WITH lower car prices and certificate of entitlement (COE) rates at record-low levels, Singaporeans have been visiting car showrooms by the droves to get a feel of the vehicle they have been eyeing the past few months but have been put off, if not by anything else, the high petrol prices. But even petrol prices have dropped so should anything stop you?
Other than the first time I bought a car when the thought of taking a $15,000 or so loan for my second-hand Mazda 323 made me tremble, there was only one other time when I actually thought deep and long about holding on to a car.
It was when a friend sat down and worked out with me how much it cost to actually own a car. We all have some vague ideas but what he took me through made sense but I must add that mathematics has never been my forte.
We worked on the assumption that I would hang on to the car for 10 years, which many of us don't do. My friend warned me that if I were to work on the assumption that I changed my vehicle every 5 years, the cost would be much higher at which point I decided to work on the 10 year ownership model..
First I had to work out the cost of the car (that would be price of the car plus what I would have paid in interest for the loan), add 10 years' worth of annual insurance and road tax to the amount, add 10 years' worth of petrol (I multiplied my monthly average consumption by 12 months and then by 10years). Add to it maintenance (I put aside $200 a month multiplied by 12 and then by 10). Add 10 years worth of car park and ERP charges.
Finally minus whatever you will get back for the car at the end of 10 years (sell off as second-hand vehicle or scrap or whatever deal there is available).
I was then told to take the final figure and divide it by 10 years and then by 365 days to find out what it costs to use the car daily. I was told to sit down what I would then spend on taxi fares every day if I were to take a taxi for every trip. I was shocked by the final figure. But I managed to overcome it and proceed with the purchase of my car. But it was an interesting exercise.
If anyone with a good head for figures can tell me how accurate this exercise is, I am sure many others out there would appreciate it.
Meanwhile, I shall pass it on to you. Have fun with it.