Get the most from a new car purchase

 

Thinking of purchasing a new car? Be it used or brand new, here are tips that will let you get the most for your money when purchasing. There are just too many factors to considers when buying a car. Today, we got you covered on how to get the most of your money when buying a vehicle. This is inclusive of the money that you would have otherwise be spending as well!

 

1)  Do plenty of research and buy the right one

 

Once you have chosen a car, it is good to have a few other car models that are in the same category for comparison. Unless you have firmly decided that you will be buying one specific car, make sure to look around for its competitor as well. Of course, one of the way is to test drive them all the see which car you like the most.

What to look out for: Pricing and features. (Be sure to check what trim level is your car to match it with the competitor to get a fair comparison as price is not your only deciding factor)

FUTURE TIP:  Be sure to make additional research towards maintenance costs, reliability and resale value.

 

2)  When is the right time to get a car?

 

There are a lot of promotions available at any given time. However, “how to get the best promotion?” you may ask. For starters, try shopping at the end of the year or when a new model or redesign is released. These periods typically result in a lowering of car prices. If the purchase is relatively more urgent, try waiting until the end of the month where there are more promotions available.

Besides looking for promotions, another factor to consider is the future COE price. You may just have found yourself even more significant savings! However, do take note that this may be considered more of a gamble as you may end up paying more for your car if the COE increases significantly.

 

3)  Affordability

 

As tempting as it is to purchase your next vehicle, alongside the alluring promotion that is being offered, you still need to consider the cost. Your car must be an asset that brings value to you and not a financial liability that you are unable to upkeep.

Unless you are paying in full cash, you still must consider the down payment, interest rate and loan tenure.

For example, if you take a loan of $70000, over the maximum loan tenure of 7 years at market interest rate of 2.28%, you are paying over $11,100 in interest! This means that you would have paid an additional $11,100 for your car purchase!

Instead of taking full loan and minimal down payment, we recommend:

50% down payment, 5-year loan.

Total interest paid $5700
Potential saving of estimated $5500, close to 50% compared to the first example.

To get the most out of your money, what you can do is to use an online loan calculator to see how much interest you have to pay for your loan. Always be vigilant and compare with different banks for a lower interest rate. It is definitely in your best interest to reduce the loan amount and loan tenure! You may be paying slightly more every month, but you are sure to have saved a significant amount of money along the way.

 

4)  Dealer’s Margin

 

Get to know how much your car actually costs. What I mean is the cost for the dealership, which is the amount charged for the services rendered by the dealer. This is inclusive of the registration of brand new cars or handling used cars.

For a brand-new car:

You can look at the cost of cars registered under the onemotoring website.

You are able to see how much it costs to register a car and how much the dealer is selling. An example is the Honda Civic VTI 1.6A. In September 2020, it costs $84,703 to register it however they are selling it at $101,999. Where they make profit of $17,296 just on the sale of the car. In general, the dealer margin is about 15% for affordable brands.

For a used car:

Although you are unable to see the exact cost of your car that your dealership is selling to you, in most circumstances, vehicles sold by used car dealer earns them between $5000 to $10000. To find a good deal, you can look around for your car model that has been registered around the same time period with lower depreciation.

To get the most out of your money you should look for one where a car dealer takes a smaller cut of the profit margin. With already high duties that are paid for the car, surely you do not want to overpay even more. You can use this to your advantage when using the next tip to get the most bang for your buck!

 

5)  Negotiation on price / freebies

 

Now, with all stars align, before you purchase your car, question what else can you do to get the most out of your money. How to do this? Negotiating of course! Using all of the above knowledge, you can now begin your negotiations.

Bargain for a slightly lower price than what you are looking for! If the car is selling for $70,000 and you wish to purchase at $67,000, try to bargain for $65,000 instead. You may be pleased to find yourself an amazing deal. Of course, if the dealer has a higher than average profit margin, this is an opportunity to seek for a better price.

If they are firm, bringing in some competition from other car dealerships by comparing prices will often get you a better deal. (Be sure to bring out any hidden costs when negotiating for your desired price!)

After you have negotiated on a satisfactory price proceed to get more freebies from them. In Car camera, solar film, magnetic sunshades, car mat. If you are experienced, you can even get additional warranty and free servicing.

Show some interest when buying even if it is the car you love the most and never be afraid to leave the dealership. Just so to squeeze a little more savings out of them!

 

Conclusion

 

All in all, buying a car in Singapore requires a lot of time and effort to find the right one that is for you. While depreciation is unavoidable for cars, is still a must to make a wise and informed decision. By getting the most for your money, it can be said that you are indirectly reducing the depreciation.  We hope that what we have written has allowed further insights of what you can do to get the most for your money while simultaneously saving you more money!