How did I "saved money" by owning a Car in Singapore? 老乌龟 胡说八道
What am I talking about? How the heck of owning a car in Singapore related to saving money? This is a sure loss and pure expense, Turtle must be talking nonsense again.
As you know Old turtle is very stingy and kiasu, he is not willing to spend too much money on a depreciating asset ie a car with a limited lifespan in Singapore.
One of my immediate resolution for this year is to change to a bigger car in terms of space and seating ie from a 5 seaters to a 7 seaters. Reasons? Kids are growing up and parents and in-laws are growing old so we need more space to carry more bodies in the same car.
In Singapore, owning a car is expensive because of it's limited lifespan ie purchase of Certificate of Entitlement (COE) to own a car for 10 years or renewed another 5 or 10 years after end of first 10 years of it's life.
In 2014, I bought my first ever car (Nissan) in my life when my first baby turtle was 1 year old. The car was a old 7 years old car and cost me $36k and there was a parf/coe rebate at the end of it's 10 years life if we decided to terminate/scrap the car, this comes to around $9k and this was the cash value I will be able to get back.
I will now share my personal Turtle experience on how I "saved" money by owning a car in Singapore.
My older car depreciation per year was around $9k[($36k - $9k)/3] assuming I scrap it off. But I choose to renew it's life at the end of 10 years by renewing the COE by another 10 years, by doing this, I will need to give up the parf/coe value of the car ie $9kand pay the prevailing Quota Premium (PQP) subjected to the monthly COE value. I paid $45k for a 10 years COE renewal for my old car back in 2017 to extend it's life span till 2027.
The COE bidding price was $32889 for 10 years COE as of Dec 2019 so I actually paid around $12k more back in 2017 but obviously I do not have crystal ball to predict the the future price.
(1) It was because COE value was pretty high at that point of time and I do not want to spend too much buying a new car.
(2) I have been maintaining the car pretty well.
(3) I still need the convenience of having a car.
If I keep the older car for next 10 years, the annual depreciation will be $45000 + $9000) / 10 years = $5400 per year. This is a very reasonable amount in terms of annual depreciation but of course you have to think about the higher road tax (increase 10% per year for next 5 years) and higher maintenance fees for wear and tear.
So how much did I "saved" by renewing COE and not buying a new car?
A brand new Nissan (same size) probably cost around 80-100k at least back in 2017 including COE so annual depreciation was at least 7k to 9k at least after taking into consideration of parf/coe rebates. I saved around at least 2k to 3k per year in terms of depreciation by continuing my old Nissan.
For those who are like me who needs a car for convenience and time savings can consider to renew COE as the current COE is relatively low as compare historically for the past 10 years. Thanks Uber for pulling out from Singapore ride hailing business.
Find out more here for COE renewal:
Fast forward to Jan 2020
I traded in my older 13 years old Nissan for 35k and bought a 10 years old Honda 7 seaters for 40k, the COE was extended for 5 years COE by the car agent. This means that the old Honda cost me an annual depreciation is 40k / 5 years = 8k per year.
As compared to a brand new same model 7 seaters, it will cost me around 110k to 120k for 10 years COE and a annual depreciation of around 10k to 11k including parf/coe rebates. How much did I "saved" again? Around at least 2k to 3k per year.
This old Honda is still more expensive than my older Nissan but since they are off model and size, it is not a direct apple to apple comparison.
Lastly, I did not take any car loans for both of my older Nissan and old Honda so I am not paying any car loan interest which adds up to the cost of owning a car in Singapore.
Usually the car agent will be quite unhappy if you do not take any car loans as they are unable to earn any interest (in house loan) or referral fee from banks. Heck, everyone knew I don't like debt.
Many told me old cars lots of problem, I think it is also a matter of luck when you select the car and which car agent did you trust to buy your car from. So far, speaking from personal experience, my maintenance is just for wear and tear and nothing major and even after adding these into the annual depreciation, my cost is still lower than owning a new car.
Turtle own car tips:
(1) Consider renewing COE if your existing car is still performing well.
(2) Try not to take car loan if possible to save on interest.
(3) Buy second hand resale car if you want to upgrade your ride to cater to your expanding family.
Of course if you can do without a car, please go ahead and save the 6k to 8k on depreciation a year. For those who need it, this is my old Turtle experience for your consideration.
Next post I will share what is my running cost of maintaining a car in Singapore excluding any car loan.
Every savings counts. "Little drops of water make a mighty ocean".
Hope you like my Turtle sharing on family and personal finance management.
Turtle_Investor (aka 老乌龟)
Slow and Steady win the race, Slow and Boring sleep soundly, Slow and Simple no worries.