Whether you have decided to go for a brand new car or a secondhand car, getting a car remains a big deal in Singapore. Simply put, before making the final decision on getting a car, you need to have all the necessary information so you know what you are getting into.
As most people already know, getting a used car can help you save over half the cost of buying a new car. This article is based on experience and extensive research. It focuses on the factors to consider before buying a secondhand car. Such factors include:
- Age and usage
- PARF or COE?
- Road tax
- Financing the purchase
Age and Usage
When it comes to buying a secondhand car, not just any used car will do. First of all, you must find out how the previous owner has used the car. Factors such as overall cleanliness, residual smell and the state of the car seats can give you an idea about the age of the car, but such factors are usually not enough. You have to find out how often the engine has been used (and for how long!).
As much as being consistently used over a long period should make you not buy a used car, you also do not want a car that has not been used regularly (despite being old). This is because not using a car regularly can bring about various engine complications. The mileage must be known and understood. A car with a mileage of up to 15,000km per annum is preferred.
Also, the number of previous owners of the car can be a useful pointer in determining the age of the car, and the possibility of problems.
- Be aware that you are not allowed to buy over the insurance of the seller
- Be aware of the available options
- Always make a comparison between different policies
In truth, you should obtain your own insurance coverage, even when you are buying your used car from a direct seller. Being aware of the fact that you should not buy over the insurance of the car seller helps you in choosing what is best for you as regards insurance.
Comparing different policies is useful, especially as Singapore has quite a number of insurance companies. Each one hopes to do better than their competitors. Also, you are free to change your insurance provider after a year if you see fit.
When it comes to insurance, it can be a very dicey business. One factor that contributes to this is the “excess.” This is basically the maximum amount of money (out of the bill) which you must pay before the insurance company steps in. If, for example, you have an insurance claim of $4000 and your excess is $1000, then the company takes care of $3000. However, if the claim is for $800, you bear the burden alone (as it is not even up to your excess).
Apart from that, you should always enquire about their policy on modifications. Simply put, will your claim be affected if modifications have been made to the car (say tyre rim or something else has been changed)? It is important to pay close attention to the fine print, especially for used cars.
PARF or COE?
The returns you get as scrap value depends on whether the car is a COE car or a PARF car.
When a car is less than ten years of age, it is referred to as a PARF car. With such a car, before its tenth year, you can decide to de-register it. De-registering it at such a stage gives you money-back guarantee (up to half the original sum).
For a COE car, the COE has been already renewed by the previous owner and the age of such a car is over 10 years. It’s called a COE car because, a new 5-year COE or a 10-year COE has been paid for.
While COE cars appears less expensive to purchase, remember that unregistering a PARF car can earn you a huge sum of money too (based on the part of your COE that remains unused). Also, in the long run, COE cars usually end up requiring more money in form of repairs (especially when not adequately maintained in the past).
Road tax is a key factor to consider before buying a secondhand car. The best thing to do is enquire about how much you would have to pay for road tax, and also about the due date.
If not properly checked and understood, it is capable of bringing about hidden charges later on. For COE cars generally, you have to pay about fifty percent more for road tax. If you are lucky enough to find a seller who has already taken care of road tax for that year, the cost of the car may become a little higher, but it is usually worth it.
Financing the purchase
Many people see car loans as a useful way to buy secondhand cars. This has benefited many. The following are the available loan options:
- Balloon scheme financing (for PARF cars)
- Fixed interest rate financing
- In-house financing
In Singapore, you are able to pay for up to seventy percent of the open market value (OMV) of the car via loan. However, you must choose the option most suitable for you.
Always bear in mind that shorter loan tenure means a lower interest rate (with 7 years being the maximum). At CarTimes, we offer flexible loan packages that can suit your needs.
Not sure how to work out the sums for the ride that you have been eyeing? Speak with our Sales Executives who are well equipped with information to help you breeze through the calculations!