Before you rush out to get a used car, there are a few things you need to consider. We steer you through some of them.
1. Am I really getting a good deal even if the price is cheaper for a secondhand car? Don't just look at the price tag of the vehicle. Do a check on the registered COE of the vehicle. Then compare this with the COE of a brand new car of the same make and model. Calculating the difference between the two will give you a better gauge of the actual “value” of the car.
2. The registered COE of the secondhand car shouldn't affect my decision, isn't that all in the past? Don't forget the COE value has a bearing on the scrap value of your car. You will receive a much higher rebate when you scrap a new car compared to what you get from scrapping a secondhand car. So you need to decide if you intend to keep your car for the full 10 years, or if you are just looking at something for the near term.
3. How old is the car and what would I need to pay for maintenance? According to consumer reports.org, “in the first two or three years of a car's life, it has fewer problems and is typically covered by a comprehensive warranty. A used car, on the other hand, is either close to coming off warranty or already off it.” As a buyer, you need to brace yourself for the eventuality that the car will have more problems as time goes on, and these will cost more as the years go. These costs will come out of your own pocket.
4. What if I might want to sell the car in a few years’ time? Depreciation is part and parcel of buying a car, especially in Singapore. Models typically lose about 47 per cent of their value in the first three years, compared with 18 per cent over the next three. Before buying a secondhand car, you need to research on its resale value, especially if you are not buying for the long haul.
5. This is not as risky as the property market, so what if I want to “buy high and sell high”? This is true, but an investment is still an investment and the same rules apply. One should not risk more than one is willing or able to lose. Don't forget that car prices, in particular COE prices, are closely tied in with inflation, consumer prices and the overall GDP of Singapore. Some financial knowledge and basic understanding of the stock market, global trends and potential factors that could affect prices are essential for those who see their car more as an investment than merely a means of transportation. To find out how the high COE prices are affecting used car sales.
2. The registered COE of the secondhand car shouldn't affect my decision, isn't that all in the past? Don't forget the COE value has a bearing on the scrap value of your car. You will receive a much higher rebate when you scrap a new car compared to what you get from scrapping a secondhand car. So you need to decide if you intend to keep your car for the full 10 years, or if you are just looking at something for the near term.
3. How old is the car and what would I need to pay for maintenance? According to consumer reports.org, “in the first two or three years of a car's life, it has fewer problems and is typically covered by a comprehensive warranty. A used car, on the other hand, is either close to coming off warranty or already off it.” As a buyer, you need to brace yourself for the eventuality that the car will have more problems as time goes on, and these will cost more as the years go. These costs will come out of your own pocket.
4. What if I might want to sell the car in a few years’ time? Depreciation is part and parcel of buying a car, especially in Singapore. Models typically lose about 47 per cent of their value in the first three years, compared with 18 per cent over the next three. Before buying a secondhand car, you need to research on its resale value, especially if you are not buying for the long haul.
5. This is not as risky as the property market, so what if I want to “buy high and sell high”? This is true, but an investment is still an investment and the same rules apply. One should not risk more than one is willing or able to lose. Don't forget that car prices, in particular COE prices, are closely tied in with inflation, consumer prices and the overall GDP of Singapore. Some financial knowledge and basic understanding of the stock market, global trends and potential factors that could affect prices are essential for those who see their car more as an investment than merely a means of transportation. To find out how the high COE prices are affecting used car sales.
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