Get the Best Car Insurance in Singapore
As many of us know, Singapore holds the dubious honor of being one of the most expensive countries in the world to own a car. And with COE prices so high, it comes as no surprise that more and more prospective car owners in Singapore are choosing to buy used cars to tide them over until, they hope, COE prices fall. But there's a little more to buying a used car than buying a new one, and if you're interested in one, you'll need to make sure you do your research. Below, we have compiled some tips to guide you through buying a used car in Singapore so that you can find the best car for your needs.
Who should you buy from?
When buying a used car, you should make sure that the actual condition of the car is as advertised by its seller. How vigilant you need to be about double-checking will vary depending on who you're buying the car from.
If you're willing to pay a little more, you may look into buying a pre-owned car from an official showroom or a dealership. The advantage of buying used cars at dealerships is that, due to their high visibility in the Singapore car market and media, they have a stake in maintaining a reputation for honesty, reliability and quality; thus, you can have a greater degree of confidence that the car's condition will map closely to how it is being advertised. Used cars bought from dealerships may come with warranties as well, which can be reassuring to buyers anxious about the longevity of used cars. You are further protected as a consumer thanks to the Lemon Law, which requires that consumer goods sold by registered businesses perform up to a reasonable standard given its make and mileage.
You can also buy a used car from an individual seller. Though you'll have more work to do to ensure you get what you pay for, you can often find much cheaper cars this way. If you decide to go this route, be sure to follow the following precautions:
- Check out a variety of sellers. You should have a good idea of how much a car that fits your specifications is selling for in the market; this will improve your negotiating position and help to ensure you pay a fair price.
- Ask for servicing and maintenance records. You want your used car to last you a long time, and cars that have have been serviced regularly throughout their lifespans according to their maker's recommendations will continue to perform well for longer.
- Have the car thoroughly inspected. You should hire a professional evaluation center or a reputable mechanic to inspect the car so that you can be sure of its condition, age and mileage before you buy it. Disreputable sellers may try to mislead you as to its history of accidents, maintenance records, age and mileage, with some tampering with car odometers or covering up scratches with paint jobs.
- Go for a test drive in the car before you buy. You should pay close attention to how the suspension, brakes, steering and gearbox are functioning.
- Make sure a contract is drawn up to document the transaction, and have it witnessed by a trusted third party. Read the fine print: Be clear before you sign on every single charge factoring into the price to avoid paying ambiguous or unnecessary hidden fees. Don't sign a contract or form until it is final and cannot be altered by the selling party.
Should you buy a PARF or COE car?
When you're in the market for a used vehicle, you have the option of buying either a PARF car or a COE car. A PARF car is a car under the age of 10 that is thus still eligible to qualify you for a PARF rebate if you deregister it before it surpasses 10 years of age. A COE car is a car that has had its COE renewed through its former owner paying the Prevailing Quota Premium (PQP) for either 5 or 10 additional years and is at least 10 years old. Ultimately, which kind of used car you should choose depends on your preferences regarding overall cost and condition.
Comparing PARF Cars vs. COE Cars
|PARF car||COE car|
|- More expensive||+ Less expensive|
|- Possibly higher required down payment||+ Lower required down payment|
|+ Can qualify for both PARF and COE rebates||+ Can qualify for COE rebate|
|+ Potentially lower maintenance costs||- Potentially higher maintenance costs|
|+ Newer vehicle||- Older vehicle|
|+ Less total mileage||- Higher total mileage|
|+ Lower road tax||- Higher road tax|
COE cars are generally going to be your cheapest option. Any COE car will be at least 10 years old. As such its Open Market Value (OMV) will have depreciated significantly from it was when brand new, and its price should reflect that. Also, when buying a COE car, built into the price is the cost of the unused remaining time on its COE. Depending on what the Prevailing Quota Premium was its COE was renewed, it's possible you may be able to save a lot of money by not having to pay the current Quota Premium for a COE on a new car.
For example, the average price of COEs in Category A in 2009 was S$10,744, as compared to the average COE cost in 2016 of S$49,644, and 2017 COE costs are tracking fairly closely to 2016 costs thus far. If you bought a COE car that had its COE renewed in 2009, you would only have to pay a fraction of the cost of the 2009 PQP, and save tens of thousands of dollars.
If you end up deregistering your used COE car before its COE expires, you also can qualify to receive a COE rebate for the amount of unused time left on the COE at the time of deregistering.
However, there are also some drawbacks to buying a COE car that you should bear in mind. As your car continues to age past the 10-year mark, you will be obligated to pay a progressively larger amount in road tax, as delineated in the following table.
|Age of Car (years)||Additional Surcharge on Road Tax|
You will also want to carefully consider the condition of the used car you have in mind. Due to a COE car's higher age, it may have also accrued significant mileage, and as mileage accumulates on a car, its performance depreciates. The upshot is you may find yourself paying to repair or replace parts of your car more frequently than you'd anticipated, especially if the car in question did not undergo regular periodic maintenance for the first 10 years of its lifespan.
Buying a PARF car, on the other hand, affords you the opportunity to drive a newer vehicle that has accrued less total mileage, may incur lower maintenance costs, and doesn't require you to pay higher road tax surcharges at least until it turns 10. Not only that, but as a PARF car still have not aged past the age of 10, you can still benefit from both the PARF rebate and the COE rebate, if you deregister it before it turns 10 and before its COE expires. Getting these two rebates could help to counter a major downside to buying a PARF car: they are typically more expensive.
Not only are PARF cars usually more costly, but you also may have to pay more for it upfront in your down payment than you would for a COE car. The Monetary Authority of Singapore (MAS) mandates that car buyers with an OMV of S$20,000 or less can borrow up to 70% of the purchase price of the vehicle. If the car you are buying has an OMV of more than S$20,000, you can borrow up to 60% of the purchase price. As PARF cars are newer than COE cars, a PARF car's OMV won't have depreciated as much by the time you're buying it, meaning a higher likelihood that its OMV is still higher than S$20,000 and that a higher down payment of 40% of the purchase price would be required.