How can I make enough money to buy a car?

LifestyleTransportationBuying A Car? You Need To Be Earning At Least S$8,850 FirstKenneth Fong20 Mar 2022Back in my mid-20s, I remembered starting my two-hour commute to work one d

How can I make enough money to buy a car?
Buying A Car_ You Need To Be Earning At Least S$8,850 First


Buying A Car? You Need To Be Earning At Least S$8,850 First


Kenneth Fong20 Mar 2022

Back in my mid-20s, I remembered starting my two-hour commute to work one day and thinking, Why the [emailprotected]#$ am I doing this? This was almost immediately followed by:

Source: imgflip

Sounds familiar?

If youve ever had that conversation with yourself as youre being chauffeured to work in your Mercedes-Benz or Volvo stretch limo (read: public buses).

I feel you

So lets find out how much you theoretically need to earn before you even think about buying an air freshener for your brand new car.

Disclaimer: the numbers and figures here are based on assumptions and estimations, so feel free to adjust them accordingly to reflect your situation better.

TL;DR: Can I Even Afford To Buy A Car?

  • The cheapest new car on the market as of Feb 2022 is the Perodua Bezza 1.3 Premium X which is going for $97,999
  • You need to cough up S$2,040.32 per month, on top of the S$29,400downpayment, which youll need to make in cash.
  • Its not possible to responsibly afford a car on a monthly income of S$3,000
  • You need a gross monthly income of S$8,850.80to comfortably afford the cheapest car on the market.

Why Are Cars So Expensive in Singapore?

Singapore is notorious for being one of the most expensive cities in the world. And its no surprise that the cost of owning a car is astronomical.

Source: BudgetDirect

As a matter of fact, BudgetDirect has compared the prices of multiple car models in Singapore versus the prices of the same models in other countries.

See a massive difference?

Source: BudgetDirect

Now lets take a look at Singapores road infrastructure.

Singapore has more than ten times fewer kilometres (km) of roads compared to the other countries in the table above.

Although we have vastly fewer registered vehicles here, the number of cars per km of roads is a lot more than those of the other countries.

Therefore, to control the number of people who own cars in Singapore, we have implemented several measures:

These measures include additional fees and taxes (such as Certificate of Entitlement or Excise Duty) on top of the vehicles original price.

Now that you know why its expensive to own a car in Singapore, you must be wondering, how much do you need to pay monthly to own a car?

What Car Are We Looking At?

As Seedly is all about personal finance and fiscal responsibility, so buying an Aston Martin is antithetical to what Seedly is all about.

So for this exercise, were going to be really budget about this and pick the cheapest new car we can find on the market.

Besides, we just need something with four wheels thatll bring us from point A to point B  without having to experience what its like being a sardine in a tin.

Heres how we chose our car:

  • It has to be a brand new passenger vehicle with an automatic transmission (Like the wife said, I am NOT getting into a lorry in this dress.)
  • A car loan will be taken (If youre going, Need car loan meh? Stop. Just stop reading this article now, you high-SES Ahem. We digress.)

So whats the cheapest new car we can find?

Its the Dont hold your breath Perodua Bezza 1.3 Premium X!

Source: SGCarMart

And shes all yours for a mere S$97,999 inclusive of Certificate Of Entitlement (price from sgCarMart and is correct as of 20 Mar 22).

Monthly Installment

As the Open Market Value (OMV) for the Perodua Bezza is $11,040 (less than $20,000), that means that the maximum car loan you can get is 70% of the car price, and youll only need to put down a 30% down payment.

FYI: Cars with OMV exceeding $20,000 will be entitled to a maximum loan value of 60% of the car price and a minimum 40% down payment. The key takeaway here? If youre unsure whether you can afford that car, look at how much cash you can put down for the downpayment and work up from there.

Assuming you take the maximum loan tenure of 7 years (at 2.78% interest):

  • Loan Amount (70%) = S$68,599
  • Downpayment in Cash (30%) = S$29,400With the help of sgCarMarts handy dandy Loan Calculator, your monthly instalment = S$976

Road Tax

Using SGCarMarts Road Tax Calculator, the annual road tax for a Perodua Bezza is S$584.

Your monthly road tax = S$48.67

Car Insurance Premium

Car insurance is pretty much a given for anyone who owns a car.

Read more: Which Is The Best Car Insurance For Me?

For the sake of this theoretical calculation, were going to assume that this is your first car and that you are relatively young and inexperienced (younger than 27 years old and with less than 2 years of driving experience). Yeah Insurance companies have high standards.

For your reference, this is the driver profile we submitted for a car insurance quote:

  • 25-year old, single male
  • Working indoors
  • 0% No-Claim Discount
  • 2 years of driving experience

Without going into details like why women get quoted cheaper prices (yes, insurance companies generally consider the fairer sex as safer drivers), the excess, personal accident coverage, etc, the cheapest annual car insurance premium we can get is S$3,240.

Your monthly car insurance premium = S$270

FYI: Itll definitely get cheaper as you get older, get married, and manage to maintain an accident and claim-free record, or when you know which credit cards to use for car insurance premiums. In any case, if anything happens, make sure you know what to do when you get into a car accident.

Petrol Cost

Source: Straits TimesAccording to the Perodua brochure, the Bezza is expected to do 21km/L. Were going to assume a few things here again:

  • Actual fuel consumption is probably closer to 17km/L given the start-stop traffic of driving in the city
  • You live in the East but work in the West, so an average of 60km each day, for a grand total of 1,800km a month
  • You keep your petrol costs low by referring to this Comparison of Petrol Prices religiously and manage to pay about S$2.66/LYour monthly petrol cost = S$281.65

Parking Cost

Contrary to what many people think, this is where it can get surprisingly expensive.

Source: evening_tao | freepik

Here are some assumptions regarding your monthly parking arrangements:

  • HDB season parking at S$110 per month
  • Office season parking at S$110 per month (highly dependent on location)
  • Shopping centre parking at S$80 ($2.50/hour for an average of 8 hours a week, or 32 hours a month)
  • Parking coupon-type parking at S$24 (2 booklets at S$12 each)

Your monthly parking cost = S$324

ERP Cost

If you plan your routes carefully, you might be able to avoid ERP charges altogether.

Source: Straits Times

But if you need to enter the CBD or get into town on a Saturday, itll probably cost you something like S$2 each time you cross a gantry. Assuming a conservative charge of S$10 a week.

Your monthly ERP cost = S$40

Car Servicing And Repair

Considering that youre starting with a new car, well assume that the first couple of years will only require regular servicing.

We called up a few workshops in Singapore and got an average cost of S$250 for every 10,000km interval.

Assuming that were doing 1,800km a month, thats one servicing to be scheduled every 5 months or so.

A major servicing which entails tyre replacement and the works will cost about S$400.

And that happens probably once every 2 years.

Lets also assume that because of your regular servicing and the fact that youre not driving your Perodua Bezza like youre in the Fast and Furious franchise, youre not going to be hit with any major repair work.

Were going to hazard a guess here and say that your monthly car servicing and repair cost = S$100 (to be safe)

How Much Do I Need To Spend Per Month On A Car?

Source: @looneytunes | giphyBreakdownCostCar LoanS$976Road TaxS$48.67Car InsuranceS$270PetrolS$281.65ParkingS$324ERPS$40Car ServicingS$100Monthly TotalS$2,040.32

Of course, the figures here are all based on assumptions and agar-ations, so youll need to adjust your individual monthly costs accordingly.

Oh yeah, and dont forget. This is on top of the S$29,400 downpayment, which youll finance in cold-hard cash.

How Much Do I Need To Earn Per Month Before I Can Afford A Car?

You might have seen your peers or know of people around you who earn a gross monthly income to the tune of S$3,000 but are cruising around in their rides. And deep down, youre wondering, Can meh? How they afford sia

Erm They cant.

And honestly, we dont know how theyre doing it either.

Remember the 50% expenses, 30% wealth building, 20% savings rule where we pay ourselves first before spending anything? Lets break it down:

  • Gross monthly: S$3,000
  • After CPF contribution (20%): S$3,000  S$600 = S$2,400
  • After 30% wealth building: $2,400  S$720 = S$1,680
  • After 20% savings: S$1,680  S$480 = S$1,200

Even if we assume that you pour everything you have left of your Expenditure fund into your car (meaning youre effectively surviving on air).

Youre still short of a whopping S$840.32 in order to own that Perodua Bezza!

Yeah Your friends are over-leveraged.

Meaning theyre not saving enough or theyre not investing for their future.

So lets be realistic about this and work backwards.

Well keep the Expenditure fund at 50% and give you at least S$1,500 for food, insurance, parents allowance, etc. so you can live like a well-adjusted human being. Well also need to add the S$2,040.32 monthly car payment, which brings our total Expenditure fund to S$3,540.32.

This means that your total monthly income, before CPF deduction, should ideally be S$7,080.64.

Or a gross monthly income of S$8,850.80.

And if youre looking to get your own place in the future, youll need to make sure that you do not commit your entire income to your car because you wont have enough debt allowance to take up a mortgage loan #justsaying

  • Top 6 Ways Youre Spending Way Too Much On Your Car



About Kenneth FongI threw all of my money into the longkang once... because I wanted to see my cash flow.You can contribute your thoughts like Kenneth Fong here.

Video liên quan