Guide to Buying a Second-Hand Used Car in Singapore

Buying a used car in Singapore is a popular choice, and for good reason. You can save money on upfront costs, insurance, registration, taxes, and depreciation compared to buying a new car.

However, navigating the used car market requires careful consideration and knowing how to buy a used second-hand car in Singapore is a skill by itself.

This guide explores the steps to buying a used car, how buying a used car works, and provides tools and tips to help you find the perfect pre-owned vehicle, while avoiding potential pitfalls.

For those wondering what you need to buy a used car, the first step is always securing financing for your vehicle. When buying a used car in Singapore, you can pay cash or take out a loan. If paying cash, be sure to budget for additional expenses like registration and insurance.

Most people opt for a car loan to preserve savings or afford a better model. Getting pre-approved for a loan can simplify the buying process.

Before you start shopping, it's crucial to determine how much you can comfortably afford. This includes not just the car's price, but also these factors:

• Purchase price: The actual price of the second-hand car can vary greatly depending on the make, model, age, and condition.

• Certificate of Entitlement (COE): The COE is a document that allows you to own and use a car in Singapore for a period of 10 years. When buying a used car, the COE situation can vary. You might be inheriting the remaining COE duration or need to renew it, which will incur additional costs.

• Insurance: Comprehensive car insurance is essential for protecting yourself and your vehicle. The cost of insurance can vary based on factors like your driving experience, the car model, and the coverage you choose.

• Maintenance: Regular servicing and repairs are necessary to keep your car running smoothly. Older cars might require more frequent maintenance, so factor in potential repair costs.

• Depreciation: The value of your car will decrease over time. This is an important consideration for your long-term budget, especially if you plan to sell the car in the future.

How you intend to pay for your used car is an equally important consideration. Consider whether a bank loan or in-house financing better suits your needs.

Use an auto loan calculator to determine an affordable down payment and monthly payment, aiming for a down payment of about 10% and keeping total monthly car expenses (including loan payments, road tax, insurance, and estimated maintenance) under 20% of your take-home pay. 

The LTA Expenses Calculator can help you estimate these costs and can help decide what you should pay for a used car based on your income and budget.

Remember to factor in long-term costs like insurance, maintenance, repairs, and depreciation to determine the entire cost of ownership when making your decision.

For used cars in Singapore, expect to put down a significant down payment, typically around 30-40% of the car's price. Monthly instalments will vary depending on the loan amount, interest rate, and loan tenure, but be prepared for a substantial monthly commitment.

Before you start browsing used cars, it's wise to get pre-approved for a car loan. This gives you a clear idea of how much you can borrow and what your monthly payments might be, helping you narrow your search to cars within your budget.

Many financial institutions in Singapore offer pre-approval for used car loans. Some even have special loan options, such as green car loans for environmentally friendly vehicles or low-interest loans specifically for second-hand car purchases.

To apply for a pre-approved loan, you'll typically need to provide the bank with some basic information, such as your income, employment history, and credit score. The bank will then assess your eligibility and provide you with a pre-approval letter stating the loan amount and interest rate you qualify for.

Loan tenures for used car loans in Singapore typically range from one to seven years. A longer loan tenure means lower monthly payments but higher overall interest costs. Choose a loan tenure that aligns with your budget and financial goals.

Getting pre-approved not only helps you budget but also strengthens your negotiating position when dealing with sellers. It shows them that you're a serious buyer with financing in place.

Read more: Find the best car loan rates in Singapore today

Choosing the right used car to buy can be overwhelming. The best way to find used cars is to start by making a list of your must-haves, considering your lifestyle, needs, and priorities. Think about the type of car that best suits your needs:

• Sedans: Sedans offer good fuel economy and are suitable for individuals or small families.

• SUVs: Sports Utility Vehicles (SUVs) offer more space and versatility, ideal for larger families or those who need to carry cargo.

• Hatchbacks: Compact and fuel-efficient, great for city driving and easy parking.

• Pickups: Offer ruggedness and towing capacity, suitable for those with specific work or lifestyle needs.

Now that you have a general idea of the type of car you're looking for, it's time to delve deeper into some crucial factors that will help you narrow down your options and find the perfect used car for your needs.

• Fuel economy: Consider your typical driving distances and frequency. Look for models with good fuel efficiency ratings to save on petrol costs. Explore hybrid or electric vehicles for greater fuel savings and environmental benefits.

• Safety features: Prioritise safety features like airbags, anti-lock brakes (ABS), and electronic stability control (ESC). Research safety ratings from organisations like the ASEAN NCAP to assess the car's crashworthiness.

• Other features: Consider additional features like infotainment systems, advanced safety technologies (e.g., lane departure warning, blind-spot monitoring), and comfort options (e.g., leather seats, sunroof).

Once you have a clearer picture of your needs, create a shortlist of car models to research further. This focused approach will make your used car search more efficient and effective.

The process of buying the perfect used car involves more than just knowing what you want; it's also about knowing where to look. Here are some popular options in Singapore:

• Online marketplaces: Explore online platforms like sgCarMart and Carousell. sgCarMart is a dedicated platform for buying and selling used cars, offering a wide selection of listings from dealers and private sellers. Carousell, while known for general classifieds, also has a substantial used car market with listings from both individuals and dealers.

• Dealerships: Visit authorised dealers who often have a selection of used cars with warranties and after-sales service. You can also explore independent dealerships specialising in used cars, offering a variety of makes and models.

• Auctions: Consider public auctions for potentially lower prices, but be aware that this requires more expertise and carries higher risk.

Once you've found some potential cars, it's crucial to evaluate their prices. Check if the asking prices align with market rates for similar models in Singapore. Don't hesitate to negotiate with sellers to get the best possible deal. 

Also, consider if you're willing to pay a premium for a certified pre-owned (CPO) car. CPO cars typically undergo thorough inspections and come with extended warranties, offering greater peace of mind.

Read more: Should you get used cars vs new cars?

Before you physically inspect any used car, research its market value to ensure you're getting a fair deal. Online resources and pricing guides can help you understand the typical price range for similar cars in Singapore, considering factors like the car's make, model, age, mileage, and condition.

Understanding the fair market value empowers you to negotiate effectively and avoid overpaying. Several platforms provide tools and resources to check market prices for specific models in Singapore. Utilise these resources to compare listings and ensure you're getting a competitive rate.

Remember that pricing can vary depending on the seller. Dealerships typically price cars higher than private sellers. Factor this into your research and be prepared to negotiate accordingly.

By thoroughly researching prices and comparing listings, you can confidently approach negotiations and ensure you're getting a good deal on your used car purchase.

Vehicle history reports provide valuable insights into a used car's past, including accident history, title information, mileage accuracy, and ownership details. In Singapore, you can obtain a vehicle history report through platforms like SG Vehicle Check, the General Insurance Association of Singapore (GIA) or visit One Motoring and enquire about vehicle registration details. These reports can reveal potential red flags, such as accidents, title issues, odometer discrepancies, or outstanding loans.

While some online listings and dealerships may provide free access to vehicle history reports, you might need to purchase one independently if it's not available.

However, keep in mind that vehicle history reports don't tell the whole story. They provide a snapshot of the car's past but don't necessarily reveal its current mechanical condition. Always combine a vehicle history report with a thorough physical inspection and, if possible, a pre-purchase inspection by a trusted mechanic.

Read more: Tips to save big on your next car purchase

Once you've found a used car that interests you, contact the seller to confirm its availability and gather more details. Here are some tips for contacting sellers in Singapore:

• Be polite and respectful: Start by expressing your interest in the car and thanking the seller for their time.

• Be specific: Mention the car's details (make, model, year) to avoid confusion.

• Ask relevant questions: Prepare a list of questions to help you assess the car's condition and suitability.

Here are some key questions to ask:

• Is the car still available?

• What is your reason for selling?

• Are you the first owner?

• Can I see the car in person?

• What is the overall condition of the car?

• Are there any known mechanical issues?

• Has the car been involved in any accidents?

• Can I see the maintenance records?

• What is the remaining COE validity?

• Are there any outstanding loans or fines on the car?

• Can I see the vehicle registration details?

Read more: Car loans from banks vs car dealers: Pros & cons

A test drive is crucial before buying any used car. It allows you to assess the car's performance, comfort, and handling first hand, and potentially identify any issues. Here's what to do:

Before you start:

• Check the warning lights: When you start the car, ensure all warning lights illuminate briefly and then turn off. Pay close attention to the lights for the engine, oil pressure, brakes, and airbag.

During the test drive:

• Choose a varied route: Select a route that includes hills, rough roads, curves, and a stretch of highway to experience the car in different conditions. This is particularly important in Singapore's varied driving environment.

• Check visibility: Assess visibility from the driver's seat, including blind spots.

• Evaluate acceleration and braking: Pay attention to how smoothly the car accelerates and how responsive and predictable the brakes feel.

• Assess handling: Notice how the car handles corners and manoeuvres in traffic. Singapore's roads can be congested, so good handling is essential.

• Listen for unusual noises: Pay attention to any strange noises or vibrations that could indicate problems with the engine, suspension, or tyres. Rough roads and heavy traffic can exacerbate these issues, making them more noticeable during a test drive in Singapore.

• Check comfort: Assess the comfort level of the seats, driving position, and overall cabin experience.

Beyond the basics:

• Test features: Try out the features that are important to you, such as the infotainment system, air conditioning, and any other options specific to your needs.

• Consider passenger comfort: If you frequently carry passengers, check the backseat legroom and comfort.

Even if a used car seems fine after a test drive, it's crucial to get a professional inspection from a qualified mechanic. This can uncover hidden issues that you might miss, saving you from potentially costly repairs down the road. A mechanic can thoroughly check the engine, transmission, brakes, suspension, and other critical components for any signs of wear or damage.

In Singapore, used car inspections typically cost between S$100 and S$400 per session, depending on the workshop and the extent of the inspection. It's a worthwhile investment to ensure you're not buying a car with hidden problems.

Look for reputable workshops specialising in pre-purchase inspections. They have the expertise and equipment to thoroughly assess the car's condition and identify potential issues. Some common problems to watch out for in Singapore's climate include:

• Wear and tear from humid weather: Singapore's humidity can accelerate rust and corrosion, especially in older cars.

• Issues from stop-and-go traffic: Frequent stop-and-go driving can put extra strain on the engine, transmission, and brakes.

• Flood damage: Check for signs of flood damage, which can be prevalent in certain areas during heavy rain.

If you're buying from a dealer, they should allow an independent inspection. If a private seller resists, it could be a red flag. The exception is if you're buying a certified pre-owned (CPO) vehicle, which typically undergoes a thorough inspection before being sold.

For online purchases where a pre-inspection isn't possible, get the car inspected as soon as possible after delivery. Many online retailers offer a return window, so you'll want to identify any issues before that window expires.

Negotiating the price of a used car can be intimidating, but with preparation and knowledge, you can confidently secure a fair deal. Here's how:

• Research the car's market value: Use online resources and pricing guides to determine the fair market price for the car you're interested in, considering its age, mileage, condition, and any optional features.

• Assess the car's condition: Take note of any flaws or issues you observed during the inspection or test drive. These can be used as bargaining points.

• Set a budget: Determine your maximum price and be prepared to walk away if the seller isn't willing to meet it.

• Start with a reasonable offer: Base your initial offer on your research and the car's condition. Don't be afraid to start low, but make sure your offer is still enticing to the seller.

• Negotiate incrementally: Increase your offer in small increments, showing that you're willing to negotiate but also holding your ground.

• Focus on the car's price, not monthly payments: If you have a pre-approved loan, negotiate the total price, not the monthly payment. This prevents the seller from manipulating the deal with extended loan terms.

• Clarify all costs: Ensure you understand the "out-the-door" price, including all taxes, fees, and any additional charges. Question any unclear fees and be wary of hidden costs.

• Be assertive but respectful: Maintain a polite and professional demeanour throughout the negotiation. Clearly state your needs and expectations.

• Be prepared to walk away: If the negotiation isn't progressing or you feel uncomfortable with the seller's tactics, be ready to walk away. There are plenty of other used cars available.

If the inspection or test drive revealed any issues, use these as leverage during the negotiation. For example, if the mechanic identified worn brakes, you can request a price reduction to cover the repair costs.

Read more: Scam-proof SingSaver guide

Once you've negotiated a price and are satisfied with the car's condition, it's time to finalise the purchase. In Singapore, this involves carefully reviewing the sales contract to ensure all agreed-upon terms, including the price, COE details, and any extended warranties, are accurately documented.

Don't hesitate to ask questions or clarify any unclear points before signing the necessary paperwork. Payment is typically made via bank transfer or cashier's order, and it's crucial to obtain a receipt for your payment.

To complete the purchase, the seller must transfer ownership of the car to your name, along with the COE if it's not being renewed. This involves submitting the necessary paperwork and fees to the Land Transport Authority (LTA). This process is crucial for legally owning and using a car in Singapore. Remember to update your car insurance policy with the new ownership and vehicle details.

Before finalising the purchase, it's also wise to ensure there are no outstanding fines or loans associated with the car, which you can check through the LTA's online portal. Always obtain receipts for your payment and any deposits made.