Car ownership: Can I afford a car?

Now I have a few queries pertaining to this topic: Car ownership.

How do you know if you are ready to own a car?

Let's go through this together and you will know if you are ready to own a car.

General assumptions made
a) Car purchased: Suzuki Swift 1.4M, S$92,900.00 (from sgcarmart)
b) Free parking at workplace
c) 40% down payment of S$37,160.00
d) 60% loan amount: S$55,740.00
e) Interest rate: 2.28%
f) Loan term: 60 months
g) 26 years old, single male, office based, held licence for 5 years

Monthly car expenses:

1) Instalment: S$1,035.00

2) Road tax: S$50.83
Assumption:
a) 1.4l car

3) Car insurance: S$200
Assumptions:
a) New driver
b) 0% NCD
c) S$2400/year
 
4) Petrol: S$250.00
Assumptions:
a) Cost: S$1.80/litre after discount,
b) Mileage of 20,000km/year; 1666.67km/month
c) Fuel consumption: 12km/l

5) ERP: S$40
Assumptions:
a) S$2.00 per day
b) Worked 20 days/month

6) Residential car park: S$88.20 (After 2% discount for using GIRO)
Assumptions:
a) Stay in HDB
b) Covered MSCP

7) Misc carpark: S$50

8) Car maintenance: S$30.00
Assumptions:
a) Servicing every 10,000km
b) S$180/servicing

Total monthly expenses: S$1,744.03


Now you know how much the car will cost you (minimally) every month. So what you need to do next is:

TRANSFER S$1745.00 EVERY MONTH INTO AN ACCOUNT WHICH YOU DO NOT HAVE ACCESS TO VIA ATM OR INTERNET BANKING

If you are able to do the above consistently for at least 24 months and still feel comfortable to live with whatever is left from your paycheck, YOU ARE READY!

After 24 months, you should have accumulated at least S$41,880 in your account. This amount will be used as down payment for your new car as well as your 1st instalment and car insurance.

Now you are able to live own a car and still live comfortably!



Tags: afford, car, ownership, costs