staggering $104,866!

Preferential Additional Registration Fee (PARF)

Another thing to keep in mind before buying a used car in Singapore is the PARF rebate.

The PARF rebate applies to cars that are not more than 10 years old from their initial registration date. It’s the amount of money you get back once you’ve deregistered your car, allowing you to recover a portion of the car’s registration tax, otherwise known as the Additional Registration Fee (ARF). In a way, it’s like getting cashback for your car. 🙂

Newer used cars in Singapore will yield a higher PARF rebate, making them more expensive than older cars. When your car is deregistered, the newer it is, the more PARF rebate you’ll receive.

The PARF rebate is calculated based on your ARF payable. If your used car’s ARF payable is $70,000 and you deregistered it when it was 7 years old, you’ll receive a PARF rebate of $42,000. However, if your second-hand car’s COE has been renewed before, you won’t be eligible for the PARF rebate.

COE vs PARF

If you’re still confused about the COE and PARF — don’t worry.

Here’s a summary to differentiate the two: COE cars are generally cheaper than PARF cars because they’re over 10 years old (its PQP has been paid for by the previous owner). On the other hand, PARF cars are less than 10 years old and carry a higher price tag. Deregistering your COE car yields a COE rebate while deregistering a PARF car yields both a PARF and COE rebate.

Whether you choose a COE or PARF car depends on your personal needs and budget. 🚘

If you’re looking for a used car for just a year or two, a COE car is better since it’s easier on the wallet. However, due to its age, it’s also more likely to have maintenance issues. On the other hand, if you’re after something that’s newer and can last a longer time, PARF cars would fit your needs better.

Open Market Value (OMV)

It’s a no-brainer to look at the OMV of a used car in Singapore. OMV refers to the price paid when a vehicle is imported into Singapore, covering purchase price, freight, insurance, and all other charges related to the sale and delivery of the car.

Basically, OMV refers to the market price of the car. Knowing the OMV helps you calculate the upfront costs of your car, including the ARF. 💰

Insurance and premiums

All drivers must have a motor insurance policy. Without one, you won’t be able to renew your road tax. Your car insurance and premiums will vary based on age, gender, driving experience, condition of your car, and other factors.

The average annual car insurance premium for a male driver in his 20s can reach up to $2,350, whereas a 40-year-old male driver may only have to pay around $1,642. Female drivers in the same age categories tend to pay less — around $2,097 and $1,632 respectively, as insurance companies consider women to be lower-risk drivers.

If you’re a male driver in your 20s, you could be looking at a total insurance cost of up to $11,750 over five years!

Car loans

Car loans are a handy way to finance your dream ride. Given the fact that even a used CX-5 with less than 2 years left on its COE can cost around $32,000, it’s no surprise that many people turn to car loans. But hold your horses — it’s important to do your due diligence before taking a car loan. After all, there are different types of car loans with varying interest rates.

Keep in mind that a car loan won’t provide you with 100% of your car’s market price. Based on Singapore regulations, the maximum amount you can borrow is 70% of the used car’s market price if the vehicle costs $20,000 or less. If the vehicle is more than $20,000, then you’re looking at a maximum loan of just 60% of the market price.

Before getting a car loan, it’s important to have savings of at least 30% to 40% of the used car’s market price.

Here’s a friendly reminder: your loan amount must take into account your total debt servicing ratio (TDSR). This means that your debts, including personal or home loans, should not exceed 60% of your gross monthly income.

Also, watch out for hidden costs! If you’re borrowing from a car dealer, don’t forget that there may be processing fees and other potential charges. Doing your own research can save you from some nasty surprises. 😬

Car loan interest

The interest on your loan largely depends on the length of your loan repayment period. Longer loans lead to higher interest, while shorter loans mean lower interest. It’s recommended to take a shorter loan tenure so you can quickly pay off your car loan and incur the least amount of interest. Just make sure those monthly instalments fit comfortably within your budget.

A $15,000 car loan with a loan interest rate of 2.75% over a period of 4 years would cost you $347 a month. The total interest paid would be $857. However, if you stretch that same loan for 6 years, your monthly instalment would drop to around $243, but the total interest paid skyrockets to a staggering $1,288.

The difference in total interest would be a massive $431 — so choose wisely!

Where can you get a car loan?

Both banks and car dealers offer loans for used cars, though they come with different perks. Banks usually offer lower interest rates, ranging from around 2.48% to 3.75%. Plus, they have a variety of loan products, giving you the chance to shop around and find the best deal easily.

Car dealers, however, typically charge higher interest rates, usually between 2.78% to 4.8%, though there is room for negotiation. While dealership loans can vary widely, they can be a convenient option, especially if you’re buying and financing through the same dealer.

Many car dealers offer balloon payment schemes, which let you enjoy lower monthly payments in exchange for a larger payment at the end of the loan term. This scheme factors in the PARF value of the car, giving you a flexible way to manage your finances.

Balloon payment schemes can be tempting, but they come with very high interest rates and a hefty final instalment, which includes the PARF rebate. Choosing this route requires solid financial planning and lots of discipline.

Let’s say you take out a bank loan of $30,000 at an interest rate of 2.5% for a period of 4 years. The total interest would be $3,000. Including the loan amount and interest, you’ll have to fork out $33,000 in total, with your monthly instalment being about $687.

Let’s compare that to a balloon payment scheme with a 3.5% interest rate on the same $30,000 loan for 4 years. The total interest would be $4,200. The total loan amount, excluding the PARF value, would be $26,200 (assuming the PARF value is $8,000). Your monthly instalment would be lower, at about $546.

While the balloon payment scheme offers significantly lower monthly instalments compared to a regular car loan, don’t forget that your final payment will include the PARF rebate, so be prepared to pay about $8,546 for your final instalment! 🤯

Overall, the balloon payment scheme’s higher interest rate and PARF inclusion still mean that the total amount you’re paying for the car loan would be greater than a regular car loan — the only upside is that your monthly instalments (excluding the last instalment) are lower.

Road tax

Even second-hand cars in Singapore are subject to road tax. It’s essential to confirm with the seller whether the road tax for the used car has been paid. As the new owner, you’ll need to renew the road tax every 6 or 12 months.

Take the CX-5, which requires you to pay around $605 every 6 months. This adds up to about $6,050 over a 5-year period!

Car maintenance and servicing costs

Maintenance and servicing costs for used cars aren’t cheap either. For the CX-5, maintenance packages vary significantly, ranging from $424 to $1,538, depending on your mileage. If you service your car yearly, you could spend up to $7,690 over five years.

Car depreciation

Depreciation refers to how much money your car loses over time. This is calculated as an annual figure, taking into account factors like the used car’s sale price, deregistration price, as well as the remaining years left on its COE.

For example, if you buy a used car for $50,000 with a deregistration value of $5,000 and 5 years left on its COE, the annual depreciation would be around $9,000. Let’s say you decide to sell your used car just a year after purchasing it. In that case, you’re likely to incur a loss on the sale due to depreciation.

Parking and petrol

HDB Season Parking can cost up to $190 per month (depending on your car’s tier and the car park’s location). This excludes other external parking charges, such as office parking, parking at malls, and parking at other places of attraction. Over a period of 5 years, this can add up to a massive $11,400 just for parking.

On top of that, with fuel prices hovering around $2.84 per litre, filling up a CX-5’s tank will cost about $162. If you’re refuelling monthly, you’re looking at nearly $9,720 over 5 years.

Doing your due diligence

Be sure to give that used car you’re eyeing a thorough inspection before you seal the deal. Take it for a test drive to get a feel for how it handles. Also, research common issues related to that specific model by checking out online car forums and reviews.

Consider getting a professional to inspect the car if you can, as having an expert’s opinion can help you uncover issues that you might miss.

Total cost of buying a used car in Singapore

Now, let’s shift gears to the total cost of buying a second-hand car. We’ll estimate the rough cost of owning a second-hand CX-5 over a 5-year period by factoring in the potential fees as mentioned throughout this article.

For this estimate, we’ll assume the CX-5 has 5 years left on its COE. We’ll also consider a standard car loan at an interest rate of 2.48% over a 5-year term, with a loan amount of $60,000. This translates to a monthly instalment of about $1,124.

Over a 5-year period, a used CX-5 will still be considerably more affordable than a brand new model, which boasts a list price of over $250,000. While you’ll enjoy significant savings, it’s important to recognise the trade-offs.

Buying a used car typically means a shorter ownership period and the likelihood of higher maintenance costs due to its age. While your wallet may thank you, be prepared for the responsibilities that come with buying a used vehicle!

Other things to consider before buying a used car in Singapore

$154,050 is no small sum. Before getting into the world of used cars, it’s essential to carefully consider whether this investment is truly worth your hard-earned cash.

Here are other key factors to ponder before spending the big bucks:

How often will you drive?

Regardless of how well-maintained and polished your car is, its value will still depreciate over time. So, it may be unwise to buy one and leave it parked in one corner to collect dust.

Ask yourself how frequently you’ll be using it. For example, if you need to commute and shuttle your kids to and from school daily for a few years until they’re old enough to use public transport, then investing in a used car becomes a smarter decision!

New car or used car?

Maybe you think that a used car is still very costly, or that having a new car simply outshines a used one. While there is a big difference price-wise between the two, it’s safe to say that both have their pros and cons, and you should ultimately make the choice that best suits your needs and budget.

If you’re curious about the specifics of buying a new car in Singapore, check out our guide here.

Driving without owning a car

Owning a car, whether it’s a new or used model, comes with its fair share of costs. If you don’t need a car on a daily basis or are exploring more budget-friendly commuting options that still enable you to drive when you need to, why not consider carsharing?

Carsharing is a wallet-friendly alternative to owning a car, and with GetGo, you’ll only need to worry about paying for the hours and mileage of your drives. We’ll take care of everything else, giving you peace of mind — something you may not get with car ownership.

Read this article to find out whether carsharing is the right fit for you. Then give Singapore’s largest carsharing company a try, with over 3,000 cars across more than 1,700 locations islandwide. You can register, book, and get driving in minutes through our app. Try it for yourself.

Information is correct as of October 2024.

Cheers to thrifty travels! ✨
Amanda