Check Out The 5W1H Of Buying A Used Car In Singapore

buying a used car in singapore

Saying that there are many people out there who are still on the fence about buying a used car would be an understatement. Even so, although these concerns held a lot of merit in the previous decades and can be understood to this date, we have to point out that the car market is rapidly changing in favour of used vehicles.

Newer car models are built to last and outperform their older cousins. On the other hand, the relentless productions see their prices drop seemingly overnight. As a matter of fact, a typical car, on average, loses 35% of its value only three years after it rolls out of the line.
Essentially, you get an excellent vehicle that is still in pristine condition for only a fraction of its original price.

Furthermore, getting a used vehicle reduces the overall carbon dioxide output into the environment, lowers annual registration fees, drops down customization costs, and offers numerous other benefits.

All, in all you have a lot to get – and very little to lose.

With that in mind, let’s look at a couple of suggestions that should help you find your ideal pick in Singapore – one of the biggest used car markets in the world.

Which Type Of Used Car Should You Buy?

So, let’s go through the first thing you should move off the table to find your ideal used car – the type of vehicle.

Generally speaking, all used cars can be divided into two broad groups – Preferential Additional Registration Fee (PARF) and Certificate of Entitlement (COE) cars.

Essentially, a PARF car is a vehicle that still uses its first 10 years of original Certificate of Entitlement. And in the case of COE cars, these 10 years have passed, and the owner needs to renew the Certificate of Entitlement.

How exactly do these two groups of used cars impact your purchase decision?

Let’s take a look at a couple of examples.

buying a used car in singapore

Age And General Condition

Because a COE car is, by default, older than PARF vehicles, we can say they are, on average, in the worse condition. Of course, this doesn’t have to be a rule since some COE cars you can find on the market are in truly pristine condition.

But, the age of the vehicle still stands.

Remember; any COE vehicle is at least 10 years old, meaning it likely accumulated significantly higher mileage – which could adversely affect its performance. As a result, you could find yourself paying more for repairs and spare parts than you anticipated initially.

Value And Down Payment Of The Car

Because of this age difference, we can assume that a COE car is, on average, cheaper than PARF cars. Many people see this low purchase value – combined with a lower down payment – as a great advantage when making their first car deal.

Even more so, with the Monetary Authority of Singapore (MAS) easing some of its car loan guidelines, if you’re buying a car with an OMV of S$20,000 or less, you can borrow up to 70% of the vehicle’s purchase price. But since PARF cars are newer than COE cars, meaning their OMV is likely higher, too, they might require a higher down payment – up to 40% of the purchase price.

Keeping that in mind, you need to be aware that a COE car also suffers more heavily from depreciation and features a much lower COE selling price when the time comes to get a newer vehicle.

Also, older cars are more susceptible to wear and tear and entail more money spent on maintenance and repairs.

Qualification For Rebates

If the car is de-registered within the first 10 years after its initial registration, the registered owner will be entitled to a PARF rebate. The rebate is offered to recoup some percentage of the Additional Registration Fee (ARF) you need to pay when you first buy a used car.

This percentage will vary depending on the actual age of the car.

On the other hand, a COE car older than 10 years no longer qualifies for a PARF rebate, so you need to renew the COE of the car.

Road Tax

Generally speaking, newer vehicles are more efficient and eco-friendly, producing a lesser impact on the environment. That is why PARF vehicles feature much lower road tax – which is yet another thing you should take into consideration when assessing the up-front price of your eventual COE car pick.

What’s even more concerning is that the road tax for COE vehicles is not fixed. As a matter of fact, the road tax surcharge increases by 10% each year after the initial 10-year run, starting with the first registration.

Once you reach the 14th year of car ownership, you will pay a 50% surcharge until the end of the COE term.

Where Should You Get The Used Car From?

Now that we’ve seen some of the major differences between PARF cars and COE cars, let’s move to other important considerations – like where you should get the used car from, for example.

As we mentioned in the introduction, Singapore makes one of the most popular and favorable used car markets in the world. If you’re a resident of the city, you’re aware the offer of available cars is more than expensive while down payments are firmly under check.

But even if you already live in Singapore, the fact remains that there are plenty of options when buying a used car – from used automobile dealerships to online marketplaces.

buying a car at a car dealership

Used Automobile Dealerships

One of the advantages of visiting a used car dealership is that you actually have an opportunity to assess the quality of the automobile first-hand, take a couple of rides around the neighborhood, check the mileage, and inquire about the history of repairs and maintenance.

Also, you usually have the benefit of the polite staff being there to offer some helpful advice and guide you through the entire purchase process. For instance, shops like Think One will even offer various add-on services like car financing, insurance, and maintenance.

And let’s not forget that buying from a car dealer means you’re protected by the Consumers Association of Singapore (CASE) – a non-profit organization committed to protecting consumers’ interests and promoting fair trade practices.

As for the very process of buying a used car in Singapore, it is very straightforward. 

So, once you have performed the test drive, inspected the car thoroughly, and agreed upon the purchase price, you’ll need to put down the deposit, apply for the loan if you need one, and pay for the car insurance.

As for the things you should take note of when looking to buy a used automobile at a dealership, it is in your best interest to do your homework so you can stand your ground with the sellers, confirm that advertised prices, discounts, and rebates are applied to the purchase price and see what percentage of the repair costs will seller pay during the warranty period.

online car marketplace

Online Marketplaces

The idea of online car marketplaces is built on convenience. On paper, this form of buying is also cheaper since you don’t need to drive around the city and visit dozens of dealerships before you finally find your new car.

But, this speed and convenience have a certain price.

You don’t have an opportunity to experience the car first hand, take it for a test ride, see how it feels on the road and how you feel driving it. 

Sure, every seller will offer all relevant data like total mileage and car maintenance history, but you can’t know if some automobile genuinely suits you if you don’t sit behind the wheel.

Be that as it may, want to know what to take note of if you are buying a used car in Singapore online? 

Well, since you don’t have the benefit of experiencing your future Toyota or BMW first-hand and taking it for a test drive, you can hire a third party to perform thorough on-site car inspections instead.

Also, you should try to get as much information as you can and ask the seller for some data that may not be publicly available, such as maintenance costs.

The process of purchasing and applying for insurance and loans is the same as buying a second-hand car at a dealership. Best of all, the complete process can be performed online.

When Is The Best Time To Get A Used Car?

Good timing can, to a large extent, contribute to the success of some investment, and buying a used car in Singapore is not different. If you want to get the most out of your money, you need to buy your second-hand car at the right time.

  • When COE prices are low: Much like all other fees, CEO prices tend to fluctuate from time to time. If you get your second-hand car at lower COE prices, you will not lose that much money on depreciation.
  • When the depreciation rate starts to drop: If we look at the average numbers, cars usually depreciate 20% in the first year of ownership and another 10% over the following two years. Buying a car after this initial three-year period will help owners face lower depreciation levels after the purchase.
  • Before the car gets too old: Older cars feature lower depreciation levels but entail more frequent repairs and higher maintenance costs. To avoid these unwanted costs, it would be best to buy a four to eight-year-old PARF car.

car mechanic doing inspection

How To Determine If The Car Is In Good Condition?

Putting aside all the financial implications we have covered above, your overall goal when buying a car in Singapore should always be to find the vehicle in the best possible condition. 

They perform best, hold value the longest, and are the only safe option for you and your family.

With that said, how do you make sure you are getting the best possible car from your dealer? 

Here are a couple of things to check:

  • Mileage: Obviously, the fewer miles the car has passed, the engine will be in better condition, and the car will last longer. But, how many miles are acceptable? Well, based on the Singapore LTA’s (Land Transport Authority) data, an average private car traveled approximately 16,700 km in 2017. Keeping these numbers in mind, you should aim for a second-hand car scoring the mileage somewhere between 15,000 and 18,000 km a year. 
  • Accident history: Serious crashes and accidents may impact the structure of your future four-wheeler. Even though the car might look in top shape, you have to ask the dealer about these deep scars.
  • Previous owners: The logic here is that the more owners one car has, the higher are the chances that the car has been used roughly in the past. One person has a high chance of taking good care of the engine. Once you throw people in the mix, these chances drop, and the vehicle’s selling price drops.
  • Previous mods: Much like accidents and crashes, mods can drastically affect the integrity of a second-hand PARF car. Of course, if professionals performed the mods, that doesn’t have to be the case, but you still need to make an inquiry with the dealers.
  • Certifications: Essentially, some sellers offer certification that the automobile is in good condition. If the seller isn’t able to provide this sort of document, the car should come cheaper.
  • Warranty: This document should declare the extent of the warranty period and the cost the seller will pay in the case of some damage.
  • Overall condition: This covers everything from integral components, like a car’s engine, to smaller parts like windshield wipers and tires. That’s why it is so crucial that car buyers take a test drive to see if the engine, brakes, and wheels are working.

On top of ensuring that the car is in good condition upon purchase, it is equally important to have your car serviced regularly. Think One Autocare provides vehicle repair and servicing packages at affordable rates. Check them out here!

What Else Should You Get?

Last but not least, let’s quickly cover a couple of more things you should take care of before you take your new Toyota for a ride – things that are not related to the very car in question.

We are primarily referring to car insurance that will reimburse you a part of the repair services cost in the case of an accident or car damage.

Car Insurance

Aside from the regular car insurance package, Singapore, at the moment, offers three additional types of car insurance for used cars:

  • Comprehensive cover
  • Third-party, fire, and theft
  • Third-party cover

Essentially, comprehensive car insurance is insurance that helps you repair or replace your vehicle if it’s stolen or damaged in the case of an accident that is not considered a collision (e.g., falling objects like branches).

Third-party, fire, and theft car insurance cover any damage caused to a third party – or their property – if you are not involved in the accident, as well as covering your car if it’s damaged or stolen. It’s not the same as third-party cover, though.

The difference?

Third-party cover is the minimum required – and cheapest – coverage needed in Singapore. It doesn’t cover theft or fire damage, only the damage caused to a third party.

Not sure which car insurance to get? 

Check out Think One Insurance that allows you to enjoy the greatest cost savings from reputable insurance providers. Get 3 to 5 auto-insurance quotations by filling in the form!

car insurance and financing


Finally, it may also occur that you are underfinanced for the car’s purchase, and you need to raise some of the loans before heading to the dealer. 

Once again, Singapore offers three types of loans that will help you cover the car’s cost:

  • Fixed interest rate financing
  • In-house financing
  • Balloon scheme financing

A fixed interest rate loan is a loan where the interest rates don’t fluctuate during the fixed-rate period of the loan. The downside is that the fixed interest payment is, in total, higher than the variable-rate total, raising the car’s overall purchase cost.

In-house financing is an arrangement in which the seller extends customers a loan, covering the value of the car and eliminating the third-party financial involvement. 

Last but not least, a balloon scheme loan is a loan that covers the car’s price without the PARF value – albeit at higher interest rates.

Getting the right car loan is essential in helping owners pay less in the long run. Owners should consider the interest rate, loan tenure, and other factors. 

If you would like a flexible and transparent loan scheme, you can contact Think One Credit.

Conclusion: Who Should You Reach Out To If You’re Uncertain?

Given the numerous points for consideration elaborated above, new car owners-to-be can feel lost. Consider reaching out to friends and family members familiar with the car buying process, as they can provide insights on best practices. 

Alternatively, you may contact leading, reliable car dealers in Singapore like Think One, whose friendly and professional staff can offer you the assistance you need!

Not ready to own a car yet? Think One Leasing has a variety of passenger cars in good condition. If you are required to drive occasionally, this will be a cost effective option for you.