Get the Best Car Insurance in Singapore
Owning a car in Singapore is an expensive endeavor, with many costs involved with car ownership that go beyond its purchase price. In the following guide, we break down the various costs you'll encounter as a car-owner so that you can be as prepared as possible before you take the significant financial step that is buying a car.
Average Cost of Car Ownership in Singapore
A new Standard Toyota Corolla Altis 1.6 costs S$96,888 as of November 2020. Every year, you might expect to pay an average of $1,591 a year on car insurance if you're a brand new driver, S$621 for servicing/maintenance costs, S$742 in road tax, and S$2,434 in petrol costs. Continue reading to get a better understanding of how these costs work.
The first and most obvious cost you'll need to consider as you think about buying a car is the initial cost of purchasing it. On average, you should expect to spend in the range of S$99,262 for a sedan, S$108,300 for a small SUV/crossover, and S$185,000 for a luxury car in Singapore. Due to the need to regulate the total number of vehicles in Singapore to keep traffic congestion at a manageable level, the purchasing cost includes the price of the car itself (determined by its OMV) as well as the significant amount you'll have to pay to obtain a Certificate of Entitlement (COE), or the right to purchase and own a car. Besides the price of the vehicle and the COE, the purchase price of a car usually also includes the Registration Fee, the Additional Registration Fee, and often the first payment of the road tax. Depending on the car's carbon emissions, it may also be subject to a CEVS surcharge or rebate.
Registration Fees and Taxes
Car-owners have to pay several one-time taxes or fees on their vehicles when purchasing or registering their car. These are usually included in the total purchase price you are quoted when, for example, you survey cars at a dealership.
In addition to the standard S$220 Registration Fee (RF), you'll also have to pay the Additional Registration Fee (ARF), which scales off the OMV of your car and is calculated according to the following structure:
|Vehicle OMV||ARF Rate|
The ARF, is equivalent to or pricier than the actual OMV of the car, is a significant expense. However, car owners do have the opportunity to be recouped for the cost of the ARF if they deregister their car before it turns 10 years old of age through the PARF rebate system.
Every car buyer must also pay an Excise Duty that is 20% of the car's OMV in addition to the typical Goods & Services Tax of 7% on all consumption goods.
Finally, Singapore encourages the purchase of environment-friendly vehicles by offering rebates on cars with particularly low carbon emissions and applying surcharges on cars with particularly high carbon emissions under the Carbon Emissions-Based Vehicle Scheme, or CEVS. Depending on the car, the CEVS could decrease or increase its price by up to about S$30,000, with the Toyota Prius qualifying for the highest rebate and the Lamborghini Huracan incurring the highest surcharge.
In addition to the fees and taxes factored into the initial cost of purchasing a car, there are other costs associated with car ownership, many of them recurring and mandatory. They include insurance costs, loan repayments, maintenance costs, and road tax, which we explain one by one below.
How much you need to pay in annual insurance premiums depends on a variety of factors that insurance companies consider pertinent to the risk you pose of getting into a car accident and filing a claim. These factors can include characteristics such as gender, age, driving experience, qualification for No Claim Discount (NCD) and occupation. Generally, however, the average annual cost of comprehensive car insurance for a male driver in his 40's is about S$1,539 with 0% NCD (or S$714 for the same drivers but who have a 50% NCD), according to a ValueChampion study. Still, drivers can save up to 50% or more by switching to one of the insurance companies below.
If you took out a car loan to finance the purchase of your car, another cost you'll need to bear in mind is your monthly car loan repayments. Let's use an example to see how much this might cost you. According to a ValueChampion study, the average car loan taken out in 2016 was about S$60,000. So let's assume you took out a car loan of S$60,000 from DBS at an interest rate of 2.18% to pay off a new Toyota Corolla Altis. You'll have up to a maximum of 7 years to pay off your car as per MAS regulations. Therefore, to pay your car loan off in time, you'll need to pay S$770.82 per month.
Throughout the lifecycle of your car, you will also need to pay the recurring cost of regular maintenance to keep your car working as it should. Servicing costs vary depending on the mileage of the car, its engine capacity and whether it is a luxury vehicle. For reference, servicing a Toyota Corolla Altis would cost about S$621 over the course of one year for two servicing appointments.
To get the most years out of your car and to minimise the likelihood that your car breaks down (which requires an even larger outlay of funds), it is in your best interest to pay for regular servicing along the intervals recommended by the car's maker. Often, maintenance is recommended either every 10,000 kms driven or every 6 months, whichever comes first. Most Singaporeans drive under 20,000 kms per year, so for the average driver it will likely be the latter.
Another recurring cost that car-owners face is the road tax, payable by all owners of Singapore-registered vehicles every six months. The amount you will need to pay in road tax depends on the engine capacity of your vehicle, which is measured in cubic centimeters (cc). As your car's engine capacity increases, the amount you'll have to pay in road tax increases, making this essentially a tax on your fuel usage. You can estimate the road tax for your vehicle using Sgcarmart's road tax calculator. For demonstrative purposes, the road tax for petrol-using vehicles is calculated as follows:
|Engine Capacity (EC) in cc||Road Tax For 12 Months|
|EC ≤ 600||$400 x 0.782|
|600 < EC ≤ 1,000||[$400 + $0.125(EC - 600)] x 0.782|
|1,000 < EC ≤ 1,600||[$500 + $0.375(EC - 1,000)] x 0.782|
|1,600 < EC ≤ 3,000||[$950 + $0.75(EC - 1,600)] x 0.782|
|EC > 3,000||[$3,050 + $1(EC - 3000)] x 0.782|
In addition to the above costs, drivers in Singapore also need to pay continually for petrol and parking, like drivers anywhere else. A Toyota Corolla Altis, for example, gets an average of 15.4 kms per liter. Given petrol prices are currently at around S$2.28/liter, driving 17,500 kms in one year in this car would cost you S$2,434.
Singaporean drivers are further required to pay road tolls on a daily basis. Through Singapore's Electronic Road Pricing (ERP) system, drivers are required to pay for driving on highly congested roads during highly congested times. Singapore controls traffic congestion in the city through this automated, electronic toll system, which charges drivers more during peak hours and in areas that tend to become highly congested. This encourages drivers to drive at less highly-trafficked times and to take less highly-trafficked routes, and generally discourages unnecessary driving. It also encourages use of public transport and helps Singapore manage pollution levels.
According to the Asian Development Bank, there were 77 ERP "gantries," or control points, in Singapore located at all roads leading into Singapore's central business district and along highly-used expressways and roads as of 2014. Though it is difficult to estimate the average amount a typical Singaporean driver will need to pay, this is a recurring, daily cost every car-owner in Singapore will need to be prepared to pay. The LTA has a calculator available on its website where you can check the ERP rates for your type of vehicle on the roads you use most frequently.