How Much Do You Need To Set Aside For A Car Every Month




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How Much Do You Need To Set Aside For A Car Every Month

In Singapore, whether or not you should buy a car is not an easy decision to make. Besides the upfront costs, you also have to consider a longlist of other costs that come with car ownership. Hence, if you’re planning to get a car, it is important to have a rough estimate about how much you need to prepare to own and maintain one — at least every month for the next ten years it will be under your name.

Calculating the cost of owning a car, however, largely depends on whether you’re eyeing for a Japanese or Continental car. In today’s article, we present you a breakdown of how much you need to set aside for a car every month for both types.

How to Calculate Your Monthly Car Expenses

As mentioned in our other articles, Continental cars generally cost higher yet typically have better engine capacities compared to Japanese cars. Deciding between these two boils down to your budget, future plans for the car, and personal preferences.

The purchase price and other costs are also dependent on which of the two types you will choose. For easier comparison, let’s take a look at two of the most common car models in Singapore for each type — the Honda Fit and the Mercedes-Benz CLA.

As of the time of this writing, the average retail price for Honda Fit is $82,000. On the other hand, the Mercedes-Benz CLA is priced at $175,000.

Car Loan and Interest

Rather than paying the full amount at once, you have the option to pay in installments with the help of car loans. However, a loan comes with interest costs, and the amount of money you can borrow is limited by a few factors including annual income, credit card loans, house loans, and other financial obligations.

The amount you are able to loan is also affected by the Open Market Value (OMV), or the amount of money it costs to import a vehicle into Singapore. This includes its purchase price, freight charge, and all other costs associated with bringing the vehicle into the country.

Buyers of cars with an OMV of $20,000 and below can loan up to 70% of the car’s purchase price, while up to 60% can be loaned if a buyer intends to purchase a car with an OMV of more than $20,000. In this case, a Honda Fit which has an OMV of $16,293 (less than $20,000) can fetch a loan amount up to $57,400 (70% of the purchase price). On the contrary, a Mercedes CLA with an OMV of $28,560 (greater than $20,000) can fetch a loan amount up to $105,000 (60% of the purchase price).

Let’s assume that you opted to make a 30% down payment for a Honda Fit ($24,600) and will pay the remaining 70% ($57,400) through a loan. If the interest rate is fixed at 2.78% per annum to be paid in the next 7 years, the monthly cost you will have to pay inclusive of the monthly loan payment ($683.33) and monthly interest cost ($132.98) would be $816.31. The total cost you would then have to pay in the next 7 years would be around $68,570.04.

Contrarily, let’s say you went for a Mercedes CLA, made an initial payment of $70,000 (40% of the purchase price), and decided to avail of a car loan to pay the remaining 60% ($105,000). Assuming that the interest rate is the same at 2.78% per annum payable for 7 years, you will have to pay $1,493.25 per month, inclusive of the monthly loan payment ($1,250) and monthly interest cost ($243.25). This means you will have to pay a cost of $125,433 for the duration of the term.

Total Monthly Cost So Far:
Honda Fit - $816.31
Mercedes CLA - $1,493.25


It is a must for every car owner in Singapore to have car insurance. Car insurance in Singapore comes in three main types: Third-Party Only (TPO), Third-Party, Fire and Theft (TPFT), and Comprehensive.

A TPO car insurance protects an individual or property affected by a road incident caused by the insurance owner, while a TFPT plan is an upgraded version of TPO offering additional coverage for any loss and damage caused by fire or theft. Comprehensive car insurance, on the other hand, covers both the owner and third-parties, as well as the passengers of the vehicle and any loss and damages caused by fire and theft during the incident. Needless to say, third-party car insurances come at a cheaper price but comprehensive car insurance is the safer choice.

The amount you have to pay for car insurance will depend on your choice among the three, your profile, the model and age of the car you own, and your experience in driving.

Going back to our example, let’s say that you are a 25-year-old single male with 0% No Claims Discount and have been driving for 5 years without any history of accidents. If you’re buying a Honda Fit, it’s safe to assume that you are going to pay around $165 per month ($1,980 per year) for comprehensive car insurance. However, if you are going for a Mercedes CLA, you may have to pay more at $195 per month ($2,340 per year) for the same type of insurance.

Nonetheless, this doesn’t always mean that owners of continental cars will have to pay a higher premium. For example, another buyer of the Mercedes CLA, a 30-year-old married male with 10% No Claims Discount and has been driving for 10 years without any history of accidents may be quoted a lower premium at $122 per month ($1,464 per year) because of his longer driving history and personal profile.

*Quotes based on DirectAsia’s Quick Quote Calculator

Total Monthly Cost So Far:
Honda Fit - $981.31
Mercedes CLA - $1,688.25

Road Tax

Road tax is renewed every 6 or 12 months, and is dependent on a car’s engine capacity, age, vehicle scheme (normal or off-peak) and fuel scheme (petrol or diesel). The road tax for both a brand-new petrol-ran Honda Fit (1,496 cc) and a brand-new petrol-ran Mercedes CLA (2,143 cc) under a normal vehicle scheme is at $157 per 6 months ($26.17 per month).

Total Monthly Cost So Far:
Honda Fit - $1,007.48
Mercedes CLA - $1,714.42

Parking, Toll, & Fuel

Three costs you will regularly encounter when using your car are parking fees, ERP, and petrol.

Parking rates vary per location. Expectedly, parking spaces near Central Business Districts and establishments charge higher than those in housing areas. Watch out for free parking window times in your place. For the article’s sake, let’s assume that you have a season parking subscription at $110 every month.

ERP rates, on the other hand, vary depending on where you travel. Let’s say that you spend $60 (to and from the office) on ERP per month.

Then, when it comes to fuel, it goes without saying that the consumption is greater the larger the horsepower and engine capacity are. So, if the average cost of petrol is at $2.25 per litre and it takes you once every two weeks to exhaust a full tank (40 litres) of your Honda Fit, you will be spending $180 on fuel per month. Correspondingly, you will be shelling out $252 for a full tank (56 litres) of petrol every month for a Mercedes CLA.

Total Monthly Cost So Far:
Honda Fit - $1,357.48
Mercedes CLA - $2,136.42


When owning a vehicle, you must also consider costs on frequent inspection, repair, and maintenance.

How often you need to service your vehicle depends on how well you take care of it, so the costs you have to pay every month can be hard to gauge. Fortunately, ValueChampion recently discovered in their study after analysing quotes from three major workshops that on average, specialists recommend regular servicing for cars every 10,000 km it has travelled or every 6 months — whichever comes first — and the servicing costs around $188 ($31.33 per month).

This changes once you need some parts of your car to be replaced. Typically, Continental car parts are more expensive compared to Japanese car parts because of its higher import price. In the same study, the average cost of major servicing for both types is at $425.

In our example, let’s assume that your vehicle is well-maintained and only needs to be serviced every half-year.

Total Monthly Cost:
Honda Fit - $1,388.81
Mercedes CLA - $2,167.75

One-Time Charges, Hidden Costs, and Rebates

On top of on-going monthly costs, other expenses and rebates you have when you own a car are as follows:

  • Initial Payment (if paying through loan)

  • Certificate of Entitlement, which is based on the car’s max power, engine capacity and size among other factors. Small cars usually fall under categories A and B. (In the latest bidding, the quota premium for Category A cars is at $40,609 and $49,001 for Category B cars)

  • Vehicle Tax Structure
    o Registration Fee (fixed at $220)
    o Additional Registration Fee or the ARF (100% of the OMV)
    o Excise Duty (20% of the OMV)

  • Vehicular Emission Schemes, which may either give you a rebate or mandate you to pay a surcharge depending on your car’s emission.

  • Hidden costs (Fines for speeding, parking offenses, etc.)

  • Vehicle modifications

  • Car Plate Number Fee (If you to register your preferred VRN, minimum bid amount is at $1,000)

  • Goods and Services Tax (7% of total OMV and excise duty amount, inclusive of the in-vehicle unit)

  • PARF Rebate (computed by taking your vehicle’s age upon deregistration and the price of the ARF you paid)

What are your other options?

For those who are on a budget or do not need to use a car on the regular, a better option may be to lease a vehicle. Besides involving less commitment and lower monthly payments, it gives you more vehicle choices and the chance to drive the latest cars every few years!

CarVault provides a lease-to-own scheme to accommodate drivers who wish to pay for their preferred vehicle while driving for an income without the stress of hefty down payments. With this offering, you can just drive and enjoy your vehicle sans the hassle of keeping up with insurance coverage, road tax renewals and vehicle maintenance!

Choose from our 5 to 7-year plans and earn full ownership of the car at the end of the contract.

  • Deposit as low as $69/day

  • Lease for 5 years and the car is transferred to you in the 6th year for only a $25 fee.

Drive more. Earn more. Worry less.

For more information, contact us at 6635 5793 today.