Cars are a big investment, so it’s worth taking your time and making sure you’ve made all the right choices.
This car buying guide has everything you need to know about finding the perfect car at the perfect price.
A car is probably the second most expensive item that you’ll purchase aside from a house. Make sure you know what to look out for and what questions to ask with this complete guide to buying a car.
Tips to help when buying a car
Whether you’re buying a car for the first time in your life or whether you’re buying a new car to replace an old one, it’s important to remember that this is a large purchase and a big financial commitment for most people. So you need to put some thought and care into this process rather than rushing in and making rash – and potentially costly – decisions.
For most people, buying a car is one of the biggest investments that they will make next to buying a home, so you need to exercise the same care and attention that you would with any big investment that you make. In Singapore in 2017, new car owners spent in the range of $106,000 for a sedan, $107,000 for a small SUV, and $183,000 for a luxury car.
So given that buying a car is such a big investment for the average person, it’s important to look at some important considerations in order to enable you to make the right choice and get the best deal. This means doing some research and getting your finances sorted out before you start shopping around for a car. Your aim should be to get a good, reliable car at an affordable price, which means avoiding panic buying, avoiding spending more than you can afford and avoiding being pressured into buying something you don’t really want or cannot realistically afford.
Narrow down your options so you can compare a realistic number of suitable cars. You might start by setting yourself a price limit and making a list of must-have features.
1. What’s your price limit?
How much are you willing and able to spend on a car? Ideally, you’ll be able to set yourself a clear price ceiling and decide straight away whether you’re looking for a new or used car.
- If your maximum price is “as little as possible” then you can probably focus on used and showroom cars only.
- If you’re flexible on price, you might try listing your must-have features first.
2. What are your must-have features?
The type of car to buy depends on your lifestyle and needs. What will you be using the car for? For example:
- How many seats do you need? If you have a large family and want more than five seats, you can narrow your search down a lot further, typically into SUV territory.
- What other factors do you have to consider? Do you tend to transport heavy loads or install bicycle racks? Want plenty of leg room? Need enough boot space to transport furniture?
Your must-have features can help you work out whether you’re looking for a small passenger car, an SUV, a luxury car, or anything else before you start searching.
There are different places you might find your perfect car. The two main ones are dealerships and private sellers.
When you’re buying a car from a licensed dealership, the seller is legally required to disclose any major issues with the car, and will often be required to solve defects or problems with cars they sell.
When you’re buying a car elsewhere, it’s often going to be your responsibility to inspect the car thoroughly in order to make sure there aren’t any serious issues with it.
|Where to buy||What to do||What it’s good for|
|Authorised distributors (AD)||Walk into an authorised brand car showroom and shop for a new car||Good for finding a wide range of options, test driving each of them and getting some expert advice. If you want a new car and want to see a lot of options from a brand in one place, this might be the best choice for you. Buying from an AD also gives you a peace of mind, especially for after-sales support.|
|Parallel importers (PI)||Walk onto a car lot and shop for a new car||Similar to authorised distributors, good for finding a wide range of options, test driving each of them and getting some expert advice. If you want a new car and want to see a lot of brands and options in one place, this might be a great choice. However, note that PIs are more of a car reseller than a distributor. Understand the differences between authorised distributors and parallel importers.|
|Used car dealers||Visit a used car dealer to see what’s available||Good for finding a lot of relatively affordable options all in one place. If you’re after a used car but want the flexibility to shop around on the lot, or aren’t confident going to a private seller, then this might be the best option for you.|
|Private seller||Buy a used car directly from a private seller, typically the previous owner||If you’re after the best price possible, then buying used from private sellers is often the way to go. But make sure you know how to check the car thoroughly before buying, including its service history.|
|Demonstrator vehicles||Buy a lightly-used newer model vehicle that’s been used for test drives, demos and other light purposes by a car dealership||This might be a good option if you want to buy almost-new rather than brand new, and want to get a good price on a recent make and model. However, the savings can vary and your options will naturally be more limited.|
Demo cars might be fitted with extras that you don’t necessarily want but will have to pay for anyway.
|Car auctions||Bid on vehicles at an auction||This can be one of the most affordable ways of buying a car – it’s so good that car dealers often buy stock at auctions. s that the quality of auctioned vehicles and the quality of their discounts can vary, so you need to have a good sense of how much a car is worth, and how to properly inspect it, in order to get a good price. Also, you typically won’t be able to take the car for a test drive.|
The number one tip is to know how much a car is worth. Look up the value of the make and model before heading in, so you have a baseline. If someone asks for more than that, you can ask why it’s so expensive.
From there, familiarise yourself with the different options and features you can get with the car. Decide which ones you want and which ones you don’t. These extras will most likely make an appearance while you’re buying from a dealer.
For new cars, this might just be a test drive to check that it’s right for you. For used cars purchased from private sellers, you’re going to want to give it a thorough inspection or take it to an independent mechanic for a check before buying.
Checklist for inspecting a used car
You’re looking for anything you’ll have to fix yourself, any damage that means it’s a dud, and red flags that might indicate the seller isn’t being honest.
Check the body:
Give it a walk-around, but also stand at the front and back and look down the side of the vehicle. This can help highlight dents and other imperfections.
- There are no signs of old accident or other damage, and no chips or imperfections in the paint. You should know about every scratch on the car before buying
- For improper sealing. Pop the hood, open the trunk and try all the doors and windows. All the locks and hinges should all work smoothly and evenly
- For panel irregularities. All body panels and doors should be flush
On the inside:
Pay special attention to the electronics and check that all the functions work.
- Check the condition of all the upholstery and seatbelts
- Check that all the lights are functioning
- Ensure that the windows, air conditioning, audio and all other electronics are working
- Where possible, lift the carpets and look inside the doors for any signs of damage or repairs
Turn on the engine to test it properly.
- Warm up the engine by letting the car idle for a few minutes, then give the accelerator a quick push. If you see a puff of smoke then you might be looking at piston or valve stem problems.
- Let the car stand for a while and check for oil drips or wet surface residue on the surface of the engine and under the car.
- Check the water in the radiator. It should be clean and free of oil.
- Check the oil filter caps. A creamy white substance there probably means a cracked cylinder head or leaking gaskets.
Specifics to look for
- Structure. The condition of the chassis frame (core structure) including the engine number, chassis number and number plate.
- Paint. A new paint job on an old car might be hiding something, and you’re generally better off with the original paint. Watch out for any signs of painted-over imperfections, bubbles under the paint and mismatched paint on adjacent body panels.
- Tyres. If you’ll have to replace the tyres after buying, then factor that into the cost and don’t pay too much for the car. Tyres should also wear down evenly. If they’re not evenly worn then there may have been a previous accident, or the car might have other problems.
- Glass. This can be expensive to replace, so pay special attention to any chips or cracks in the windows, indicator lights, mirrors and anywhere else.
- Under the car. Don’t forget to inspect under the car. Rust often starts here, so look out for any signs of corrosion or other damage.
The test drive
As you drive, check that:
- You can change gears smoothly and quickly
- The engine power is appropriate for the car
- The car tracks in a straight line and doesn’t drift. The car shouldn’t pitch on corners, and the steering wheel shouldn’t pull or try to straighten itself unduly
- The brakes respond effectively
- The electrics, dials and other interfaces are all working properly, and that the speedometer is working accurately
- The temperature dials, car engine light and all other indicators are not showing problems
- There is no irregular engine noise
- You’ve paid attention to the suspension and transmission
- The exhaust emissions are reasonable
- All the headlights, tail-lights and interior lights work
The documents and information to get
You’ll want to get:
- The car’s insurance details. You should not test drive a car on public roads if it doesn’t have insurance or is unregistered. Ask to see the certificate before taking it for a test drive, and check that the certificate details match the vehicle.
- The Chassis number/VIN. This unique 17-digit code will generally be on the chassis or inside of the driver’s door. Record it for later if you plan on buying, in order to check the car’s history.
- Signed indemnity form. If you’re selling your used car, make sure you ask the prospective driver to sign an indemnity form, such as this form from sgCarMart, before allowing any test drives. This is to protect you from any liabilities should there be damage to the vehicle, as well as death or personal injury that is sustained by the buyer during the test drive.
Checking the car’s history
If a car passes inspection and a test drive, the last thing to do before buying is to check its history. Unfortunately, there’s a very good chance you wouldn’t be able to retrieve its full history so the next best thing is to have service records for the last three to four years.
Making the purchase
When buying a used car from a private seller, you’ll need to transfer ownership at the Land Transport Authority (LTA) or an Electronic Service Agent (ESA) to make it official. You should generally get all relevant documents at the time of purchase, including:
- Vehicle registration
- Completed and signed transfer form
- Identification documents of both buyer and seller
- Original motor insurance certificate in the buyer’s name
- Original and valid vehicle inspection certificate issued by any Authorised Inspection Centre
- Original Vehicle Parking Certificate in the buyer’s name
Bear in mind that the transfer of vehicle registration must be effected within seven days after a sale and change in possession of a vehicle, as it is an offence not to do so. For more details for the transfer of vehicle ownership, please check the One Motoring website.
A new car should be pretty much perfect. If a brand new car has any flaws, that should at least entitle you to a discount, or the dealer should offer a solution. If you’ve purchased from an authorised distributor, the car should come with some form of warranty.
If you find any damage in a used car, you’ll have to decide whether you can live with it or will need to get it fixed. A scratch might not bother you, but any mechanical problems, worn tyres or anything else that needs costly fixing might be a deal-breaker.
Factor in any repair costs you’ll need to pay and add them to the “sticker price” to get a sense of how much you’ll really be paying. If it comes out too high and the seller won’t budge on price, it might be time to walk away.
If it’s a problem that the seller has tried concealing, such as if you spot any painted-over rust spots, then you’ll want to think twice about whether or not you really know what you’re buying. Similarly, you probably don’t want to buy a car from a private seller if they refuse to let you take it to an independent mechanic for an inspection.
If a car still has an outstanding loan, then the seller should mention this and settle all necessary payment to the finance company before transferring the ownership of the vehicle to you. Unless you’re able to pay the full amount for the car, you will need to get a loan approval and also activate a motor insurance under your name before the transfer of ownership.
If a car has previously been written off then you shouldn’t buy it, even if it seems fine. It’s almost certainly not as fine as it seems.
There are a lot of different finance options. Sometimes you’ll sort it out before finding your car, and sometimes you’ll pick out your car and then sort out the finance.
In the long run, there might be thousands of dollars of difference between the various finance options. Deciding on finance can be just as important as deciding on a car. Check out our guide to getting a car loan if you’re unsure about the process. Also, bear in mind that every car loan application will be reflected on your credit history, so make sure that you’re aware of your borrowing power and meet the lender’s eligibility requirements before applying to minimise the risk of having your loan rejected.
Paying for the car outright: Dip into your savings and pay for the car outright.
- Pros: There’s no need to pay interest when you pay it all up-front.
- Cons: You need to have enough.
Dealership finance: This is when you get finance from the car dealer. The dealer usually goes to a third party lender and plays middleman. Typically, both the dealer and the lender get paid out of the interest.
- Pros: It can be convenient to get finance in the same place as you buy the car.
- Cons: Might not be the most cost-effective choice. Dealers might have an incentive to charge more interest, and you’ll be taking out a loan in a high-pressure sales environment.
Car loan from a bank or car financier: A car dealer might offer you a loan on behalf of a bank or car financier, but you might go directly to the lender and cut out the middleman.
- Pros: There is a wide range of options. For example, a good credit applicant might get more competitive rates, or you might choose to borrow only the amount you need and pay the rest with savings. You can also consider the loan terms and conditions at your own pace, outside the car dealership and in a less stressful environment.
- Cons: You need to make sure your loan matches your vehicle type. Sometimes there may be conditions around the types of vehicle you can get. For example, some loans might be for new cars only.
Besides the Open Market Value (OMV) of the car, which is the price of the car itself, and Certificate of Entitlement (COE), which is essentially the right to own a car, the Singapore government also imposes vehicle ownership tax to regulate vehicle population. These include the Registration Fee (RF), Additional Registration Fee (ARF), Excise Duty, Road Tax and Special Tax.
You’ll also want to make sure you have enough to cover all related expenses, both during and after purchase.
Vehicle ownership fees and taxes
- Registration fee: For new cars, you’ll have to pay a $220 registration fee. And if you’re buying used, you’ll need to pay a $25 transfer fee for the transfer of registration/ownership at LTA.
- Additional Registration Fee (ARF): A tax calculated based on a percentage of the Open Market Value (OMV) of the vehicle and imposed upon registration of a vehicle.
- Excise Duty. A tax calculated based on a percentage of the OMV of the vehicle that is imposed and collected by Singapore Customs.
- Road tax. This is a recurring cost that is payable every six months or annually.
- Special Tax. This tax is levied on diesel cars and payable in addition to the road tax of the vehicle.
- Carbon Emissions-Based Vehicle Scheme (CEVS). Implemented in December 2017, this new scheme aims to encourage Singaporeans to purchase cars with lower carbon emissions by offering rebates and applying surcharges on models with particularly high carbon emissions. With CEVS in place, it could decrease or increase your car price by up to $30,000.
Additional costs when buying
- Parking. Factor in all the seasoned parking costs that you may have to pay at your workplace or home. Season parking at offices generally cost between $90 to $120 per month. If you’re staying in an HDB flat, it will be $90 per month for surface car parks and $120 per month for sheltered car parks.
- Extras and modifications: The price you pay at a dealer will depend largely on which features and extras are thrown in. This can turn the price thousands of dollars either way. Generally, if it’s a new car, it might be a good idea to turn down any extras you don’t want in order to keep costs down. The same might be true when buying used from a private seller with a modified car. If you don’t care about the mods, you might want to give it a miss to avoid overpaying.
- Car insurance: It ‘s mandatory to have a valid insurance policy in order to drive a motor vehicle on the road. The minimum requirement is that the policy provides cover for personal injury to third parties.
Additional costs after buying
- Additional car insurance: It’s not mandatory to get comprehensive coverage, but additional car insurance is generally a good idea. The cost can vary widely depending on the type and quality of cover, the insurer and your personal circumstances.
- Maintenance and fuel: It’s worth planning for operating costs. The cost of fuel and routine car maintenance will depend on the type of car and how much you drive.
- Car loan repayments: If you’re not careful these might become a major headache. You should know how much the repayments will cost before taking on a car loan.
In some situations, you’re likely to encounter other miscellaneous expenses too. For example, licence plate transfer fees (if you’re buying the plates from the old owner – more if they’re custom plates), inspection costs, Electronic Road Pricing (ERP), dashboard cameras and more.
It’s always a good idea to understand your consumer rights when making a big purchase.
The main ones to know are:
- Cooling off periods. This is how long you have to change your mind and get a refund after buying a car.
- Your car warranty rights. All cars bought from an authorised dealer in Singapore, both new and used, will come with a consumer warranty to cover defects and failures shortly after purchase.
Cooling off periods
If you change your mind after buying, such as if you realise you can’t afford the financing or just got a bad deal, then you have a limited time to contact the dealer in writing, cancel your agreement and get a refund.
This period of time is the “cooling off period”. According to the Consumer Protection (Fair Trading) Act (CPTFA), the vehicle purchase contract should have a clause that includes a five days “cooling-off” period (excluding Saturdays, Sundays and public holidays). But in all cases, the cooling off period will only apply to purchases from licensed car dealers. It is not available when buying at an auction or from a private seller.
- Borrow from S$5,000
- Fixed monthly repayments
- Redraw on your existing loan
HSBC Personal Loan
Apply today to get approved for up to S$200,000 over 7 years.
- Max. loan amount: Up to 8x fixed monthly income or up to S$200,000
- Loan tenure: Up to 7 years
- Approval duration: 1 minute approval in principle. "Next Day" approval available for loans up to S$100,000
- Effective Interest Rate: 7% - applicable only to customers who earn at least $80,000 p.a. and tenor between 3-7 years
- Fees: S$88 processing fee, S$75 late payment fee, 2.5% early repayment fee, 2.5% + prevailing interest overdue interest fee