Not having to beat the morning rush hour commute on our frequently delayed trains can give anyone a sigh of relief even if it does come with a higher price tag. But before you go out and buy yourself a car, be it used or brand new, there are certain things one must consider.
The points to consider before buying a car, both new and used in Singapore can be broken down into the following:
- Common pitfalls associated with buying a new car
- Essential tips when buying a second-hand car
- Factors to consider when getting a car loan
1. Common pitfalls associated with buying a new car
Buying a new car saves you from having to make frequent trips to a car service station. However, the higher price tags don’t always mean a smooth and comfortable ride. The most common mistakes people make when buying a new car is at the dealership itself.
Getting swayed by the charming salesperson
A lot of people get steered by what the salesperson has to say. Now, there’s nothing wrong listening to the salesperson as they know what they are talking about but keep in mind they get a commission from selling you the car. This may or may not result in a salesperson pushing a car to you that might not fit your current need or budget.
Next thing you know, you’re stuck with a giant yellow S.U.V. with no place to park it and a huge monthly instalment going towards your car loan.
Not shopping around enough
Another common mistake associated with dealerships is buying from the first dealership you find.Many people walk into the first dealership they come across and settle on a car right away. You should always shop around as you are bound to find price variations and even the number of add-ons a dealership can give you.
Falling for freebies and add-ons
Talking about add-ons, don’t go in for anything you might not require. A lot of salespersons, especially the good ones, can steer you into aftermarket goods you don’t quite need. Pay attention to the products being marketed towards you. That car of yours doesn’t really need a fancy spoiler, spinning rims or a fancy music system.
2. Essential tips when buying a second-hand car
When one says ‘used car’, the first thing to pop up on one’s mind is the maintenance required. Sellers will do just about anything to pass off their tin can as a luxury car but it’s up to you to figure out the difference.
Do your checks thoroughly
Pay attention to the details, check under the hood, check for any type of noise that arouses your suspicion and always do your homework before you go and see a car. Figure out the common issues a particular car model faces and try to ascertain the reason the car is up for sale. It is times like these that your petrolheadad friend can come in handy.
Find out what were the past rebates
When a car owner deregisters a car they are entitled to two types of rebates, either PARF (Preferential Additional Registration Fee: a rebate that you are entitled to should your car be de-registered within 10 years from the date it was first registered on) or COE (Certificate of Entitlement: the certificate that declares the holder of the COE, you, the owner of a car and permits you to use it legally. It can be renewed if you wish to continue using the car after its 10 year depreciation period is over).
So when buying a used car, you should consider the type of rebates the previous owner has had. PARF cars are comparatively newer than COE cars which mean less maintenance work but also a high OMV which can drive up your budget. COE cars, on the other hand, are older and may require more maintenance and repairs but can fit into tighter budgets.
3. Factors to consider when deciding on payments
The next thing to consider is how you are going to pay for the car. If you have money in the bank then you could pay for it from your pocket but if you don’t then go in for a car loan. If you do then here is what you need to consider:
When to take the loan?
You go in for a car loan only when you’re certain that your savings are enough to cover at least 3 to 6 months of instalments. This way, you can maintain payments of the car loans and be able to dispose your car for the best possible price if you happen to lose your source of income.
How much to borrow?
Having enough savings also means you have enough for the down payment you have to make towards the car. The higher the down payment, the lesser your loan amount will be. If you don’t have enough savings for a down payment or enough to cover a few months worth of instalments, put off buying the car till you do, or go in for a cheaper alternative.
What if you don’t get the amount you want?
You also have to consider that you might not qualify for the loan amount you’re looking for. The fact is even though you can get a loan amount for up to 70% of the car price, it doesn’t always mean you’ll qualify for it. It boils down to two big factors.
One is that your credit score should be in a good condition and two is that your other loan obligations. As long as you have maintained a good credit score, have made timely payments on your other lines of credit and kept your all your combined loan payments inclusive of the car loan amount you’re looking for to under 60% of your total income, then you’d qualify for the desired loan amount.
Am I getting the best deal?
When it comes to loans, shopping for them is almost the same as any other thing you buy. You go to all the banks that could offer you a loan and see what’s on offer. Then you choose one which suits you. Get the best deal you can between
- Down payments
- Loan tenures
- Interest rates
- Promotions offered
Getting a car, especially when you plan to pay using a car loan, is something you shouldn’t take lightly. After all, you will be living with your car and the loan payments for the next couple of years!