My wife and I never had the intention to buy a car, until we were expecting our first kid. The main reason was that cars in Singapore are notoriously expensive because you need to buy a Certificate of Entitlement (COE) from the government just to have the right to own a car. Latest COE Category A was a whopping $40,714!
But alas, while expecting our first kid, the idea of having a car to shuttle our young kid around became more appealing. We didn’t put in much thought and just went with the cheapest car in the market with a reasonably large trunk and airbags for safety. So, we ended up with the Mitsubishi Attrage 1.2L Sports. Definitely not the most impressive, but gets us from point A to point B.
More than 2 years down the road, I’m taking a look at the true running cost of a car in Singapore. I won’t be selling the car anytime soon, but I just wanted to do this exercise to satisfy my curiosity. Hopefully this information might be useful to you as well.
Total purchase price of our Mitsubishi Attrage 1.2L (auto) was $62,999 back in Aug/Sep 2018, including COE of around $30,000 at the time. Total interest would be $5,952 over 6 years at 2.48% per annum. So total cost of the car is $68,951. FYI, our monthly interest instalment is $638/month.
For the ongoing running costs, I’ve used are either estimates or averages of car-related expenses I’ve consolidated through various banking statements. Here’s the breakdown:
| Variable Expenses | Monthly $ | Annual $ |
| Fuel – Esso (including discounts) | $200 | $2,400 |
| Parking – HDB season | $110 | $1,320 |
| Parking – Cashcard top-ups | $100 | $1,200 |
| Road tax – LTA | $42 | $506 |
| Insurance – Budget Direct | $57 | $683 |
| Miscellaneous – spare parts, car wash, etc. | $50 | $600 |
| TOTAL VARIABLE COSTS | $559 | $6,709 |
COE is valid for 10 years, so let’s say that all these expenses are depreciated over 10 years. Assumption is that car value goes to $0, which is not the case because there is some residual value. But I’m ignoring that for now, may look into it later. I’ll update this post if the residual value substantially changes the calculations.
Depreciating the entire value of the car over 10 years, the TOTAL FIXED COSTS would be $68,951 / 10 years = $6,895 per year or $575 per month.
That gives us the TOTAL RUNNING COST of $13,604 per year or $1,134 per month.
Even if we were to buy the same car right now at the higher price of $66,999 with higher interest cost of $7,440 (same 2.48% over 6 years but for $50,000 loan), the TOTAL RUNNING COST would only be 4% higher at around $1,179/month according to my calculations. That works out to around $40/day.
What happens if we got rid of the car and exclusively used private transport like Grab to get around? Prior to the pandemic, I had primarily used the car to drive to and from my workplace which is pretty inaccessible and shortens the commute significantly.
Checking JustGrab prices each trip would cost me at least $30 without surge pricing. That alone would cost me $60/day vs $40/day running cost for the car. Not worth it unless I’m willing to take a much longer commute via public transport.
So for now, the added convenience is a huge advantage for me. I justify it in that the car allows me to have additional time with my wife and kid, which is intangible and precious. That offsets whatever opportunity cost we are sacrificing if we had put the $1,100+ into the stock market earning us a 2-3% annual return.
A small sacrifice we can afford for now at our life stage, but that may change later on when the kids have grown up and are more independent.
Hope you found this sharing useful. Let me know if you have a private vehicle and what your total running costs are, I’d love to hear it. Thanks!