Man with $2,300 salary buys car, surprised he couldn’t really afford it
It seems like learning all that math in primary and secondary school didn’t help financial literacy.
In a report from The New Paper, Adam (not his real name), a 32 year-old civil servant, got himself into financial trouble after purchasing a car for $60,000 in 2007 on a $2,300 monthly salary.
The reason for his purchase? “He thought a life of status and comfort awaited him,” reported TNP.
To service his car loan, he maxed out 12 credit cards and six credit lines and landed in $50,000 debt. He shared that aside from the $600 monthly loan repayment, other car-related expenses such as petrol and parking drove expenses up to $1,000 per month.
After accounting for essentials, he only had $50 extra to live on for close to two years.
The TNP article goes on further to elaborate the problems Adam had after getting married in 2011: His wife also had many debts and their honeymoon was spent answering calls from banks demanding repayment.
Hidden costs the killer to owning a car
Flip open The Straits Times on Saturday mornings and you are surely hit with advertisements telling you that buying a car is a matter of $599 per month.
In a way, that is true: You do pay the dealer $599 per month, but you also have to cough up cash to other parties in order for you to utilise your car in Singapore.
Here are the other costs you should consider if you want to drive on a daily basis:
Disclaimer: These are rough estimations and not supposed to be representative of every Singaporean’s car-owning experience. It is not our fault you kena chop carrot when servicing your car at certain authorised dealers or ah beng workshops.
Season parking (HDB): $65 – $90
Season parking (At your workplace): $65 – $350
Petrol: $180 – $280
ERP (Assuming travelling to and from the CBD via ECP during peak periods on 20 work days per month): $150
Road tax (Assuming regular 1600cc car, calculated as an amount set aside monthly): $61.50
Insurance: $60 – $250 (Figure varies depending on several factors such as no-claim discounts, driver experience, etc. Calculated as an amount set aside monthly)
Servicing (Figure varies depending on the type of servicing such as oil change, parts replacement, etc. Calculated as an amount set aside monthly): $20 – $100
Total cost on top of the “just $599 per month and you can drive away with the ride of your dreams” claim in advertisements: $601.50 – $1,281.50
So before you decide it is time for you to embark on a life of status and comfort, you must check whether you have an additional $1,500 per month lying around every month.
Please don’t be a slave to your car.
Top photo of unrelated car via Vyacheslav Argenberg Flickr