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Humanising Finance
March 2016
4 tips to get you closer to owning your dream car
The update on Certificate of entitlement (COE) premiums is always a talking point among Singaporeans. With the expected increase in supply of COEs, buyers have already benefitted from the generally lower premiums in the last few bidding exercises.

If you’re thinking of getting a new car, here are a few tips to help you get going.
1. Budget wisely
It sounds pretty straightforward but the first step is always to plan a budget. Knowing what other expenses you incur on a regular basis will help determine the amount that can be set aside for a car.

Getting into the habit of setting aside some money not only allows you to save for your car, it also prepares you for future car instalments. A good tip is to put your savings in a bank account which offers higher interest with sub-accounts such as the Maybank iSAVvy Savings account so that you can clearly see how much you have saved for your car.

Car buyers should expect to pay more than the required cash down payment for their cars. Other costs such as road tax, vehicle insurance, fuel, ERP charges, parking, car maintenance, repair or replacement of parts as a car ages should be factored in. Pre-owned car buyers will also have to pay transfer fees.
2. Avoid unnecessary costs
Things like late payment fees or vehicle repair costs are some of the things that you may end up paying for unnecessarily. Use GIRO to make your monthly car loan payments on time and send your car for regular servicing and any repairs needed. While it may seem like a good idea to save on minor repairs or servicing, not addressing these issues can lead to bigger and more expensive problems in future.
3. Motor insurance
While most motor vehicle owners look at price competitiveness when choosing a motor insurance policy, it is important to consider other features and benefits.

Is the coverage only for Singapore or does it include other geographical locations? Given that many Singaporeans like to drive into Malaysia for short breaks, this is something that should be taken into consideration.

Also check if your motor insurance policy allows you to select a workshop of your choice for car repairs or will only cover repairs made at authorised workshops.
4. Financial options for car buyers
Under the Monetary Authority of Singapore’s regulation, the maximum motor vehicle loan amount depends on the open market value (OMV) of the motor vehicle purchased.

For a car with an OMV not exceeding S$20,000, the loan can be up to 60 per cent of the vehicle purchase price. The maximum amount of loan on a car with an OMV of more than S$20,000 is 50 per cent. All car loans must be paid within five years.

You should also consider the ability to meet the monthly loan payments. For prudent financial planning, a general rule of thumb is to factor approximately a quarter of your income to purchase a vehicle.

Financiers will usually adopt a 60 per cent debt servicing ratio (DSR) to assess loan eligibility. This means that your monthly commitment should not exceed 60 per cent of your gross monthly income, minus all your outstanding debts. For example, if your gross monthly income is S$5,000 and you do not have any outstanding debts, your car loan instalment should not exceed S$3,000. However, the amount will be less if you have other outstanding loans such as home loans or personal loans.
If you need more advice on how you can own your dream car, feel free to get in touch with our customer relationship executives on 1800 629 2265 (1800-MAYBANK) who can advise you further.
Always wanted to find out more about a finance-related issue? Email us at: corporateaffairs@maybank.com.sg
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