Why I Think Your Car is Cheap!

If you’re feeling that your car is a money pit, I’m going to surprise you with a story that will have few worldwide equals. Lofty claim? Just keep reading; I think you’ll agree.

My wife and I own a 2002 four door Mazda. It runs beautifully and it always has. But we live in Singapore, where nine year old cars are considered ancient. If we want to keep driving it, we have to pay the government for that privilege.

This fee, of course, is beyond regular road insurance and taxes. This is a special fee aimed at keeping older cars off the roads—while ensuring that most of the cars driving about are new (or close to it). Ready for this?

To keep driving our car, we have to pay the Singaporean government the equivalent of $46,000 Canadian dollars. It’s referred to as a COE (certificate of entitlement) and the government levies it to control the number of automobiles on the road.

You can’t afford it? Tough. Get on the bus, or risk life and limb on a bicycle…on Singapore roads!

Why not just buy a new car, you might ask? How about a new Honda Accord? Unfortunately, that would set us back roughly $130,000 Canadian, if we want the bells and whistles. …see listing

If we were crazy enough to buy a 7 Series BMW, it would cost more than a house in Nova Scotia: $386,000 Canadian for a 750Li.

Which brings me back to our 9 year old Mazda. If we pay the government $46,000, we can drive it for another ten years. If we want to keep driving it beyond that point, we’ll likely have to shell out another equally outrageous sum.

Why not go without a car?

That’s my instinct. But my wife won’t hear of it.

So I’m throwing my limited brain power towards seeking a cheaper option. I’m not sure what I’ll find, but I’ll be doing my best.

And you wondered why I said your car was cheap?

 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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22 Responses

  1. Bri says:

    That makes my stomach hurt….

  2. That's an extortionate price, but maybe the other aspects more than make up for it! Singapore taxes aren't up to 50% ish are they? Do you have those ice-cold winters? 😉

  3. JK says:

    Yes. Yet it seems the other half of the equation is missing. How much income can your wife and yourself reasonably expect make by having access to the car? How does that compare to the equivalent in Canada? I'm not challenging your statement but am curious as to how the other half of the equation balances – or does not.

  4. Thanks for the comment and question JK!

    Considering that my wife and I could take the bus to work, I don't think there's any income that could be derived from having the car. I suppose that if we took some kind of delivery job, or charged our friends for rides, it might be possible. But that would be pretty weird.

    What do you think? Thanks for the comment!

    • JK says:

      I think you're right then – my car IS cheap relative to yours! Carry on…and thanks for sharing your insights via the blog. I'm a generally quiet RSS follower…

      • Thanks JK!

        The more I thought about your comment, the wiser your comment seemed.

        Some people could make money with the vehicle itself. But for us, it's just a luxury, not a working necessity or a working asset.

        Thanks for your comments! I really appreciate them!

  5. Yeah Bri, it's crushing! If I choose to buy a six year old Nissan, it would cost me $34,000, and I would only get to drive it for four years before having to shell out roughly $46,000 Canadian to renew the COE!

  6. Hey Kevin!

    I have written a post that I'm going to publish in about five day's time. You are going to love it!

    I'm flipping the tables and talking about what you addressed with your comment: What are some of the benefits of living in Singapore? And can you live cheaply in Singapore?

    The answer to that last question is a resounding YES!

  7. Keith says:

    Lose the car Andrew! I was resistant, just like Pele, but with Annika's subtle nudging… we decided to test it out. That was 2 years ago and I can honestly say that I LOVE not having a car. Singapore is one of the few places that public transportation is very doable, and I've actually found that I'm in less of a hurry than when I drove a car.

  8. Hey Keith!

    I used to tell people that, no matter how much money I made, I wouldn't buy a car in Singapore. Not even if I made a few hundred thousand a year.

    But I "inherited" the car when I married Pele.

    And I would love to ditch the idea of getting another car. The next time you see Pele, help me out and see if you can convince her. I haven't had any luck.

  9. Andrew,

    My car IS cheap…or should I say WAS cheap. I sold my car at the end of May, after much deliberation. I sold it to save all the monthly costs of owning and maintaining it, which was around $500 USD a month. I owed less than $7,000 on it when I sold it. And that small sum was driving me nuts. I couldn't IMAGINE being in your situation.

    Singapore seems like a beautiful place, but I couldn't see myself paying that much money to drive a car there. I would be car-free and figure out the rest. I use a combination of a bike and the bus system here in Sarasota, Florida. So far, so good..to a degree.

    Good luck!

  10. Hey Mantra!

    You're also leaving less of a carbon footprint! Using public transport is really smart. I'll bet that few people really figure out what their vehicles truly cost. Having said that, for people living rurally, there might not be an option.

    One of the great things about Singapore is this: if you can go without a car, and skip the materialism that infects much of the city, you can live well and save plenty of money.

    I'll be writing my next post about that.

    Thanks for the comment Mantra!

  11. Paula @ AffordAnythi says:

    Wow — I remember being in Singapore and thinking "gee, all the cars here sure are fancy!" At that time I assumed it was because the government fee was so high, only ultra-rich (or ultra-spendy) people owned cars to begin with. I had no idea there was a government incentive to keep older cars off the road! But then, it seems the incentive really keeps all cars off the road … wow. I can't imagine facing those car fees. Yikes!

  12. Hey Paula!

    Yeah, the government controls the cars on the road. Ironically, if you want to drive an old car, you have to throw a lot of money behind it. For example, if I owned a 1995 Mercedes Benz, and I needed to renew the COE, it would cost me roughly $65,000 to do that. It's like a special tax, giving me permission to drive the car.

    But you know, in 2009, during the financial crisis, so many people were selling their cars that the government reduced the COE payment to a dollar, for about a day or so! Imagine that! A tax that costs nearly $65,000 for a 10 year permit was one dollar. But the next day, it went back up! Of course, the following week, there was a flood of new cars on the road.

  13. DN says:

    After reading your post it's hard to believe the number of traffic jams in Singapore!

    I saw this advertised on the MRT the other day: http://www.carclub.com.sg/ I'm not sure if it's any good but my sister uses something similar in Canada and it works out really well for her and her husband.

  14. Bernard says:

    Hi Andrew,

    Just got your book from popular a couple of days ago. It was a good read, easy to understand and very down to earth.

    There was a portion in your pertaining to car ownership, it was mentioned that the first few years depreciation rate for cars is pretty high, hence it's better off getting a second hand car. Does this princple work in Singapore, since you were writing in a Canadian context.

    If it does applies, what would be the sweet spot (no of used car years) for a second hand car. Also what if one is already an existing car owner?-

    Bernard

  15. tony says:

    Why not opt for a weekend car? If it is a must to own a car! The usage is mainly for Sat n Sun only. Furthermore, it can only be use daily from 7pm to 7am. The main purpose is mainly for low usage such as me. The car price is discount SD$17k and the roadtax is discount 70% if i am not wrong. Anyway, my advise is if really……really need it then go ahead otherwise don't buy.

  16. Alan says:

    Hey Andrew,

    I asked a colleague in Singapore who leases a car how much it costs. She said she pays $2500 a month for the lease! FOR A TOYOTA CAMRY!!! That's crazy! That's over $80 a day not counting parking fees and gas. If I took a taxi to work and home every work day, I'd only be spending about $400 a month. – and that's still a big chunk of change in my eyes.

    I'm sticking to riding my bike.

  17. Tony says:

    i can get 10 yr old a car here in Japan for free, but inspections and taxes are based on engine size, so a 2000cc car will run you $1,000/yr.

    Still, that is cheap compared to Singapore!

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