Are you earning enough to own a car in Singapore?

Ever wonder if you are earning enough to buy a car in Singapore? Purchasing a car in Singapore has gotten progressively costly in recent years. Furthermore, there are additional expenses to consider when owning a car that goes beyond what we’re earning, such as road tax and insurance coverage.

With COE costs hovering at around $35,000 and the Additional Registration Fee (ARF) expanding, one would need to set aside a lot more budget to pay for a personal car today.

In this article, we will share a breakdown of all the costs involved in owning a car in Singapore, using the case study of the Mitsubishi Attrage, one of the more affordable models in the market.

Just a heads up – this is not an entirely new topic that we are exploring. Other websites have shared their viewpoints on this before. We find their estimations unique and different compared to what we are about to present, hence our advice is to do your due diligence and adequate research before deciding to purchase your own car.

Additional Vehicle Expenses That You Need To Calculate

Apart from the purchase price, here are some additional expenses to take into consideration in calculating the total costs of vehicle ownership:

  • Annual Motor Insurance
  • Annual Depreciation
  • Annual Road Tax
  • Petrol and Parking Expenses
  • Service and Maintenance Cost
  • Vehicle Loan Interest


Currently, the Mitsubishi Attrage costs $65,999 (make it a whole number at $66,000). Let’s breakdown the costs based on the above points.

1. Annual Motor Insurance

This amount varies according to your insurer as well as your own driving history. By and large, a new car owner should pay about $1,200 every year for a comprehensive plan

Annual Motor Insurance/Year – $1,200


2. Annual Depreciation (AD)

AD = (Total Cost of Vehicle – Sale Value of Vehicle) / Number of Years that the Vehicle is in Service

The above is the formula for calculating annual depreciation. Total Cost of Vehicle includes the Open Market Value (OMV), COE, Registration Fee (RF) and Additional Registration Fee (ARF). The Sale Value would refer to the Preferential Additional Registration Fee (PARF) which is the value of de-registering a vehicle in Singapore.

Below is an example of how it is calculated.

Mitsubishi Attrage 1.2 Modern CVT (A)

OMV $13,626
ARF = OMV (For car below $20,000)

Given the vehicle will be used for 10 years,
50% PARF rebate, $6,813

Annual Depreciation,
($65,999 – $6,813) / 10years = $5,918.60 ~$5,920

The Mitsubishi Attrage depreciates at a rate of $5,920 per year, over a 10-year period. As this value includes COE, depreciation is a good indicator of determining the annual cost of a vehicle and the deregistration value that you would accrue back at the end of 10 years.

AD/Year – $5,920


3. Annual Road Tax

The road tax of the Mitsubishi Attrage costs $506 every year. This is pretty straightforward.

Annual Road Tax/Year – $506


4. Car Petrol And Parking Expenses

Most people tend to forget about parking and petrol, despite it being a significant cost area.

Petrol costs estimate at about $60 every week, or $240 a month. ERP charges are another $20 per month.

HDB season parking costs $110 every month. Not forgetting parking elsewhere such as the office or at the nearby mall, that would set you back an additional $80 a month.

In total, you would spend approximately $450 on parking and petrol every month, which translates to $5,400 a year.

Petrol and Parking Expenses/Year – $5,400


5. Car Service And Maintenance Cost

This is more difficult to calculate as this is dependent on the workshop you go to, your driving experience, and also how you take care of your vehicle.

The initial years of a new vehicle are relatively issue-free, with regular servicing required. However, past the 5-year mark, your vehicle would likely face some problems due to the high mileage and use, thus requiring major overhaul and even the replacement of parts for it to be maintained.

Given that servicing fees are about $500 per year, and maintenance costs come up to about $5,000 over the course of 10 years, that would amount to $10,000 over the car’s lifespan, therefore, equates to $1,000 every year.

Service and Maintenance Cost/Year – $1,000


6. Vehicle Loan Interest

In purchasing a vehicle, a 30% down payment needs to be made ($19,800), and a loan can service the remaining 70%.

Based on a 7-year loan period of 1.88% per annum, monthly instalments on a $46,200 loan would amount to $623, with total interest cost at $6,132. Over a 10-year time frame, that would be $613 every year.

Vehicle Loan Amount/Year – $613

At $14,248, this figure might come as a surprise to some of those who think that the costs to vehicle ownership ends after they make the purchase. This table and breakdown show that there are other hidden costs involved to own and properly upkeep a car in Singapore.


How Much You Need To Earn To Afford $14,639 Per Year

After removing CPF (20%) and personal savings for reserve funds and credit duties (which we assume at 20%), we are left at about 60% of disposable income.

Daily necessities and spending typically amount to about 40 to 50% of one’s gross salary. Therefore, we advise that Singaporeans ought to cap vehicle expenditure at about 10-20% of their yearly salary. In conclusion, you should be earning about $75,000 to $150,000 a year before considering buying a car in Singapore.

What do you think about our above evaluation? Do you think Singaporeans are earning enough to own a car? Share with us your perspectives on Facebook, we’d love to hear your thoughts!


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