Viewed : 71,332 times

Recommended Articles

What is the true cost of car ownership on this little island of ours? We look at some important pointers that you should take note of.

30 Mar 2015 | Category: Car Ownership Advice

A car isn't for everyone - especially in Singapore. While that statement may piss you off a little bit, that's just the way the system is rigged. The hideously inflated cost of owning a car is meant to discourage the vast majority of Singaporeans from owning a car.

Why? Well, officially prices are at crazy levels to prevent Singapore's roads from becoming too overly congested (and to get you to take public transport).

But let's say that you choose to save up all of your hard-earned cash to purchase a brand new BMW 3 Series Sedan 316i Business priced at $179,800; OMV at $28,831 (as of press time).

You buy the car with a 50-percent downpayment and take out a five-year car loan. End of story? No my friend - that's not even the true cost of a car. The image on the right is:

A BMW 3 Series Sedan 316i costs over $85,000 more than its original purchase price over a period of 10 years

But take note, your cost of ownership will be even more expensive than that!

Why? Because this costing doesn't even include any future increase in COE, road tax, fluctuations in fuel cost, fines, accidents, rising maintenance costs and ERP/parking rate hikes!

Unfortunately, it is difficult to say just how much you can really expect to pay for a new car. But one thing is for sure - you can count on that price being higher than it is today.

Buying a car is a huge decision that can have a major effect on your financial situation. Think about the total cost of a car and imagine all of that money in an investment portfolio earning eight percent each year.

Unless you absolutely NEED a car because you have a job that can support the expense, it's really much better to put that money to work growing your retirement nest egg.

Who knows? You might even be able to purchase a property down the road that you can rent out to start getting passive income!

If a liability that loses 10 percent of its value every year is worth more to you than building an investment portfolio that earns eight percent every year - well... that's up to you. But if you want to learn more about investing, give our Investing Learning Centre a look.

This article first appeared on MoneySmart in August 2014.
  • Email

You may also like

1-10 of 20