Breaking Down the True Cost of Owning a Car in Singapore

In Singapore, buying and owning a car is a major decision. While it offers convenience and the freedom to travel on your own terms, the costs involved can be overwhelming if you’re not fully prepared. From the high Certificate of Entitlement (COE) fees to ongoing fees like car maintenance and road tax, responsible car ownership requires careful financial planning. In this guide, we’ll break down the true costs of owning a car in Singapore, including both initial and ongoing car expenses, and help you understand what it takes to make this commitment manageable.

Initial Costs of Buying a Car in Singapore

The Certificate of Entitlement (COE)

One of the most significant initial costs of owning a car in Singapore is the Certificate of Entitlement (COE). This is a mandatory requirement for every vehicle owner and grants the right to own a car for 10 years. The COE price can be a considerable portion of the overall vehicle’s cost, usually amounting to tens of thousands of dollars.

There are five COE categories, each corresponding to different vehicle types (A, B, C, D, and E), with prices varying across these categories.

COE prices are determined via open bidding exercises held twice a month, typically on the 1st and 3rd Mondays. The final price, also known as the quota premium, is set based on the highest unsuccessful bid in each category.

Registration Fees and Other Initial Expenses

In addition to the COE, car owners will also need to factor additional expenses and fees into the overall cost of purchasing a car in Singapore.

Registration Fee (RF):

The Registration Fee is a one-time, fixed fee required to register your vehicle with the Land Transport Authority (LTA) upon purchasing a car. This fee is generally S$350 for most vehicles—though it may vary for specific vehicle types or in special cases—and must be paid at the time of registration.

Additional Registration Fee (ARF):

ARF is an extra charge based on the car’s Open Market Value (OMV), which is determined by Singapore Customs depending on factors such as purchase price, freight, and more. The ARF is calculated as a percentage of the OMV, increasing with every $20,000 increment in the OMV. This fee can substantially increase the upfront expenses of buying a car, especially for higher-end models.

However, owners of hybrid or electric vehicles may be eligible for ARF rebates under the Enhanced Vehicular Emissions Scheme (VES). This initiative classifies vehicles based on their emissions performance, with cars that produce lower emissions qualifying for rebates as high as $25,000. 

Import Taxes and Duties

When importing a new or used vehicle into Singapore, you must pay registration fees, as well as Goods and Services Tax (GST) and excise duty. The GST is levied at 9% of the total purchase price, while the excise duty is 20% of the car’s OMV.

Insurance Premiums:

Car insurance is compulsory for all vehicle owners in Singapore, ensuring that they are covered in the event of an accident or damage. Car owners can find three main types of policies available:

• Third Party Only: This is the minimum level of car insurance, covering damages to other people’s property and injuries to other individuals if you’re at fault in an accident. However, it does not cover any damage to your own car or injuries you may sustain.
• Third Party, Fire and Theft: This includes all the coverage of Third Party Only insurance, plus protection against your vehicle being stolen or damaged by fire. Do note that it does not cover accidental damage to your own car.
• Comprehensive: This is the highest level of coverage. It includes all the protections of Third Party, Fire and Theft insurance, along with coverage for accidental damage to your own vehicle, regardless of fault. Comprehensive policies may also offer additional benefits such as windscreen cover, coverage for personal belongings, and protection against natural disasters.

Additionally, insurance premiums may also depend on factors like the car’s model, driver’s age, and driving history. For instance, owners of luxury cars, sports vehicles, or hybrids should expect higher premiums due to the higher repair costs and greater risk of theft.

Other Factors Influencing the Cost of a Car in Singapore

1. Car Make and Model Choices

The brand and model of a car also contribute to its initial purchase price. Premium brands such as BMW, Mercedes-Benz, and Audi often come with a higher price tag due to their luxury features, brand reputation, and advanced technology. Similarly, vehicles like the Toyota Alphard tend to be more expensive due to their hybrid technology and higher-end features.

2. Optional Upgrades and Accessories

When purchasing a car, many buyers opt for optional upgrades and accessories to personalise their vehicles. These can include leather seats, advanced infotainment systems, upgraded sound systems, and safety enhancements such as additional airbags or parking sensors. While these add-ons enhance comfort and convenience, they can greatly increase the overall cost of the car.

3. Parallel Import or Authorised Dealer

To buy a car in Singapore, you can either go through an authorised dealer or a parallel importer. Parallel importers in Singapore typically offer lower prices than authorised dealers because they source vehicles directly from overseas markets, bypassing the added costs of distributor markups, branding, and local warranties. This can offer cost savings, making parallel import cars an attractive option for those looking for a more budget-friendly choice.

These factors all contribute to the upfront costs of purchasing a car in Singapore, and it’s crucial to start budgeting accordingly to ensure that you’re financially ready for the next step.

A Breakdown of Ongoing Vehicle Expenses

In addition to the initial purchase, car ownership in Singapore also comes with ongoing costs that must be managed.

Calculating Average Monthly Fuel Costs

Fuel expenses are a substantial ongoing cost of owning a car in Singapore. To get a more accurate estimate of your monthly fuel expenses, here are some key aspects to consider:

Fuel Efficiency Ratings

Each vehicle has a fuel efficiency rating, typically measured in kilometres per litre (km/l) or litres per 100 kilometres (L/100km). Cars with higher fuel efficiency will generally require less fuel to travel the same distance, resulting in lower fuel costs. For example, cars like the Honda Odyssey Hybrid tend to have better fuel efficiency compared to traditional petrol vehicles. 

Additionally, regular petrol vehicles like the Toyota Vellfire Petrol 2.4L Turbo Premier may have lower fuel efficiency due to its petrol engine. However, for those car enthusiasts who prefer a higher horsepower, the initial lower price and the trade-off in fuel efficiency might be worth it.

Driving Patterns

Your driving habits play a crucial role in determining your fuel consumption and, by extension, the costs of your car in Singapore. If you typically drive during peak hours when traffic jams are frequent, the constant stop-and-go driving and idling can significantly reduce fuel efficiency. Conversely, if you often drive shorter distances or through smoother traffic conditions, you may experience lower fuel costs due to more consistent driving and less fuel wastage.

Fuel Prices

Fuel prices in Singapore are subject to fluctuations based on global oil prices and local market conditions. On average, petrol prices can vary from station to station and may change throughout the month. It’s important to keep an eye on the market trends and plan your refuelling to take advantage of lower prices when possible. Moreover, fuel prices for different types of fuel (e.g., 92-octane, 95-octane, 98-octane) can vary, so choosing the right fuel is another key factor in the ongoing costs of owning a car in Singapore.

How Road Tax is Determined and Paid

Road tax is a mandatory expense for all car owners in Singapore, and the amount you pay is primarily determined by your vehicle’s engine capacity. Generally, the larger the engine capacity, the higher the road tax. Fees can range from as low as $200 per year for smaller vehicles with less than 1,000cc to as high as $1,000 per year for larger, more powerful engines.

However, there are some other considerations to keep in mind:

1. Additional Costs for Older Cars

The road tax for older vehicles may be higher than that of newer cars, primarily due to their higher emissions and lower fuel efficiency. As vehicles age, they tend to emit more pollutants, which can lead to increased road tax costs. For example, a well-maintained older car with a larger engine capacity could incur road tax that is much higher than that of a newer, more efficient vehicle.

2. Late Renewal Fees

Car owners have to renew their road tax every 6 or 12 months, and late payments can incur additional fines, which add to the overall cost of ownership. The longer the delay, the higher the fine. Penalties can even reach up to $270, depending on your car’s engine capacity. To avoid these charges, it’s important to keep track of your road tax renewal date and make the payment on time.

3. Meet the Renewal Criteria

To renew your road tax, you will need to meet certain criteria:

1. Ensure your car insurance is valid for the entire road tax renewal period.
2. Complete a vehicle inspection at an LTA-authorised inspection centre.
3. Settle any outstanding fines or penalties from relevant authorities before proceeding with renewal.
4. If your vehicle is an off-peak car, it must undergo an inspection of its number plate seals.

Ensure that your car complies with all regulations before submitting your road tax payment to avoid any delays or complications.

Frequently Asked Questions About The Costs of a Car in Singapore

1. What are some hidden costs of a car in Singapore?

Beyond fuel, insurance, and road tax, several hidden costs can catch car owners by surprise. Parking fees are one such expense, particularly in urban areas where parking spaces are limited. In addition to that, regular maintenance, including oil changes, brake pad replacement, and tyre rotations, adds to the ongoing costs. There are also ERP toll charges and potential fines for violations, which can add up over time.

2. Is it better to choose a car with a lower or higher engine capacity?

Opting for a lower engine capacity car typically means lower road tax, better fuel efficiency, and cheaper maintenance. However, higher engine capacity cars may offer superior performance and greater comfort. It’s crucial to balance engine size with your personal driving needs and the associated costs of ownership.

3. Are hybrid cars better than petrol cars?

Hybrid cars like the Toyota Noah offer lower fuel consumption and reduced emissions compared to traditional petrol cars. While they may have a higher initial purchase price, they tend to offer better long-term savings due to fuel efficiency and fewer emissions. However, hybrid cars may require more expensive maintenance, particularly for battery systems, so it’s important to consider your driving habits and budget before making a decision.

4. Are parallel import cars covered by warranty?

Yes, reliable parallel importers in Singapore generally provide warranties for their vehicles. For instance, Leco Auto offers a warranty of 5 years or 100,000 km, whichever comes first. Extended warranties are also available, providing further peace of mind. That being said, it’s advisable to thoroughly review the coverage options from your parallel importer before purchasing to ensure it meets your needs.

How can I reduce the cost of owning a car in Singapore?

To reduce the cost of a car in Singapore, you’ll need a combination of smart decisions and lifestyle choices. Here are a few car budgeting tips:

• Opt for a smaller engine capacity: Cars with lower engine capacities tend to have lower road tax, better fuel efficiency, and cheaper maintenance costs.
• Consider a hybrid or electric vehicle: These vehicles generally offer better fuel efficiency and lower emissions, which may qualify you for rebates under the Vehicular Emissions Scheme (VES), lowering your overall cost.
• Maintain your car regularly: Regular maintenance helps avoid costly repairs down the line. Keeping your car in good condition can also improve fuel efficiency and prevent major breakdowns.
• Look for discounts on insurance: Shop around for the best insurance deals and consider bundling policies for added savings. Some insurers may offer discounts based on your driving history or if you install additional safety features in your car.

Conclusion

All in all, the true cost of a car in Singapore extends far beyond the price tag at the dealership. From the initial COE to ongoing fuel costs, maintenance, and insurance, it’s essential to budget for both expected and hidden expenses. But, with the right approach and adequate research, you can manage these costs and make a decision that best suits your driving needs and financial situation.

If you’re looking for an affordable yet reliable vehicle, look no further than Leco Auto, one of Singapore’s trusted parallel importers. We offer a wide selection of new vehicles from trusted Japanese brands like Toyota, Honda, and more at competitive prices. Whether you’re looking for a family car, a compact hybrid, or a luxury vehicle, we’ve got you covered.

Contact us today to learn more.