That car could cost you $1.6m over the years

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#1
Think carefully about the long-term costs of a car in Singapore, and whether you really NEED one. If not, invest the money at 4%-5% for better returns!

The Straits Times
www.straitstimes.com
Published on Mar 03, 2013
That car could cost you $1.6m over the years

Experts urge buyers to add up the costs and think about what else to do with the money

By Alvin Foo

Owning a car in Singapore for one's adult life could add up to a whopping $1.6 million, say financial experts. And that's just for a non-flashy 1.6-litre family sedan.

Those who can't do without a car should be prepared to make lifestyle changes to cope with tough new curbs on car loans, financial advisers told The Sunday Times.

Car buyers must now make down payments of 40 per cent to 50 per cent of the purchase price and settle car loans within five years, under new central bank rules. The market had been unregulated for a decade, allowing car buyers to borrow up to 100 per cent of purchase prices and take as long as 10 years to repay.

Financial advisers were quick to point out the triple whammy of reduced financing limits, high certificate of entitlement prices and hefty down payments.

For instance, the down payment on a new Japanese or Korean 1.6-litre car costing around $150,000 is now at least $60,000.

"For the average income earner and for younger age groups in general, the best thing to do may be to avoid purchasing a car altogether," said Ms Geraldine Lam, an investment specialist at financial advisory firm Providend.

She calculated that owning a 1.6-litre car here could cost between between $1,304 and $2,641 monthly, for loan repayments and running costs such as petrol, insurance, parking fees and servicing.

This could add up to as much as $1.6 million over 50 years, assuming one has a car from age 25 to 75.

Committing to larger monthly loan repayments over a shorter period could also affect a person's ability to borrow for a property in future, the experts warned. That is because banks often look at a potential home buyer's capability to service the home loan based on his other financial commitments.

Before putting down that hefty down payment for a car, buyers should consider what else they could do with the money, the experts said. Among other things, $60,000 is enough for a down payment on a resale Housing Board flat in some estates, or a wedding banquet for 350 at a top hotel. Or it could be invested. For example, investing $1,000 monthly with a yearly return of 4 per cent would yield $1.9 million at the end of 50 years.

For those who insist on getting a car, the rule changes may mean having to make lifestyle adjustments to keep up the payments.

"The majority of people will need to cut back on their variable spending, by eating out less or dining at a hawker centre instead of a fancy restaurant," said wealth management consultant David Gardner at The Henley Group, which provides financial planning services.

Buyers might also want to consider getting a used car instead of a new one, as this will mean a lower initial cash outlay and taking a smaller loan.

Instead of spending on a costly car, Ms Lam suggested relying on taxis as an alternative, including booking a dedicated cabby on a regular basis.

Checks with banks revealed that Singaporeans mainly do not take the full 10 years to repay their car loans.

A DBS Bank spokesman said: "We have observed that most car buyers in Singapore tend to repay the loan in full within four to seven years. Repayment delinquency has also improved over the last few years as consumers become more financially savvy."

Lecturer Ng Ko-Vin, 32, said last week's changes convinced him that he should buy a used Honda Edix instead of a new car, as it will mean forking out less cash upfront.

Public relations executive Melvyn Tan, 35, who is still hoping to buy a car, said: "I was planning to put a 30 per cent down payment, but now I have to redo my sums and save a bit longer."

alfoo@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
look at the bright side - there may be less cars on the roadgoing forward --> less air pollution

seriously that stretch of orchard road should be converetd & dolled up to become a walkway or green park instead of haviing pple to cross to either side of the road through crampy underpass or traffice junction.

look at beijing's 王府井 walkway - so big, broad and spacious for shoppers to walk
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#3
Quote:seriously that stretch of orchard road should be converetd & dolled up to become a walkway or green park instead of haviing pple to cross to either side of the road through crampy underpass or traffice junction.

It would be better to put the cars underground and the people on the surface instead of the reverse situation we have today. Of course it will cost money but I think the eventual benefits are likely to be enormous in terms of foot traffic and consequent retail spending - which will flow back to the government via property taxes, GST etc. It could take many years to pay off, but hey, the government is supposed to think long term right? Maybe that should be issued to STB and LTA as a joint challenge?

A different way would be to keep the traffic on the surface but re-route it elsewhere. The question is where. One possibility - a flyover? The only things in the airspace now are ERP gantries which can be easily moved. The flyover could stretch from Tanglin Mall to Plaza Singapura.

Or, build a giant elevated platform 3 stories above ground to allow people access to all the malls at one go. The platform can be turned into an urban park with trees lining both sides, and the central "lane" can be opened to buskers and kiosks selling food, souvenirs, flowers etc. This is "free" GFA since previously it was only a road. This platform could run from Wheelock Place/Shaw to Centrepoint - there are buildings on both sides for most of that stretch. Those who have been to Bangkok may recall the giant platforms at some BTS stations, that's the idea but of course we can add more trees and whatnot.

The mall operators can be asked to contribute, I'm sure they would be happy to pay to connect to the platform because it converts a relatively low-yielding 3rd floor into an extra high-yielding "ground floor".
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I do not give stock tips. So please do not ask, because you shall not receive.
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#4
thanks for the generous long post...free of charge great ideas like these hopefully will be read by some civil servants here and they can use these free ideas for their own credit/promotions..
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#5
(03-03-2013, 12:50 PM)d.o.g. Wrote: It would be better to put the cars underground and the people on the surface instead of the reverse situation we have today. Of course it will cost money but I think the eventual benefits are likely to be enormous in terms of foot traffic and consequent retail spending - which will flow back to the government via property taxes, GST etc. It could take many years to pay off, but hey, the government is supposed to think long term right? Maybe that should be issued to STB and LTA as a joint challenge?

The idea of putting cars underground is perfectly feasible from current engineering point of view. It will be similar to creating a series of tunnel networks like the KPE and coming MCE, NSE for the underground expressways.
However the cost is exhorbitant and from current administration's cost-benefit analysis, this idea is not yet needed.
Perhaps in the next 50, 100 years forward, in order to create more living spaces on ground level, the major aterial roads and expressways can be shifted beneath instead.

I for one, DO NOT agree to building homes beneath the ground level for both psychological and health reasons. We homo saipens are born in the sunlight and have not evolve to live beneath surface. The Sun gives us Vitamin A not for nothing. We are created to live on surface unless a world wide crisis forced us to go underground.
I however, am for the idea of creating industrial and commerical buildings beneath the surface, shopping malls as well.

I am also looking forward to creation of a granite rock cavern near the Southern Island, housing a light water nuclear plant. I hope the Government would look into this idea if the energy crisis really happen in the coming century. Also as per what I raised in the past, I hope that the current Government would start studying into the effects of Global Warming onto our coastal lines and start conceptual studies into builing of Dykes near our shorelines without affecting the international shipping routes.


(03-03-2013, 12:50 PM)d.o.g. Wrote: A different way would be to keep the traffic on the surface but re-route it elsewhere. The question is where. One possibility - a flyover? The only things in the airspace now are ERP gantries which can be easily moved. The flyover could stretch from Tanglin Mall to Plaza Singapura.

The idea of a flyover is perfectly feasible from current engineering knowledge as well. The only thing one has to consider is that the amount of traffic disruption entails from the construction period of them. Massive amount of geoengineering works has to be prepared in advance prior to piling works of such a flyover. These again take up additional construction period, and thus massive disruption to both traffic in that area and the retail outlets owners and property landlords.
Put it simply, the impetus to do this is not yet there.


(03-03-2013, 12:50 PM)d.o.g. Wrote: Or, build a giant elevated platform 3 stories above ground to allow people access to all the malls at one go. The platform can be turned into an urban park with trees lining both sides, and the central "lane" can be opened to buskers and kiosks selling food, souvenirs, flowers etc. This is "free" GFA since previously it was only a road. This platform could run from Wheelock Place/Shaw to Centrepoint - there are buildings on both sides for most of that stretch. Those who have been to Bangkok may recall the giant platforms at some BTS stations, that's the idea but of course we can add more trees and whatnot.

I know exactly what you are talking about. Its the Bangkok famous Skybridge where one can connect from one MRT to another in above ground sheltered walkways linking various commerical and shopping malls.
This idea actually is easier to construct than a flyover. Smaller scale engineering works, thus lesser traffic and business disruption. However, the traffic planners must do their sums well and biz owners stop screaming when such works are being done. Property landlords must be able to provide subsidies to rental tenants else, many complains letters will start shooting again.

(03-03-2013, 12:50 PM)d.o.g. Wrote: The mall operators can be asked to contribute, I'm sure they would be happy to pay to connect to the platform because it converts a relatively low-yielding 3rd floor into an extra high-yielding "ground floor".

The interest in this actually varies, some mall operators love it, others "no thanks" mentality.
One way the URA can look at is at the concept of Hongkong MTR where the MTR corp actually is the developer of the land ABOVE the station. Thus the interest to link to the various shopping malls around the station is there.
One thing to note is that URA has to differentiate the land above the station being a commerical or residential purpose. If being run as a private corporation, all developers would only want to build private residential housing above their own stations. Thus HDB estates would not be of first priority.
This idea can actually be look into, but in a hybrid way, with ultimate control being URA and HDB so as to allow commoners enjoy the benefits of having metro railways beside their HDBs and not just private condo dwellers.

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#6
NorthSouth MRT is running just beneath and along the Orchard Road and likely go deeper near Dhoby Ghaut to avoid the CTE.
NorthEast Line is likely be another 10 to 20m deeper than NS line near Dhoby Ghaut.
Circle Line is another 10-20m deeper than North East Line when it intersects NS line and NE line at dhoby Ghaut .

Unless there is some amazing civil engineering technology available, digging an underground road in orchard road with a viable gradient of ascent and descent is either impossible or exorbitantly expensive. And slip roads out of the underground road to various parts of orchard road is totally out of question.

A sky bridge is possible though to interconnect the two sides of Orchard Road. However, it is likely to be a rather ugly structure and if there is any major road accidents involving burning, the sky bridge will become a danger to the occupants and shoppers.
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#7
ty my earlier simpler idea may work for this congested place - rid of the road and re-convert it to a ground level big broad shopper walkway with greenery park..how nice it will be..(why is there still need a parallel road on the ground when there is already a red sub-way line beneath it?)

regarding the multiple lines gg through orchard road via dhoby ghaut station, it just shows there is no intention of the de-centralisation plan at all..

why is it so many lines like to cut/intersect at city area?
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#8
(03-03-2013, 10:59 PM)pianist Wrote: ty my earlier simpler idea may work for this congested place - rid of the road and re-convert it to a ground level big broad shopper walkway with greenery park..how nice it will be..(why is there still need a parallel road on the ground when there is already a red sub-way line beneath it?)

regarding the multiple lines gg through orchard road via dhoby ghaut station, it just shows there is no intention of the de-centralisation plan at all..

why is it so many lines like to cut/intersect at city area?

Nothing is impossible for engineering a road beneath the Orchard Road. A road beneath the existing Orchard MRT line is fully feasible with a further distance inclination entrance/exit at opposite ends.
Perhaps one end at Istana Park while the other from Mount-E hospital side.
The Boston Big Dig and the Florence tunnel beneath the city centre were even bigger challenges. Closer to home, the KL SMART tunnel showed the feasibility of construction through large shield tunnelling methods.
All in all, the reason is simply Cost-Benefit analysis.

The Cross Island line is the first decentralised MRT line.
The reason of why so many lines like to cut/intersect at city area is simply being that the largest commerical/shopping hub is at city centre thus all current lines are being brought to intersect at this area.

However, the "recent" annoucements of decentralisation of central business hub towards East, West and soon North hubs showed the elites finally willed themselves to this idea at last.
Actually the decentralisation hubs idea was way back a decade at least.
Tampines Regional Centre was the first hub and it was moderately successful.
Sorry I can't reveal too much. But let's just say the elites finally pushed themselves to decentralise the commerical centres.

These have two fold effects:
1. Increase the land value across the island instead of only city central.
2. Decrease the traffic conjestion coming towards city area in morning and backwards in the evening. (Hopefully!)

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#9
(03-03-2013, 10:59 PM)pianist Wrote: regarding the multiple lines gg through orchard road via dhoby ghaut station, it just shows there is no intention of the de-centralisation plan at all..

There lies the engineering reasons of why all the lines criss-crossing at Dhoby Ghaut and not orchard, somerset or newton. Fire up google map and you will see why.
Orchard Station will be ideal as exchange hub but it is horrendously difficult to engineer it.
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