Buying a Used Car from a Dealer in Singapore: Key Tips

Let’s talk turkey — in nutshell, brand-new vehicle prices in Singapore are perhaps the highest in the world. That’s one of the main reasons people flock to used car dealers when it comes to getting new wheels. In this article, we’ll give you the scoop on how to buy a used car for a dealer — a reputable car dealer. If you’re interested in exploring the world of pre-owned automobiles, here are some helpful tips for purchasing a used car. We’ll explore the jargon, and the financial landmines, and give you the best advice so you can avoid those traitorous pitfalls associated with the whole transaction. 

Q&A on buying a used car from a dealer in Singapore

Purchasing a pre-owned automobile from a dealer can be a great option for those who want the peace of mind that comes with buying from a reputable and established business. However, navigating the process can be confusing and overwhelming, especially for first-time buyers. In this Q&A section, we’ll cover some of the most frequently asked questions about buying a used car from a dealer in Singapore. From understanding the paperwork involved to negotiating the best price, we’ll provide you with the information you need to make an informed decision and get a great deal on your next used car — we’ll give you the tips you simply can’t live without. 

How much does it cost to buy a used car?

The prices of used cars in Singapore are affected by various factors, including COE prices, demand and supply, car models, age, mileage, and condition. In general, the prices of used cars in Singapore tend to be higher than in many other countries due to the high cost of car ownership and the relatively small size of the market.

The prices of different types of cars in Singapore vary depending on factors such as age, mileage, and condition. However, here are some examples of the average prices of popular car models in Singapore in 2019, according to data from the Singapore Vehicle Traders Association:

• Toyota Corolla Altis: SGD 61,000
• Honda Civic: SGD 55,000
• Mazda 3: SGD 57,000
• Mercedes-Benz C-Class: SGD 134,000
• BMW 5 Series: SGD 147,000

It is important to note that these prices are just averages, and the actual prices of specific cars can vary significantly depending on various factors.

What does the selling price of a used car in Singapore consist of?

The selling price of a used car in Singapore typically consists of several components, all factors taken into account by most used car dealers, including:

• The car’s Open Market Value – OMV: The OMV is the price paid or payable for the vehicle when it is first registered in Singapore. It includes the purchase price, freight, insurance, and all other charges incidental to the sale and delivery of the car to Singapore. The OMV is used as a basis for calculating various taxes and fees, such as the Additional Registration Fee – ARF – and the Goods and Services Tax – GST.
• The Additional Registration Fee -ARF: The ARF is a tax that is imposed on the OMV of the car. The ARF is calculated based on a tiered system, with higher-priced cars being subject to a higher percentage of ARF. The ARF can range from 100% to 180% of the OMV, depending on the car’s OMV. These fees and percentages are always in flux and changing — so it’s important to have a trusted used car dealer that helps you out and gives you accurate info. 
• The Certificate of Entitlement – COE: The COE is a quota license that gives the owner the right to register, own and use a vehicle in Singapore for a period of 10 years. The cost of the COE is determined by a bidding system, and the price can fluctuate significantly depending on demand and supply. The COE is a significant component of the selling price of a used car, as the remaining COE period will affect the car’s resale value.
• Other fees: In addition to the ARF and COE, there may be other fees and charges that are included in the selling price of a used car, such as transfer fees, registration fees, and insurance fees. These fees can vary depending on the dealer or seller, and may also depend on the age and condition of the car.
• Depreciation: as a car gets older it starts to lose its market value. There’s an old saying, the minute you drive a new car off a lot, it transforms into a liability. Why? Because it generates debt and depreciates. It’s not really an asset. 

All these factors contribute to the price of the car, the price the dealer takes into account when calculating what price tag to put on a used car. 

Aside from the vehicle purchase price, what other costs do I need to know when buying a used car?

So, you arrive at a reputable used car dealer and have your eye laser locked on beauty — the price, which is a complex algorithm and equation of dozens of factors, works for you. You even managed to bargain and bit and got a nice discount. You’re all set, right? Sadly, there are other costs to consider. Let’s break those down. 

• Goods and Services Tax -GST: This is a tax of 7% on the total cost of the car, including the OMV, ARF, COE, and other applicable fees.
• Transfer fee: If you are buying a used car from a dealer or a private seller, there may be a transfer fee involved to transfer ownership of the car to you — in most cases, a trusted used car dealer will let you know what that cost is. 
• Road tax: This is an annual tax payable to the LTA to use the public roads in Singapore. The amount of road tax payable is based on the engine capacity of the car and the age of the vehicle.
• Insurance: You will need to purchase insurance for your used car to cover the cost of any damage to the car or any injury caused to other parties in the event of an accident.
• Vehicle inspection: Before you can register and use the car, you will need to have it inspected by an authorized inspection center. The cost of the inspection can vary depending on the center you choose.
• Maintenance and repair costs: You will need to budget for ongoing maintenance and repair costs for your used car, including regular servicing, oil changes, and any necessary repairs.
• Parking fees: If you plan to park your car in a public parking lot, there may be fees involved to use the parking facilities.

How can I finance the cost of buying a used car from a dealer?

When it comes to financing a used car, you have two options: Cash or a Loan. There are three types of used car loan financing methods available in Singapore: fixed interest rate financing, in-house financing, and balloon scheme financing.

The most popular option for many drivers is fixed-interest rate financing from a bank, where the interest rate remains constant throughout the loan period. For instance, you may consider the DBS car loan, which offers competitive interest rates and flexible repayment options.

In-house financing is a viable alternative if you are unable to secure a bank loan or if the vehicle is too old. However, the interest rate may be higher, and there could be administrative fees to consider.

Balloon scheme financing, on the other hand, allows you to exclude the Preferential Additional Registration Fee – PARF – from your loan, reducing your monthly repayments but increasing your used car loan interest rates. Keep in mind that this option may come with certain conditions and penalties if you decide to switch cars halfway through the loan tenure.

Buy a car today —- Will used car prices continue to rise in 2023?

According to data from the Singapore Vehicle Traders Association, the average prices of used cars in Singapore have been increasing steadily over the last few years. For example, in 2019, the average price of a used car in Singapore was around SGD 61,500, while in 2018, it was around SGD 58,000. However, it is important to note that these are just averages, and the prices of specific car models can vary significantly.