A Young Couple's Guide to Buying a Car Together
Most couples in Singapore think more about buying their first flat together rather than a car because of the waiting time before they will finally get the keys to their new Build-to-Order (BTO) flats. But not all couples are at the stage where they are considering marriage yet; in fact, some just want to be able to spend more time together while still staying with their parents. For these couples, buying a car together could give them the liberty and convenience to see each other more often, go on romantic dates and even travel together on a road trip.
While buying a car in Singapore is definitely not cheap, buying it together might be a feasible solution since you split the cost to make it more affordable. Nevertheless, it is still a big financial commitment, so what should couples consider before taking the plunge?
What to consider
Cost and affordability
Do you know exactly how much a car cost in Singapore, including all the fees, taxes, insurance, maintenance cost, petrol cost and parking fees? Refer to our infographic here to have a rough idea of the “all-in” price before you and your partner decide if the convenience is worth it.
Since it can be pretty expensive to own a car here, most people require some form of loan to help them finance the purchase. Similar to a home loan, there are restrictions on the maximum amount of loan you can get, and there are also different interest rates offered by the various banks.
Firstly, note that you can borrow a maximum of 70% of the purchase price of a car with an Open Market Value(OMV) of $20,000 or less. For cars that have a higher OMV, you can borrow up to a maximum of 60% of the purchase price. This means that for a $80,000 car (with an OMV of under $20,000), you would have to pay the upfront cash of $24,000.
Current interest rates for car loans are around 2.4 to 3%. Be ready to put aside about $1,000 a month just to service the car loan instalments. Tenure for car loans typically lasts from 1 year to 7 years.
Whose name should the car be registered under?
Most logically, the person who will probably use the car the most should put the car registration under his or her name. But since there will be two person using the car, you’ll need to declare one as the main driver and also add in the insurance for your partner.
Depending on the usage, DirectAsia offers flexible driver plans so that you only pay for what you need. For instance, if both of you are below 30 years and are relatively new drivers, the Value Plan makes sense since it covers up to 5 named drivers, 2 of which can be young or inexperienced drivers. On the other hand, if your family members may occasionally use the car, you might want to go for a flexible plan which covers all drivers of your car, as long as they have a valid driving license.
Who is responsible for car maintenance?
If you’ve decided to buy the car together, it might be wise to speak about the split between how you want to finance the car, as well as the responsibility of taking care of maintenance, payment of road tax, renewing the car insurance and how you should split the cost for parking and petrol.
It might seem intuitive but these little things can be the start of conflict for some couples. Though it’s not a fun topic to speak about, you might also want to consider the fate of the car should you split one day.
Despite the cost, some couples may find that the amount of time saved from having to take public transport, especially if you live or work far from each other is a price worth paying for. Consider the long-term cost, benefits and your financial priorities before making that decision!
Keen to find out how DirectAsia can provide car insurance coverage for both you and your partner? Feel free to speak to our friendly customer service officer at 6665 5555 or ask for a non-obligatory quote now!