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Hi James, I want a car. Where do I begin? You could start with visiting car dealers and checking out the makes and models available. Read up and do some research, check out motoring magazines and read reviews on the Internet. You should also consider your transportation needs when deciding on a vehicle type. Will you be ferrying your family around? Will you be driving in the city area alot? Are you the adventurous sort who would take road trips to Malaysia or beyond? Do a rough calculation of the additional costs that come with owning a car such as fuel, parking and ERP charges and decide on the budget you're able to set aside for all your car expenses. Measure up these considerations against the car's characteristics such as fuel consumption, luggage space, acceleration, and most importantly of course, the price. Suggested online resources: One Motoring Asiaone Motoring Motor Traders Association of Singapore  Back to questions The next step is to decide on the Certificate of Entitlement (COE) package. A few options may be available from your car dealer. You should understand the implications of each. These include: Immediate delivery Offers almost-immediate delivery of your car with COE. This is usually available when the car that you want is in stock. You may or may not be charged a small premium for the privilege. Ask the car dealer about the COE priceif he is planning to utilise one he already has in hand so that you can gauge the relative value of this option. Guaranteed COE - If the car that you want is not in stock, a 'Guaranteed COE' package promises delivery of the car with COE within 1 to 3 months (i.e. 2 to 6 fortnightly rounds of COE bidding). The price is typically fixed upfront. With this option, a minimum COE value is usually stipulated in the sales agreement, which means you get a price rebate if the COE falls below a certain amount. This amount is usually fixed at a very low rate so the rebate is rarely exercised. Non-Guaranteed COE This may be a cheaper option as it allows your car dealer up to several months to deliver the car and bid for a COE within a stipulated price range. However, you risk not obtaining a COE! This is especially so where COE prices are generally on an upward trend. You should consider this option only where you do not need a car urgently. Back to questions You should always read very carefully the agreement terms. Pay attention to the consequences in the event that you are unable to secure financing for your purchase, for instance, will your deposit be forfeited? Most financiers do not charge a fee for merely processing your application. You should also make sure that the sales agreement accurately reflects the agreed price(s) and sets out all relevant accessories and extras (if any) that you have agreed with your car dealer. Back to questions Singapore laws require that you obtain a minimum of Third Party Liability insurance. Most financiers would however, require that you obtain Comprehensive Insurance coverage. Such a coverage will cover damage to your own car as well as that of a third party. You are fully entitled to shop around for your own insurance. However, many car dealers may give an additional discount off the car price if you purchase your coverage through them. You should consider whether this discount outweighs the savings you may make from purchasing your insurance elsewhere. To find out more about our ezyShield AutoPlus insurance, call us at 6410 2966 or request a call from us now. Back to questions What if I'm interested in a pre-owned car? The process involved is fairly similar. You should visit several car dealers and pick a car which you like and fits your budget. The main differences between purchasing a new and used car are as follows: Loan Limit - some financiers may require that you pay a higher deposit. COE - your car will already have a COE. Be sure to note when it expires and how much it is currently worth. Car Registration - your car will already have a number plate. You can pay to have it changed. Road Tax - there might be a few months left on your road tax validity. Be sure to know when it expires. Back to questions The typical form of car financing in Singapore is hire-purchase. This is where the financier beneficially owns the car and lets you hire it. You don't become the beneficial owner of the car until you have fully paid all the instalments. The terms are found in the hire-purchase agreement you enter into with your financier. In addition, the Singapore Hire-Purchase Act governs hire-purchase agreements involving cars that cost less than $55,000 excluding COE. Financiers usually offer hire periods of 1 year to 10 years. Interest rates may vary depending on the length of the hire period. Back to questions The amount of financing you would need or should take largely depends on your personal circumstances. If you take up 100% financing, you would not have to fork out as much cash in the short term. However, in the long run, you would pay more money for your car than if you had taken a smaller financed amount because you would have paid more interest for the longer hire period. Back to questions The market practice is typically to charge what is known as a "flat" or "applied" interest rate. In calculating the amount of interest payable in flat interest rate calculations, it is assumed that the principal or financed amount is constant throughout the period. An example of flat interest rate calculation: - Financed Amount = $60,000
- Flat/ Applied interest Rate = 3.5%
- Hire Period = 7 years (84 months)
- Total Interest payable = 3.5% x $60,000 x 7 = $14,700
- Monthly Instalment = $(60,000 + 14,700) / 84 = $889.29
In reality, the financed amount reduces over time. Because this is not taken into account, the "effective" interest rate is in fact higher than the flat rate. In the above example, the effective interest rate is in fact 6.44%. Back to questions For the convenience of car buyers, a practice has evolved whereby they are asked to sign blank documents when they first apply for financing. This is so that buyers do not have to make repeated trips and so that they can get a car as soon as it is registered. While this is certainly convenient, it is also potentially risky. The one form that can be substantially completed is the financing application form. When you apply for James auto financing, you should ensure that the application form is fully completed and retain a copy for your own reference. We will also contact you for the verification of personal details and confirm the amount to be financed. It is very important that you listen carefully and point out any discrepancies in your understanding of what the finance amount and/or other finance details should be. We rely heavily on you to confirm such details as it may be very difficult to undo a transaction if you change your mind subsequently. Back to questions Yes you may complete your hire-purchase before the end of the term. As an early completion means a reduction in interest income on our part, a fee of 20% of the outstanding interest is charged to partially compensate the loss. In the case of James auto financing, this fee may be waived or you may be charged an additional fee depending on the promotion you choose. The terms of such promotion(s) will be indicated in the promotion letter. You should find out what (if any) sort of fees may additionally be chargeable by other financiers. Below is a worked example of what would be payable upon early completion of your James auto financing: - Original financed amount - $80,000
- Flat interest rate - 3.5%
- Total interest payable (TI) for 120 months - $28,000
- Monthly instalment - $900
If you decide to complete your purchase after 24 months and assuming that you are up to date with other payments, the computation of your balance payable is as follows: - Total instalments paid: 24 x $900 = $21,600
- Number of months remaining (n): 120-24 = 96
- Outstanding interest (based on rule of 78)
- = [n (n+1) x TI] + [N (N+1)]
- = [96 (97) x $28,000] + [120 (121)]
- = $17,957
- Early completion fee for 24 months
- = 20% of Outstanding Interest
- = 20% x $17,957 = $3,591.40
- Amount payable for early completion
- = ($80,000 + $28,000 - $21,600 - $17,957) + $3,591.40
- = $68,443 + $3,591.40
- = $72,034.40
NOTE: A similar calculation is applicable if you wish to assign your hire-purchase in accordance to the Hire-Purchase Act. An additional administrative fee of $200 would be chargeable in such a case. Back to questions Car dealers often run attractive promotions with financiers, offering upfront rebates. You may receive the rebate in the form of cash or in some other cases, this comes in the form of discounts such as a lower car price, additional accessories or a higher trade-in value for your old car. You should take careful note of whether you have applied for a rebate promotion or not and whether it is meant to be paid to you in cash or to your car dealer who is expected to give you some sort of commensurate value. This is because in most cases – including James promotions – the rebate is repayable pro rata if you choose to complete your financing early. Therefore, even if you did not receive the rebate in the form of actual cash, you may eventually have to repay part of the rebate pro rata. As such, do carefully read all the documents you are asked to sign in relation to your financing. Back to questions | | | | |
