It is well-known that any car in Singapore comes with quite a hefty price tag. Perhaps this is why more and more Singaporeans are choosing to purchase second-hand cars as a more wallet-friendly option nowadays.
Although it seems intuitive that used cars are less costly than their brand-new counterparts, is this really the case? In this article, we break down the costs of a second-hand car, and pit it against buying brand new.
Cars tend to depreciate the most within the first few years of ownership. In fact, it is often said that a car depreciates by as much as 30% within its first year. This means that if you buy a secondhand car, You will save on costs greatly, even if the car is only one year old.
(Related story: At What Mileage Does A Car Lose Value? )
Plus, due to car depreciation, your dream car that was just a little too costly for you may now be well in your budget on the secondhand market.
In this aspect, buying a secondhand car definitely wins against buying a new one.
All cars in Singapore must have valid vehicle insurance. While the cost of insurance can be hefty, insurance for a used car is usually lower due to the fact that parts for older cars are more readily available.
You may further reduce the cost of car insurance with a third-party insurance policy if your car is older.
(Related story: The Ultimate Car Insurance Guide )
Certificate of Entitlement (COE)
COE prices are constantly fluctuating depending on supply and demanding. Buying a used car when COE prices are high may cause you to actually lose value due to high depreciation as a result.
Buying a secondhand car definitely saves you a lot on initial payment. Unfortunately, the downside to that is that you cannot be 100% sure about the condition of the vehicle, and it definitely will not be as good as a brand new one.
(Related story: Signs A Secondhand Car Has Been In An Accident)
As such, additional costs for car maintenance and repair due to old age or previous accidents will stack over time to be quite costly.
So, are used cars always cheaper?
In most cases, used cars will be a lot easier on your wallet. But there are some cases where they will actually cost you more than their new counterparts. So here is a handy checklist to help you take the pressure off your wallet if you are intending to buy a secondhand car.
Buy a used car if…
- The car is not too young (at least one year old), so you can enjoy lower costs due to depreciation.
- The car is in very good condition, and will not cost you a bomb in maintenance.
- The car model has been on the market for a while
- COE prices are low
- You are set on buying a luxury car
Whether or not you decide to buy a new or a used car, we hope this guide helps you to make the best decision for you!