Buy a brand new car or a used car?
If you’re reading this , there’s a good chance you’re already an adult , have a singapore driving license and are seriously considering getting a car.
You’re probably looking around for a good deal, checking SG car mart or Carro every other day. And a lingering question in your mind could be whether to get a brand new or used car.
If you’re thinking of getting a new car, you’re in luck because COE premiums are relatively ‘affordable’ right now. Remember in 2012 - 2013 when COE premiums were nearly $100,000? Now they’re under $30,000. (referring to CAT A COE prices)
This means you can get some pretty nice brand new cars in the $80,000 range . Previously, this was almost impossible. So congrats ! You’re in the market for a new car at a good time. However, buying a brand new car comes with some considerations - which we’ll cover below.
Brand New Cars
With brand new cars, it loses a lot of value over the first 2-3 years of its life. You may be familiar with the phrase that goes something like ‘a car loses half its value the moment it rolls out the showroom’ . While that is an exaggeration, this statement has a very good point.
For example, if you are buying a brand new Toyota Camry, it has a depreciation of about $13.6k per year, or more than $1,000 per month. And this is on top of your monthly car repayments ! So on paper, you are paying approx. $1,000 monthly for your instalment, and also ‘losing’ $1,000 per month on the value of the car. And this does not factor in other costs like petrol, maintenance, road tax and insurance.
While this may be a small thing to consider, buying a new car from a dealership means that you’ll have to wait for about a month or two before you can take drive the car on the roads. This is because with a brand new car, you may have options to spec the car to your liking - such as getting optional add-ons like safety systems, upgraded infotainment, or cosmetic changes like an upgraded bodykit and rims. These are sent to the factory for them to build the car exactly to the specifications you mentioned and it takes time for them to build the car and ship it over to singapore.
If you’re buying a brand new car, there’s a good chance that what you are buying will cost more than the used car you’re considering. If you are buying a Hyundai Santa Fe 2.4 GLS Sunroof, which costs $175,999 at the time of writing (with COE), then you are forking out about $70,000 cash just for the downpayment ! This can be a dealbreaker for consumers who are not able to afford such a hefty downpayment.
One of the biggest reasons consumers buy used cars is because of the price. You can get some really good deals on used cars if you know where to look. Some cars have been sitting in the lot for awhile, and the dealer or owner may be keen to sell it off quickly, so that puts you in an advantage when negotiating on the price of the car or terms of the purchase.
Another reason is a niche group of car buyers (who are likely car enthusiasts) - change cars pretty often. So for them, it makes more sense to buy a car they’re interested in, own it for awhile and then sell it once they feel like driving something else.
For example, if you’ve always wanted to drive a sporty continental car - then you can check out some good buys such as an Audi A4 or BMW 3 series - which can be had for under $60,000 with about 3 years of COE left. Take for example this Audi A4.
You can drive it for about 3 years, and when it times to scrap the car, you can still get back about $19,000 from the ARF, which can be used towards the downpayment for your next car. Depreciation stands at about $13,000 per year.
Reliability is a hit or miss with used cars. This is because you may not know the full maintenance history of the car, unless the previous owner is able to provide it to you.
Which is why it's important to do a pre-inspection purchase before buying a used car. Another tip is to change all oils and filters in the car after purchase to give you a peace of mind, and can potentially save you time from the car being in the workshop and money from expensive repairs down the line - and this brings us to our last point.
Used cars are sold by private dealers or the car owners themselves. This means that a warranty on the car can come in various ways. Some are 3 months long while others are 6 months, and some have more coverage than others. Whatever it may be - a warranty is pretty important because without one, it can leave you stranded with repair bills should the car cause any issues. Typically, dealers will provide a 6 month or 1 year engine and gearbox warranty - as these are the more expensive things to replace if they malfunction.