?? Here's the wheel deal on buying a car in Singapore

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?? Zooming car (prices)

When I started work four years ago and saw how slowly my bank account was growing, I thought to myself that I’d end up buying a car later than I had planned.?

Then prices of Certificates of Entitlement (COEs) for mass-market cars started climbing – fast. In 2023, it hit S$100,000. At that point, I resigned myself to the fate of never being able to afford a car.

However, several recent announcements could put owning a car just a little more within reach for mere mortals like me. More in this week’s issue.

In this week’s issue:

• How much does it cost to buy a car today?
• Some bank home loans are now cheaper than HDB loans
• Singapore could face higher costs and slower growth under a Trump presidency

?? Supply and demand

In Singapore, the right to own a car can often cost more than the car itself. You likely already knew that, given how it has become a national pastime to complain about COE prices.

After all, it’s largely because of the COE that the price of a Toyota hybrid in Singapore can buy you four Tesla Model Ys in Australia.

In April 2023, COE prices for mainstream cars (Category A) breached the S$100,000 mark for the first time.?

Since then, prices fell to a low of S$65,010 in the first bidding exercise of 2024 before climbing back up to S$100,000 again.

Late last month, the Land Transport Authority (LTA) announced that, from February 2025, it would be adding around 20,000 COEs progressively “over the next few years”.

LTA said this was possible because vehicle usage has gone down, public transport has expanded and congestion can be better managed through the continuing transition to the Electronic Road Pricing 2.0 (ERP 2.0) system.

For context, Singapore has for years maintained a zero-growth policy for the car population. Essentially, this means that the supply of COEs available for bidding is determined primarily by car deregistrations (e.g. sending a car to be scrapped when its COE reaches its 10-year lifespan.)

With more supply being injected, basic economics dictate that prices will fall. However, some analysts and car dealers are less confident, saying that while the move will stabilise prices, it’s hard to know how big of an impact it will have on prices – especially in the long term – without knowing when and how the new supply will be added. Real-world market forces, after all, are more than just supply and demand.

That said, the promise of a COE injection has played a part in reducing demand for them in the latest round of bidding on Wednesday (Nov 6), car dealers say, as premiums for all five categories fell.?

In a video published last year, I talked about how COE prices are heavily influenced by the 10-year cycle in COE supply. It so happens that we’re now coming off a low in the supply cycle and climbing towards a peak sometime in 2026.

On top of that, the authorities have extended an electric vehicles (EVs) incentive scheme until Dec 31, 2025, which can net EV buyers savings of as much as S$40,000.?

With more companies expected to follow Amazon’s and Grab’s lead to impose work-from-office policies, is it time for aspiring car owners to start preparing for their purchases??

?? How much car can you get?

For illustration, let’s see how much it costs today to buy a brand new BYD Atto 3, an electric car eligible for the EV incentive scheme and one of the best-selling cars in Singapore.?

According to figures on Sgcarmart, the amount would be S$178,888 – though prices vary depending on add-ons such as colour and whether you want the dealer to guarantee that you’ll successful get a COE. will vary based on the package that’ll determine, for example, whether the dealer guarantees a successful COE bidding.?

That price includes the price of a Cat A COE, as well as relevant taxes and fees. Buyers won’t need to pay additional registration fees after the EV rebates.?

For the BYD Atto 3, you’ll be able to get a car loan of up to 60 per cent of the car price, which means you’ll have to pay a down payment of 40 per cent.

When budgeting for a car, you’ll also need to consider other recurring costs, which include road tax as well as the cost of servicing, insurance, parking and charging or petrol.?

These amounts vary widely so the figures below should serve only as a rough estimate. BYD’s authorised dealer, for example, offers free servicing for 10 years or 200,000 km.?

• Road tax: S$1,502/year
• Car insurance: ~S$2,300/year
• Servicing: Free for 10 years
• Charging: ~S$1,920/year
• HDB season parking: S$110/month

Based on the above figures, we get a sum of S$7,042 per year or S$587 per month.?

Throw in your monthly car loan instalment, and it looks like car owners need to be prepared to fork out a total of about S$2,087 per month.

?? Do you really need one?

Financial advisers generally suggest capping your car expenses to under 15 per cent of your monthly income.?

That would mean having to earn close to a whopping S$14,000 per month to comfortably afford an Atto 3.?

Even if the Cat A COE were to fall to a hypothetical S$70,000, you would still need a monthly salary of at least S$12,200 based on earlier assumptions. I don’t know many people around my age who are earning that amount.?

Of course, one could opt for a cheaper, used car. TikToker Justin Sng, for example, broke down that to own a 2014 Mazda 3, one would need to earn a considerably lower monthly salary of S$7,702.?

You could also set aside more of your salary each month towards paying for a car, though that could mean you risk not being able to reach your financial goals, meet future housing payments or worse – default on your car loan if you happen to lose your job.?

So, despite the bump in COEs, it’s worth asking yourself whether you really need to own a car. Furthermore, unlike buying a house, car prices depreciate from the moment you drive one out of the showroom.

Otherwise, short-term car rentals or private hire cars can be an option for periods when you really need a car. And for other periods, public transport isn’t all that bad – notwithstanding the breakdowns and confusing interim shuttle bus services, of course.?

TL;DR

• The supply of COEs is being increased, which could bring down prices
• A government EV scheme is also being extended, which could cut costs by up to S$40,000
• Buying even a popular, mass-market vehicle like the BYD Atto 3 could set you back a hefty amount each month
• And that’s not including the 40 per cent down payment

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