Buy a Car in Singapore

Buying and owning a car in Singapore is very different from most other countries. Because of its small size and extremely high population density, the Singaporean government has deemed curbing major gridlock a high priority. The number of vehicles on the road is governed by a quota system, limiting the availability of Certificates of Entitlement (COEs) that citizens must bid on to legally own a vehicle.

Steps

Taking Financial Considerations into Account

  1. Get an idea for what type of car you want and its cost. Before moving forward, you will need to figure out a rough estimate of what you will need to spend. Singaporean car dealers feature most international makes and models, both new and used. Browse newspaper ads and online listings to get an idea for your potential car's price tag.
  2. Make sure you can afford to own a car. Keep in mind that the Singaporean government has put into place a variety of taxes and fees to discourage vehicle ownership that make it significantly more expensive compared to other countries. For example, a typical sedan in Singapore often ends up costing more than the average price of a home in the United States.[1] There are quite a few costs to take into consideration in addition to the market price of your potential car:
    • The current cost of a COE for a car averages from between S$50,000 to S$70,000.
    • You will also need to pay a road tax each year. The exact cost will be determined by your vehicle's specifications, but expect around at least S$700. If you buy from a dealer, the first year is typically included in the price.
    • Other taxes and administrative fees add up. You will need to pay a flat registration fee of S$140 along with an Additional Registration Fee that will usually exceed the open market value of the vehicle itself. You will also be charged an Excise Duty equal to 20% of your car's open market value.[2] Finally, there will be a 7% Goods & Services applied to the open market value plus its Excise Duty.[3]
    • Because space is at a premium, most Singaporeans must also pay to park their cars at home and work. A typical month of parking costs $180.[4]
  3. Find financing for your car. Financing a car is largely identical to financing in another country. If you aren't paying for your vehicle in cash, you will have the option to take out either a dealer loan or a third party loan. However, the Monetary Authority of Singapore does place certain restrictions on car loans:
    • Creditors are limited by the amount they can lend to a single person in the form of a motor vehicle loan. They cannot lend more than the "Relevant Amount" of a vehicle. This amount is generally the cost of buying a car including interest.
    • You may obtain multiple loans from different creditors, but they cannot exceed the Relevant Amount when combined.
    • Loan tenure for motor vehicles cannot exceed 5 years.[5]

Obtaining a Certificate of Entitlement

  1. Know when the next bidding period is. Read through the Land Transport Authority's COE Open Bidding Demonstration Kit & User Guide for the most up-to-date information.[6]. Ask anyone you know who has recently successfully won a bid for a COE what to expect.
    • Open bidding periods are usually run beginning at noon on the first and third Mondays of each month and end at 4 pm the following Wednesday. If a public holiday falls during one of these periods, bidding will be extended.
    • The Land Transport Authority (LTA) will release an announcement before each bidding period that will include the number of COEs being released and the exact start and end times for the bidding exercise.[7]
  2. Know which COE Category you need. There are five different categories of COE: A, B, C, D, and E. Every bidding period will have a separate quota of COEs available for each category.
    • Category A: Passenger vehicles with an engine capacity of 1600cc and below.
    • Category B: Passenger vehicles with an engine capacity above 1600cc.
    • Category C: Buses and vehicles transporting goods.
    • Category D: Motorcycles.
    • Category E: A special category that includes all the vehicle types described in Categories A-D. This category is usually the most expensive type.[8] However, if you choose to register a motorcycle with a Category E COE, you will only need to pay one third of the quota premium.[9]
  3. Be prepared to bid. You will need a bank account with either DBS Bank (or its subsidiary POSB) or OCBC Bank. If you are bidding on behalf of a company, you will need an account with UOB. This account must contain at least enough money for the fixed bid deposit, which is S$200 for a Category D and S$10,000 for all others.[10]
  4. Place your bid. Check the current number of bidders and their reserves. Submit your initial reserve price. The minimum reserve price is S$1, but in reality most categories will end up in the high tens of thousands range.
    • DBS/POSB customers must place their bids through DBS/POSB ATMs. OCBC users can do so through phone banking. Individuals using UOB will submit through an Internet banking system.[6]
    • If you find the bidding process to be a headache, car dealers offer a variety of packages where the COE is included in the car's list price. Just keep in mind that COEs obtained through this method are often more expensive.[8]
  5. Inquire about your bid. Once you've successfully submitted your bid, you can check its status through the LTA website, UOB Internet banking, or OCBC phone banking. Monitor how your bid stacks up against others.
    • Keep in mind that the final COE price will be one dollar more than the highest unsuccessful bid, not the actual reserve price set by the successful bidders.[11]
  6. Revise your bid. If you find that your reserve price has dipped below the current successful bid price, consider revising it. Of course, if the price has risen above where you are willing to pay, you can always wait until the next bidding exercise. Revisions can be made through all four previously discussed channels.
    • You may revise your bid as many times as you like. However, keep in mind that you may not revise your bid lower than its current amount and that each revision with incur an additional small administrative fee.[9]
  7. Pay for your COE. You must pay the difference between the bid deposit and the final quota premium upon registration. Bids for Categories A, B, and D are valid for 6 months, while those for Categories C and E remain valid for only three months. If the full amount has not been paid by that time, the bid is no longer valid and you must forfeit your initial bid deposit.[10]
  8. Revalidate your COE after 10 years. If after 10 years you still would like to hold onto your COE, you must renew it. For a 10 year renewal, you must pay the new current Prevailing Quota Premium, which is an average of the COE prices in the last 3 months. 5-year renewals are subject to half this price.[7]
    • Once a vehicle has been registered with a 5-year COE, it is no longer eligible for renewal with a 10-year COE.[12]

Buying Your Car

  1. Have a firm idea of what kind of car you want and stick to it. A trait common to car salespeople in most countries is that a major part of their job is to upsell the customer. In Singapore where costs related to purchasing a vehicle are extremely inflated, it is especially important to not let yourself get talked into an even pricier car with features you neither want nor need.[13]
  2. Avoid exposing yourself as a first-time car buyer. If this is your first time buying a car in Singapore, do not revealing this to the salesperson either directly or indirectly. Commit as much information to memory regarding Singaporean car buying and ownership as possible.
    • If you plan on paying in cash, do not say so until after negotiating for the price you want. Most car salespeople in Singapore make their profits from loans. If you tell them you want to pay in cash in the beginning, they are not likely to give you a better deal than the list price.[13]
  3. Shop around. Buying a car is likely to be one of the biggest purchases you'll make in your lifetime. Visit multiple dealerships and compare prices. Test drive as many vehicles as you can. Make sure the car you're buying is the one you want to drive for the next few years. You don't want to spend so much time and money only to end up with buyer's remorse.[13]
  4. Protect yourself against rough sales tactics. Many car dealers around the world engage in underhanded practices to make a sale. Singapore is no different, and the stakes are higher.
    • Be aware of sales gimmicks. Some dealers may advertise a car at a great price to get you in the door. Then, they may claim that the advertised price was a mistake or that the particular car had already sold. While these scenarios may be genuine, be on guard if this happens to you.
    • Triple-check anything that is in writing. Make sure the price listed on purchasing and financing documents is the identical to what you verbally agreed upon.
    • Do not sign any "blank hire purchase" forms. If you sign a blank document, the dealer may tack on extra fees without your consent.[14]

Tips

  • The car buying process is the same for both Singaporean citizens as it is for foreigners.[15] If you are new to Singapore, it's best to not tell your car dealer. As with first-time buyers, if you signal your inexperience, your dealer may try to take advantage.
  • School buses and emergency vehicles are exempt from the COE process.[16] Voluntary welfare organizations are also exempt from paying the COE and the pricy Additional Registration Fee when purchasing a passenger van used in running direct welfare services.
  • In many areas of the world, cars are a necessity due to a lack of reliable public transportation. In contrast, because of its small size and high population density, Singapore has invested in an extensive public bus and rail system. Car sharing is also a very popular option.[17]
  • Consider buying a motorcycle instead. The average cost of a motorcycle COE is roughly one tenth of other vehicle classes.[18]
  • When purchasing from a dealer, keep in mind that all taxes, fees, and duties are typically included in the list price. Make sure what is and isn't included is explicitly stated when making a purchase.
  • Individuals are limited to one COE bid per exercise. Because of this, you cannot bid for a COE in more than one category or get a COE for more than one vehicle at a time. However, businesses, such as car dealerships, are exempt from this and can place multiple bids.[9]
  • A major area for new car sales in Singapore is at the Leng Kee Car Belt. There you will find over a dozen different dealerships selling most international car brands.[19]
  • Because of Singapore's small size, many car dealerships have a monopoly on certain car brands.[15]

Related Articles

Sources and Citations

  1. ↑ http://www.bloomberg.com/news/articles/2012-06-04/singapore-family-sedan-matches-cost-of-a-u-s-home
  2. ↑ http://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/costs-of-owning-a-vehicle/tax-structure-for-cars.html
  3. ↑ http://www.livinginsingapore.org/how-to-buy-a-car-in-singapore/
  4. ↑ http://blog.moneysmart.sg/car-ownership/the-true-cost-of-owning-a-car-in-singapore
  5. ↑ http://www.mas.gov.sg/~/media/MAS/Regulations%20and%20Financial%20Stability/Regulations%20Guidance%20and%20Licensing/Commercial%20Banks/Regulations%20Guidance%20and%20Licensing/Notices/MAS%20Notice%20642_Banks_phy%20disability%20exclusion_15Apr13.pdf
  6. ↑ 6.0 6.1 http://www.lta.gov.sg/content/ltaweb/en/ocoe.html
  7. ↑ 7.0 7.1 http://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/certificate-of-entitlement-coe.html
  8. ↑ 8.0 8.1 http://blog.moneysmart.sg/car-ownership/understanding-singapores-coe-system
  9. ↑ 9.0 9.1 9.2 http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/bid_coe.html
  10. ↑ 10.0 10.1 http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/bid_coe.html
  11. ↑ http://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/certificate-of-entitlement-coe.html
  12. ↑ http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/maintain_vehicle/coe1.html
  13. ↑ 13.0 13.1 13.2 http://www.livinginsingapore.org/how-to-buy-a-car-in-singapore
  14. ↑ http://www.oneshift.com/used-car-buying-guide/695/pre-owned-car-buying-guide-part-5-protecting-yourself/2
  15. ↑ 15.0 15.1 http://singapore.angloinfo.com/information/transport/vehicle-ownership/buying-a-car
  16. ↑ http://www.expatsingapore.com/content/view/1152
  17. ↑ http://www.todayonline.com/singapore/life-without-wheels?singlepage=true
  18. ↑ http://www.oneshift.com/new_cars/lcoe.php
  19. ↑ http://www.sgcarmart.com/direction/index.php?L=Leng_Kee_Car_Belt
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