The second hand car market is a growing industry worldwide, but more so in Singapore, where a sedan fresh off the showroom like the Toyota Vios will be worth two top-of-the-line pickup trucks from the same maker in the Philippines.
See, a new Toyota Vios 1.5 G goes for S$116,888 or around US$86,670 in Singapore, while the same model would cost a mere US$18,971 in the Philippines and other countries — which means you could buy at least four cars for the money you need to buy just one new car from car dealers in Singapore.
This makes the second hand car market in Singapore very lucrative despite the risks, as knowing what to look out for in used cars — from mechanical stuff to car insurance coverage — would help you make the best choice.
How much can you save if you buy used cars?
Buying a used car is a great alternative to mass transportation, especially with the costs of cars in Singapore, and the COVID-19 pandemic making private transport necessary.
1. Huge differences
So how much can you save with a second hand car in Singapore?
According to sgcarmart.com, an online platform in Singapore that provides actual prices of a brand new vehicle and used cars, a new Mazda CX-5 — a five-seater crossover with an engine churning out 162 horsepower, mated to a six-speed automatic transmission — costs S$155,888.
But a used Mazda CX-5 manufactured in 2018 which has 58,000 kilometers of mileage only costs around S$94,888 — a difference of S$62,000.
2. Downpayment
In terms of downpayment, the new CX-5 requires S$62,335, while the upfront on the older model is around S$29,444. Sure, you are not buying a new car in Singapore, but 58,000 kilometers is not a big deal if the car was properly maintained.
Things to consider when buying a pre-owned car
But before rushing to a used car dealer in Singapore, there are a lot of things to consider first.
1. Setting your sights
Often, the reason why a person opts for a used car is because they cannot afford the high price tag of their dream car, especially in Singapore where car prices are so high.
But knowing what kind of car you prefer and how much you can shell out is a big convenience already as you can trim down choices.
2. Identifying a budget
What financial and car experts suggest is for aspiring car owners to specify how much they can set aside for a second hand car. This is because one might get lost in picking a used car as there are options priced way lower than the open market value of a new car, but one that would still be above your operating budget.
If you cannot pay for the used car in cash, consider financing through banks and lending companies that pay for a portion of the car in your behalf for the meantime. Find out the best car loans in Singapore.
3. Value for money
One of the top considerations about buying used cars is paying for the right value: this means getting a well-conditioned car despite the huge savings you expect from going second hand, accounting for the annual depreciation rate.
4. Check for signs of use and abuse
A car’s mileage is a guide, but always remember that it goes beyond that: you should check whether the previous owner religiously followed preventive maintenance schedules and other car management protocols like changing its engine oil, brake pads, and filters that ensure its proper operation.
5. Check for damage to the exterior
You should also check for possible dent and scratch marks, as any disfiguration may be a sign of previous wreckage. If you do not have the eye for such issues, it may be best to bring a trusted mechanic.
6. Road tax
In Singapore, not only is buying a car expensive — keeping one is pricey too, with the road tax that is paid annually. So checking whether a pre-owned car’s road tax was paid already before buying the unit is very important, as this would save you money from paying the taxes afterward.
7. Car insurance
A used car buyer should also remember that car insurance is mostly non-transferable, meaning that even if the previous owner actually bought insurance for his or her car, you would also have to buy your own car insurance after purchasing the vehicle.
Aside from knowing how much you need to pay for the insurance of a used car, you should also check any preconditions, like a ban on modifications which the used vehicle may already have. This is because an insurance company may not release claims or benefits if your car has several modifications, even if you were not responsible for putting them.
What are the risks?
Obviously, a second hand car was already used up to a certain point before it was placed on the market. While most used cars would last long enough, how it was taken care of or how it was maintained will play a major role.
As a machine, cars also age and are not expected to run forever, as further wear and tear diminish their capacity to run properly. Luckily, proper maintenance can prolong the life of your car and make sure that you get the most value out of it.
1. Picking by the looks only
While it is true that a huge part of assessing a used car is by going over its appearance, as scratches and dents are indicative of how the previous owner took care of the car despite its age, it is also important to check the interior of the vehicle and the entire car ride, aside from peeking at the engine itself.
2. Looking at the interior
The interior of the car — the seats, the dashboard, the instrument panel, and the air conditioning system of the vehicle itself — can tell a lot of stories. A cracked dashboard may show that the car was left out in the sun for a long time; wet flooring and rust on the floor may indicate a broken cooling system, or the car being subjected to flooded roads.
3. Gauges and warning lights
Meanwhile, malfunctioning indicators like fuel gauges and warning lights may be a tell-tale sign of problems in sensors and electrical lines — things that the previous owner should admit, and which should reflect on the selling price.
4. Not doing a test drive
Many experienced drivers insist that driving is not just about keeping your eyes on the road and your hands on the steering wheel. More so if you are drive testing a prospective car, as you would actually have to use all senses except for taste, to be mindful of any noise and signs of an uncomfortable ride — like rattles from suspension links, grinding gears, and knocking from the engine.
5. Using your nose too
The scent is also needed: sensing the smell of burnt cables, electric wirings, or evaporating coolant can spell the difference between life and death in some situations. You can also use your sense of scent to know whether a car had been submerged in floodwaters before, as the air conditioning unit would have a moldy smell if it encountered flooded streets.
6. Not getting a comprehensive report
Getting a comprehensive vehicle history report or a car evaluation may be a pain due to the several procedures, but it is one of the best ways to gauge whether you should buy the old car because it would show all the records like prior accidents, previous run-ins with the law, and other factors that may decrease its actual value and resale value.
There are online applications in Singapore that would do this for you, but it will still be best to check it with the government’s Land Transportation Authority.
Are second hand cars worth it?
Second hand cars are mostly a good buy, especially the ones with low mileage and were not subjected to abuse. It all boils down to how discerning a buyer’s eye is, to separate potential money pits from fresh and well-maintained vehicles.
Financing your used car
A lot of banking and lending firms are offering car loans, even for pre-owned cars. However, banks have different criteria for allowing loans: for example, DBS Bank only allows you to obtain loans for second hand car models that are not older than 10 years.
There are also credit services that would try to connect you with a particular bank for a loan like in the case of Speed Credit which would process paperwork, requirements, and documentation on your behalf.
Conclusion
To sum it all up, buying a second hand car is a great option especially for those who are looking for cheaper yet viable vehicles for daily use. However, those interested must proceed with caution, because it will be a given that used cars have already accumulated some mileage already, and will be more prone to problems than brand new cars.
Key Takeaways:
- Buying second hand cars is cheaper but basic know-how of cars may be needed to spot potential problems and to ascertain if you are getting the actual value of what you are paying for
- Other car-related expenses like road tax and insurance payments must be accounted for when crafting your budget and deciding what model you would pick
- Buyers need to trim down their choices to ensure that the most appropriate vehicle for their needs — and their finances — would be chosen.
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