The Real Cost of Owning a Set of Wheels

Car ownership costs can be categorised into two categories, namely, initial purchase costs and recurring costs.

Initial Purchase Costs

The main cost of owning a car is the Certificate of Entitlement (COE) which is a Vehicle Quota System – a Singapore government initiative to control the number of cars on the roads, by determining the number of new vehicles allowed for registration per year.

The vehicle quota for a given year is controlled through the monthly release of COE. It is a certificate that entitles you to register and own a vehicle for 10 years.

A COE bidding exercise takes place to decide on the owner of the COE. This is an auction whereby you have to bid for the certificate in order to fall within the pre-determined quota. Usually, the demand for COEs outweighs the limited quota that is released. This imbalance often results in unaffordable COE costs.

COE in Categories A (small cars) has hit S$78,301 on February 20, while COEs of vehicles in Category B (big cars) has reached S$92,667.

Then Open Market Value (OMV) must also be taken into consideration. OMV is the value of the car as assessed by the Singapore Customs, taking into account purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car from country of manufacture to Singapore. It is the determining factor for another costs including as excise duty etc.

Overall, here’s the cost structure of owning a car:

Registration Fee S$140
Additional Registration Fee 130 per cent of OMV
COE As Bid
Excise Duty 20 per cent of OMV

Source: LTA

Everyday Costs

After purchasing a car, the financial drain is just beginning.

In Singapore, it is compulsory for a vehicle to have insurance. Insurance premium depends upon the engine capacity, age of the vehicle, driving experience of drivers, among others.

Then there is a road tax to worry about. Tax rates are variable depending upon your vehicle’s engine capacity. A surcharge ranging from 10 per cent to 50 per cent on the road tax is applicable for cars that are more than 10 years old.

Engine Capacity (EC) in cc 6-Monthly Road Tax Formula
(From 1 July 2008)
EC < 600 S$200 x 0.782
600 < EC < 1,000 [S$200 + 0.125 x (EC – 600)] x 0.782
1,000 < EC < 1,600 [S$250 + 0.375 (EC – 1,000)] x 0.782
1,600 < EC < 3,000 [S$475 + 0.75 (EC – 1,600)] x 0.782 EC > 3,000 [S$1,525 + 1 (EC – 3,000)] x 0.782

Source: LTA
Normal cost of owning a car such as petrol costs, parking charges as well as Electronic Road Pricing should also be factored into your calculation.

Unless your car comes with lifetime warranty, you should be prepared to fork out money for tuning and maintaining the vehicle.

Continue reading at Biz Daily by Donavan Lim


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