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With COE premiums skyrocketing in recent months (at time of writing, the gap between the premium for small and big cars is now the widest ever at $20,000, while premiums for big cars crossed $70,000 to reach a six-year high), you might want to consider a used car instead of new if you're after your next set of wheels.

That's because purchasing a used car usually means you are paying much less as compared to a newer version of the same model. And at the same time, a used car usually depreciates less as the first owner has already absorbed most of the loss.

The downside is that most used cars older than three years are no longer covered by manufacturer's warranty. So, buying a used car is always a gamble and as Murphy's law goes, anything that can go wrong will go wrong.

That, however, doesn't mean it's the end of the world if your new-to-you used car breaks down or throws a check light.

If you've bought it from a used car dealer and a new defect is found within six months since the date of purchase, you are covered under the lemon law. Well, somewhat…


How well are you protected?

Like all warranties, the lemon law covers defects big or small that weren't highlighted at the time of purchase. It does not include wear and tear items from normal use and exposure.

For the law to be effective, you should have an evaluation checklist completed before purchase, and have the necessary information or findings documented in the sales agreement.

The Lemon Law, however, does not cover consumer-to-consumer transactions. This means that if you're buying from a direct owner, or a consignment dealer, which a lot of people do, you will not be covered.

To circumvent the lemon law, some used car dealers pose as direct owners or consignment dealers so that's something else to check for before you buy.

While looking good on paper, making a claim under the lemon law is also not always the quickest, easiest process and often ends up in a long-drawn-out dispute between the dealer and customer. A 2018 Straits Times report found that about a quarter of lemon law cases could not be resolved by CASE and had to be filed with the Small Claims Tribunals.



But even that is no guarantee, given the grey areas the lemon law contains.


In-house, insured?

Some used car dealers and consignment dealers do offer in-house warranties. This is usually offered if they also operate a repair and maintenance workshop, or partner one, with decisions on claims approvals made by them. Typically, used car dealers partner independent workshops to spruce up the cars they buy in for resale.

The terms and conditions of in-house warranties differ from dealer to dealer and often require you to continue regular servicing and maintenance exclusively with them or their partner workshop.

Most dealers are honest; they'll honour the warranty terms and do a great job with the repairs. However, there will always be a few black sheep that try to skirt the rules, or replace the defective components with cheaper aftermarket ones, instead of OEM or original.

Even worse, there are cases of legitimate claims being rejected, resulting in the unlucky customers left in the lurch with painful repair bills and unnecessary downtimes.

This sometimes happens because the repair costs come out of the dealers' own pockets. Hence, it's somewhat understandable why some of them try to avoid these 'unnecessary' expenses. Like the lemon law, there's never really a guarantee how lucky or unlucky you get with in-house warranties. At the end of the day, with such warranties, the used car dealer is ultimately the judge, jury, and executioner and it's your word against theirs.

If you're worried about potentially hefty repair bills that your new used car may chalk up, or just want total peace of mind with your big-ticket purchase, then you might want to consider protecting it with a warranty programme that's backed by the Monetary Authority of Singapore (MAS).


MAS regulated? Wassat?

Simply put, it's a used car warranty that's underwritten by an MAS-regulated insurer.

For example, the used car warranty programme offered by sgCarMart is underwritten by established homegrown insurance company ECICS Limited, and administered by PCMI Insurance Brokers Pte Ltd. (*The sgCarMart Warranty program has been updated as of 18 April 2022. Find out more about it here!) Those are some big names that promise big things. But what does that really mean?

The benefit is that because the sgCarMart Warranty is a third-party independent warranty that does not come from a workshop or dealership, it removes any potential conflict of interests and gives you only the best.

Think of it this way - a hospital wouldn't go out of its way to help you save on medical treatment, especially if you have insurance coverage, right? And because it's backed by a global insurance company, you are protected by continued coverage even if the dealer you've bought the car from ceases operation.

Your claim will go through, come rain or shine or hellfire - the system of checks and balances by MAS and the parties involved, ensures that.

At the same time, unlike most warranty programmes in the market, you are also free to choose where you would like to service your car without worrying about voiding your warranty.

It might sound too good to be true but it isn't. And even then, such premium coverage doesn't necessarily have to come at a premium.

The sgCarMart Warranty is available at a nominal fee (the price varies depending on the duration of coverage you choose and the make and model of the car) and covers repairs up to $10,000. A pre-inspection is conducted prior to warranty certification, but all that, and the activation of the warranty, is handled by the dealer so you don't even have to lift a finger.

It makes quite a bit of dollars and sense when you work out just how expensive certain components of a car cost to replace. For more information on MAS-regulated warranty programmes like sgCarMart's click here.

Today, most leading used car dealers realise this as well and are offering their cars with the option of third-party, MAS-regulated warranty packages. After all, it's peace of mind for them as well. At the same time, it's important for their customers to be kept happy because a happy customer is a returning customer.

So, the next time you're at a dealership, don't get excited over just low interest rates and waived administrative fees. Find out more about how well your potential purchase is protected against breakdowns and repairs - cause that might save you a whole lot more in the long run!

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