How much would you pay to cut your commuting time in half?
Time is precious. Often, we find ourselves shuttling between work, home and social gatherings in what seems like an endless commute cycle. But what if you could sleep in a little more, or get home a little sooner? How much would you be willing to pay for that extra sweet extra time?
In these situations, the thought of buying a car has crossed our minds one time too many. So, we’re going to break it down for you – is it really worth buying a car, especially when we have Grab and Uber?
First, let’s look at the down payment and monthly loan:
At the time of writing, the cost of a typical family car, inclusive of Certificate of Entitlement (COE), is about SGD 112,000. This is based on the median price of a 1600 cc family car, gathered from listings on SG Car Mart. A typical example would be the Toyota Altis 1.6A.
Let’s say you take out a bank loan to buy a new car, of generally similar make and price.
Under Monetary Authority of Singapore (MAS) rules, the maximum loan you can get is 70 per cent* of the car’s price (inclusive of the COE). Right off the bat, this means a down payment of at least SGD 33,600.
Your total loan will be SGD 78,400. The loan tenure (i.e. loan ‘deadline’) for car loans is always between one to seven years, and we’ll assume you take the maximum.
Now you must deal with the monthly repayments:
Most car loans have a flat interest rate of 2.78 per cent (three per cent if you’re buying a used car). But let’s say you’re apply for a DBS car loan online, which gives you a special, preferential interest rate of just 1.99 per cent per annum.
Interest rate comparison for a SGD 112,000 Toyota Altis 1.A (7-year repayment terms)
|DBS Car Loan (Online)||Regular Car Loan|
|Interest rate (per annum)||1.99%||2.78%|
|Total Interest (SGD)||10,921||15,257|
|Savings: SGD 4,336|
With a loan of SGD 78,400, over seven years at 1.99 per cent interest, you would pay SGD 1,063 per month. That’s SGD 10,921 in interest payments, over seven years.
Note that without the preferential rate, this would cost SGD 1,115 per month (SGD 15,257 in interest payments over seven years).
|Cost of Car Ownership (in SGD)|
But that’s not where it ends – you need to factor in road tax, insurance, parking, and fuel costs as well!
The road tax for a car, based on its age and engine capacity, is about SGD 744 per year (about SGD 62 per month). You can check the car’s road tax rates here.
As for insurance, let’s assume a new driver (aged around 30) without any No Claim Discount (NCD). Most car insurance policies would cost around SGD 110 per month for such a driver.
Season parking for HDB car parks is around SGD 65 a month, in unsheltered areas. However, we’re going to add SGD 200 per month for season parking at your office (a fairly typical rate), and another SGD 50 for parking at malls, eateries, etc.
As for petrol, we can see from Land Transport Authority (LTA) statistics that the typical Singapore drivers covers 17,500 km in a year. In an urban environment like Singapore, family cars would consume about eight litres per 100 km (again, using the Toyota Corolla Altis 1.6 as a standard). You can check typical fuel consumption rates here.
That’s an estimated 1,400 litres of petrol per year, for a family car. At the current price of around SGD 2.37 per litres (October 2017), that’s SGD 3,318 per year, or about SGD 276.50 per month.
Total estimated monthly cost:
After a down payment of SGD 33,600, you will pay around SGD 1,826.50 per month, excluding maintenance (e.g. changing tyres, car washes, oil checks).
What if you just Grab everywhere?
Let’s say you use Grab all the time, and travel as far as you normally would with your own car (17,500 km per year, or about 1,458 km per month).
Let’s say you make four trips per day, which means a base fare of SGD 10 per day, or about SGD 300 per month. The total distance travelled per month is 1,458, or about SGD 729 at 50 cents per kilometre. Add that to the base fare, and you’re spending about SGD 1,029 per month.
Then there’s the cost per minute. Assuming your four trips are 15 minutes each, that’s SGD 9.60 per day, or SGD 288 per month.
In total, that would come to about SGD 1,317 per month.
If you just Grab everywhere, you could save around SGD 510 per month or a whopping SGD 6,114 a year!
And remember, we haven’t even factored in the maintenance cost for a car, or inconveniences like having to wash and vacuum. Also remember that Grab often gives out promo codes and discounts, which may further lower its cost. Riding with Grab often also allows you to accumulate reward points which can be redeemed for further discounts.
Of course, it’s not always just about money. For instance, if you have a sales job that requires you to run around, then a car may be necessary. You’ll also have the added convenience of being able to travel wherever, whenever you want – that is if you have SGD 1,826.50 to spare each month.
Otherwise, you might want to seriously consider just using Grab.
*The maximum possible loan for private cars is 70 per cent of the price, for vehicles with an Open Market Value (OMV) of SGD 20,000 or below. If the OMV is above SGD 20,000, the maximum possible loan is only 60 per cent.
**Based on DBS Car Loan Online @ 1.99% p.a.