8 Things to Look Out for When Buying a New Car

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Buying a new car is a huge commitment. After all, it is going to be one of the most major purchases in your lifetime.

Buying a new car is a huge commitment. After all, it is going to be one of the most major purchases in your lifetime. As a result, people often tend to get obsessed when dwelling on the specifics of their car, such as the ideal make and model. While that is no doubt of great importance and extremely useful, there are many other important aspects and factors to take note of when purchasing a new car, that tend to be overlooked. In this article, we aim to highlight 8 key aspects to you so as to allow you to make a more informed decision when you purchase your car.

1. Test Drives

The test drive is the most essential step in the process of buying a new car. It allows you to get a feel for your future ride, while also letting you observe its unique characteristics. Naturally, there are many things to take note of when testing a new car. To help you, here are some of the more important aspects that we have highlighted for you.

A. Performance

Most car drivers would want their cars to have decent performance that meets their own expectations. To test this, the most important thing is to handle the test car as you would naturally to see if the car fits your driving style. This will also allow you to check if:

  • The acceleration performance is suitable and adequate for you
  • You are comfortable with the lag response between stepping on the pedal and the car acceleration
  • Brakes and brake feel are up to your standards

These tests are more subjective than they are objective, as they heavily rely on your personal preferences. At the end of the day, feeling comfortable and safe when handling the car is the most important thing for any driver.

B. Comfort

The next aspect after how the car feels to drive, is naturally, how the car feels to be in. This is especially true if you are a driver who prioritises comfort over performance. When test driving, decide if:

  • The car is comfortable to travel in
  • The seats comfortable and easily adjustable for you
  • There is sufficient legroom, headroom and cabin space
  • You like the interior trim and design
  • The interior controls are easily accessible and convenient for you to operate

C. Passengers

As the driver, we tend to focus a lot on our own driving experience, but it is equally important that our passengers feel comfortable and safe as well. Consider doing the following before going on a test drive:

  • Invite your family along to get their thoughts and opinions – this is especially important if you’re buying a family car, as they are going to be the ones travelling in it a lot
  • Or, invite a friend along for a second opinion – having a passenger can also alert you to certain things that you might not have noticed as a driver

Finally, one last tip we have is to do some research beforehand on a few different car options. It is always better to test drive a few different cars as they all have their own unique characteristics, strengths and flaws, and testing multiple cars will allow you to make a more informed decision.

2. Stock Availability

This might seem obvious, but complaints often occur because of delayed vehicle deliveries. This usually arises due to miscommunications between dealers and customers about the availability of the vehicle. Always make sure to check for the stock for the specific vehicle you want, with regards to the model, colour and any other options. There are 3 main kinds of stock for vehicles: Ex-stock, incoming stock and indent vehicles.

A. Ex-stock

Ex-stock refers to vehicles that are already with the dealer and can be prepared and delivered to you immediately when the COE is secured. Generally, this is the best option if you are in a rush to get a new vehicle. The downside to this, however, is that the specific vehicle you want may not be immediately available and you will have to make some compromises (like choosing a different colour) if you want the vehicle now.

B. Incoming Stock

Incoming stock refers to the vehicles that are in transit to the dealer. This is the best option if you have a preferred choice of car that is not immediately available. If so, try to get an estimated arrival date from the dealer so that you can have an idea of when you might get your vehicle, which can help in any dispute should your delivery be delayed.

C. Indent Vehicles

Indent vehicles are those that are specially ordered on request, or if the dealer has no proper timeline as to the arrival of these vehicles. If your chosen vehicle is in this category, try to get an estimate on the timeframe at best so you know roughly when to expect it.

3. Depreciation

Depreciation refers to the value that your car loses over its lifetime. It can also help show the true cost of running your own car for a specific period of time, without including other costs like petrol. In Singapore, depreciation can be calculated as so:

Depreciation = Amount paid – deregistration value
(where the de-registration value refers to the returns paid to you by LTA when you de-register your car) 


Calculating the de-registration value can be a little bit complicated, so let’s break it down step by step:

Step 1: Calculate your COE rebate

The COE rebate is granted if the vehicle is de-registered before the end of the 10-year cycle.

 

COE rebate = (Quota Premium Paid x Number of months left)/120 months
 
For example, if your COE costs $40,000 and expires 31 Jan 2020, and your vehicle was de-registered on 31 Jan 2015:

COE rebate = ($40,000 x 60)/120 = $20,000

Step 2: Find out the Open Market Value (OMV) of your vehicle

The OMV of your vehicle is the base price of the vehicle before taxes and surcharges, such as GST, COE and import taxes. These are determined by Singapore customs and can be found online at onemotoring.com.sg. Note that these values are estimates and may vary, but the actual value of your OMV should be very similar.

Step 3: Calculate Additional Registration Fee (ARF) paid based on the OMV, taking into account the Vehicle Emission Scheme (VES)

The ARF is a tax imposed on new vehicles. The value of this tax is based on the OMV, as shown in the table below:

Vehicle OMVARF Rate
First $20,000 of the OMV100% of OMV
Next $30,000 of the OMV (i.e. $20,001 to $50,000)140% of Incremental OMV
Remaining OMV Above $50,000180% of Incremental OMV

If the vehicle’s OMV is $70,000
ARF = $20,000 + (1.4 x $30,000) + (1.8 x ($70,000 – $50,000)) = $98,000

Rebates from the VES will then be subtracted from the ARF value to give a final value. The information on these rebates can be found on onemotoring.com.sg. If your vehicle was subject to a VES surcharge, that value will not be taken into account when calculating ARF.

Step 4: Calculate Preferential Additional Registration Free (PARF) Rebate

The PARF rebate is essentially a percentage of your ARF value, based on the age on the vehicle. The PARF rebate can be determined using the table below:

Age of vehiclePARF Rebate
Less than 5 yrs old75% of ARF
5 to 6 yrs old70% of ARF
6 to 7 yrs old65% of ARF
7 to 8 yrs old60% of ARF
8 to 9 yrs old55% of ARF
9 to 10 yrs old50% of ARF
More than 10 yrs old0% of ARF

Using the above example of the ARF = $98,000, if your vehicle is between 5 to 6 years old
PARF rebate = 0.7 x $98,000 = $68,600

Step 5: Calculate de-registration value

The formula for the de-registration value is just the sum of your COE rebate and PARF rebate.

De-registration value = COE rebate + PARF rebate

Using our values from above, de-registration value = $20,000 + $68,600 = $88,600

The depreciation of your vehicle, is simply the difference between the amount you paid the de-registration value.

4. Guarantees

Most retailers offer a guarantee on COEs, which is an option that you can choose to take. If you do, the retailer guarantees that you will receive your COE for a fixed fee, regardless of how much the COE premium actually turns out to be. However, these guarantees are usually priced slightly higher than the latest COE premium values.

You might be then wondering if it is actually worth taking up this option. In general, it is a good choice if COE premiums are on an upwards trend. Since COEs are sold via auction, the premiums paid are not guaranteed and you could pay a lot more than what you expect to receive your COE. By taking up the guarantee option, the dealer is contractually obliged to provide you with a COE at the price that was agreed upon even if COE premiums skyrocket, thus saving you a great deal of money. You will no longer have to worry about not receiving a COE either. Guarantees, in this sense, can guarantee you a peace of mind.

5. Warranty Terms and Conditions

This is a particularly tricky and contentious subject. Factory warranties are basically the manufacturer’s guarantee that manufacturing defects within the stipulated period will be rectified at its cost, provided that the car was bought from an authorised dealer. In Singapore, you are allowed to take your vehicle to a third-party workshop for servicing and still enjoy your factory warranties with your dealer, which is the more convenient option for smaller issues.

While this seems all well and good, warranty terms and conditions often state that the vehicles have to be maintained a specific way following a specific schedule. If you use your factory warranty for servicing with your dealer, it should not be an issue. However, third-party servicing might end up voiding the warranty due to you or the workshop not following the recommended service interval or procedures. This risk is one you have to consider, especially if you do use external workshops.

Third-party workshops might also cause an issue with dealer-borne warranty. This warranty is essentially an extension to the factory warranty. However, a dealer might consider the use of third-party workshops as a breach, and thus not be obliged to service you.

6. Service Packages

Packages and promotions offered by dealers usually include free servicing and are very attractive. However, such service coverage is usually not comprehensive. It is important to take note of what is covered and what isn’t, to avoid receiving a nasty shock in the future when you get your servicing bill.

In general, things like fluids and filters are covered by free servicing, but other more substantial components that get worn over time (E.g. brakes and tyres) are not. There will definitely still be a need to service your car over the next few years, with more substantial services being required at some point in time. Make sure to clarify all this with your sales representative or a service advisor at the car dealership to understand the costs involved as well as what your free servicing entails to avoid any misunderstandings.

7. Car Insurance

Car insurance is another important add-on to consider when purchasing a new vehicle. In fact, there is a minimal mandatory level of insurance that all new car owners are required to purchase. Much like all other forms of insurance, car insurance is not cheap. To help you understand the basics of car insurance, we have come up with a quick guide for you on the different types of insurance that are available so that you can make an informed decision on which suits you best. These are the 3 types of car insurance in Singapore: third party, fire and theft, and comprehensive insurance.

A. Third Party

Third party insurance provides the most basic level of coverage for vehicles. This insurance covers only damage incurred by other vehicles when you are deemed to be at fault for the accident. It is also the minimum insurance requirement for vehicles in Singapore. Naturally, since this is the most basic car insurance option, it is also the cheapest.

B. Fire and Theft

Fire and theft insurance, as the name suggests, provides additional coverage for your vehicle in case of a car theft or fire. An insurance payout will be offered to you if you are covered. Fire and theft insurance still provides third party coverage, as per the basic requirement for insurance coverage. This is usually recommended if you plan to take your vehicle overseas often.

C. Comprehensive

Finally, comprehensive insurance covers damage incurred on your own car in addition to the third party coverage, making it more expensive. This is highly recommended for more high-end vehicles, as their servicing and repairs costs are much higher. If you take a loan from a bank or financial institution to finance your vehicle purchase, they will usually require comprehensive insurance to be in place as a loan condition.

Choosing the right kind of car insurance for you is a serious matter of consideration (unless of course you are required to purchase the comprehensive insurance). There are several factors to consider, such as your finances, premiums, and the risks that you might face on the road. While it can be easy to get a quote online to find the lowest premiums possible, please note that most, if not all, car dealers will require you to purchase their in-house insurance for at least a year.

8. Financing

The final thing for you to take note of is your financing options. There are a myriad of them out there, from your dealer to various banks and financial institutions, and all the information on interest rates and loan repayments can be easily found with a quick internet search. Of course, with all the information available to you, it will only be natural for you to be tempted by finance loans with lower interest rates. These tend to be provided by external financial institutions and are definitely a good option to take into account when financing your car purchase.

Dealers, on the other hand, tend to have higher interest rates. But before you dismiss this option, dealers often offer attractive discounts in their price lists for many different things, such as insurance, financing and even when you trade-in your car. Of course, this comes with the caveat that all these must be done in-house with the dealer. However, these discounts and the service provided could more than cover what you save by going elsewhere.

It would be prudent for you to consider all your financing options before making a decision, instead of jumping headfirst into the first plan you see because of attractive discounts or low interest rates. Find the plan that suits your situation the most before making your final decision.

Conclusion

Now that you’ve been kept up to speed on the nitty-gritty details involved in purchasing a new car, it is time for you to go forth and make your choice. Always remember to choose the option that best suits your current situation and that you are the most comfortable with. Happy car hunting!

Verdict

What we like
- Luxurious feel
- Large telematics touchscreen
- Extremely spacious
What we do not like
- Lack of automatic boot for auto close
- Drive shaft even though it is a front wheel drive
Editor’s recommendation
The Toyota Camry has successfully done a full model change that is significantly sportier and aesthetically better looking compared to its predecessor. It does not feel you are getting a second class car as compared to equivalent continental class cars, yet the cost savings are substantial.

Specifications

Toyota-camry-gear-knob.jpg
A car that negates risk

Verdict

What we like
- Luxurious feel
- Large telematics touchscreen
- Extremely spacious
What we do not like
- Lack of automatic boot for auto close
- Drive shaft even though it is a front wheel drive
Editor’s recommendation
The Toyota Camry has successfully done a full model change that is significantly sportier and aesthetically better looking compared to its predecessor. It does not feel you are getting a second class car as compared to equivalent continental class cars, yet the cost savings are substantial.

Specifications

Toyota-camry-gear-knob.jpg
A car that negates risk

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