With the new restrictions from the Monetary Authority of Singapore (MAS) on motor vehicle loans as well as the new tiered ARF structure, some car buyers may not understand how cars are priced in Singapore and the factors contributing to the sky-high prices involved.
Fret not, this article aims to help car buyers understand what they are actually paying for.
Buying a car is a huge financial undertaking, especially in Singapore where cars cost many times the average person's annual salary
Factors contributing to car prices in Singapore:
1. Registration Fees - Basic administrative fees of $220.
2. Goods & Services Tax (seven percent GST on Excise Duty + OMV) - A form of consumption tax that is imposed based on the value of goods.
3. Excise Duty (20 percent of OMV) - Additional form of tax imposed. Like the ARF, the Excise Duty is also calculated based on a percentage of the OMV of the vehicle.
4. Open Market Value (OMV) - Assessed by the Singapore Customs, OMV takes into account the purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car from the country of manufacture to Singapore. The OMV is not the selling price from the manufacturer to local authorised dealers.
When demand is high, the cost of a COE can exceed the value of the car itself5. Certificate of Entitlement (COE) - Consists of five categories: Cat A (cars up to 1,600cc in engine capacity and an output of no more than 130bhp), B (larger cars with more than 130bhp or engine displacements larger than 1,600cc), C (Goods vehicles and buses), D (Motorcycles), and E (Open).
6. Additional Registration Fee (ARF) - 100 percent of the OMV based on the previous ruling. As of now, a new tiered ARF structure will apply. Cars with an OMV of up to $20,000 will not be affected but the next $30,000 ($20,001 to $50,000) will be taxed 140 percent of incremental OMV while cars with an OMV above $50,000 will be taxed 180 percent of incremental OMV.
Fret not, this article aims to help car buyers understand what they are actually paying for.
Factors contributing to car prices in Singapore:
1. Registration Fees - Basic administrative fees of $220.
2. Goods & Services Tax (seven percent GST on Excise Duty + OMV) - A form of consumption tax that is imposed based on the value of goods.
3. Excise Duty (20 percent of OMV) - Additional form of tax imposed. Like the ARF, the Excise Duty is also calculated based on a percentage of the OMV of the vehicle.
4. Open Market Value (OMV) - Assessed by the Singapore Customs, OMV takes into account the purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car from the country of manufacture to Singapore. The OMV is not the selling price from the manufacturer to local authorised dealers.
6. Additional Registration Fee (ARF) - 100 percent of the OMV based on the previous ruling. As of now, a new tiered ARF structure will apply. Cars with an OMV of up to $20,000 will not be affected but the next $30,000 ($20,001 to $50,000) will be taxed 140 percent of incremental OMV while cars with an OMV above $50,000 will be taxed 180 percent of incremental OMV.
7. Vehicular Emissions Scheme (VES) - As of 1st January 2018, the outgoing Carbon Emissions-based Vehicle Scheme has been replaced with the new VES.
The aim of the new VES is to reduce not only carbon emissions, but also four other pollutants (hydrocarbons, carbon monoxide, nitrogen oxides, and particulate matter), which get spewed out into the atmosphere, causing major damage to the environment.
Any additional amount paid on top of the points above - Overheads, road tax, In-Vehicle Unit fee (IU), vehicle number plate fee, sales commision, profits for dealer etc.
Let's use a Honda Civic 1.6 i-VTEC as an example. The car falls in Category A of COE and obtains a neutral VES rating.
With VES, far fewer cars will qualify for rebates as a result of stricter emission standards
Example A - Honda Civic 1.6 i-VTEC
Kah Motor List Price - $101,999 (as of 23rd March 2018)
Difference - $19,539 (Overheads, road tax, IU fee, vehicle number plate fee, sales commision, profits for dealer et cetera)
Maximum loan amount available (70 percent as OMV < $20,000) - $71,399
Up front down payment (30 percent of total cost) - $30,600
The aim of the new VES is to reduce not only carbon emissions, but also four other pollutants (hydrocarbons, carbon monoxide, nitrogen oxides, and particulate matter), which get spewed out into the atmosphere, causing major damage to the environment.
Any additional amount paid on top of the points above - Overheads, road tax, In-Vehicle Unit fee (IU), vehicle number plate fee, sales commision, profits for dealer etc.
Let's use a Honda Civic 1.6 i-VTEC as an example. The car falls in Category A of COE and obtains a neutral VES rating.
Example A - Honda Civic 1.6 i-VTEC
- Registration Fees - $220
- OMV - $19,370
- Excise Duty (20 percent of OMV) - $3,874
- COE (as of 23rd March 2018) - $38,000
- ARF - $19,370
- VES - $0
Kah Motor List Price - $101,999 (as of 23rd March 2018)
Difference - $19,539 (Overheads, road tax, IU fee, vehicle number plate fee, sales commision, profits for dealer et cetera)
Maximum loan amount available (70 percent as OMV < $20,000) - $71,399
Up front down payment (30 percent of total cost) - $30,600
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*This article was updated on 23rd March 2018.
