Top 6 Ways You're Spending Way Too Much On Your Car

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03 Oct 2017

Are you spending more on your car than you need to be? Or are you looking for ways to cut down on your car-related expenses? We’ve compiled a list of the top mistakes car-owners in Singapore are making that cost them real dollars every day.

1. Paying high-interest rates on your car loan

Because cars are so expensive in Singapore, most prospective car owners finance their car purchase by getting a car loan, and then face the prospect of paying off that debt, plus interest, for the better part of the next 10 years. But did you know that you could save big by refinancing your car loan at a lower interest rate? For example, our study on the best car loans in Singapore found that you could save over S$3,000 by refinancing a S$70,000 5-year car loan taken out at an interest rate of 2.78% with OCBC’s Refinancing Loan at a 2.08% interest rate. For more tips on how to choose the best loan, consider reading our guide on the subject.

2. Paying top dollar for petrol

If you drive in Singapore and you’re paying full freight for petrol or not earning rewards on your petrol spend, you’re missing out on a lot of value. With a petrol credit card like the HSBC Visa Platinum Card or the Citi Cashback Credit Card, you can not only get discounts of over 20% on petrol, but also earn air miles or cash back for your petrol spend. Perks like these can help maximise the value of every dollar you spend filling up your tank at the petrol station.

3. Paying inflated car insurance premiums

Often, when you buy a new car, you also buy a car insurance package from the dealership, who has a deal with an insurance company. What you may not be aware of is how much more you may be paying on your car insurance premium if you decide to stay with that insurer in the following years. According to ValuePenguin’s research, a car insurance policy sold by a dealer can be at least 50% more expensive than one you can purchase online. We recommend that when it comes time to renew your car insurance plan, you take the time to thoroughly examine the competition, as doing so could save you many hundreds of dollars every year. If you’re interested in seeing which insurers tend to offer the cheapest rates, check out our study on the cheapest car insurance premiums in Singapore for 2017.

4. Spending too much on maintenance and servicing

There can be good reasons to bring your car to the dealership for servicing and maintenance, but cost-effectiveness isn’t necessarily one of them. Our study of average car maintenance costs in Singapore showed that you could save over S$1,000 over the course of 5 years or 100,000 kilometers by getting your car serviced at a third-party garage such as AutoSaver instead of the authorised distributor’s workshop.

One caveat to keep in mind is that if your car is still under the 3-year manufacturer’s warranty, you’ll probably need to bring your car to the authorised distributor’s workshop for servicing to maintain your warranty. Furthermore, some authorised distributors may offer free maintenance packages during the warranty period. But after those 3 years pass, it could end up saving you a lot of money if you look around for quality service at a third-party workshop.

5. Driving through congested routes at peak hours

Though Singapore’s electronic road toll system, the ERP, you are automatically charged when you drive through roads that experience high levels of congestion during peak hours. But while anybody who drives in Singapore has to pay ERP tolls, you may not necessarily be doomed to paying twenty dollars every day just for making your daily commute. By doing your homework and taking note of where and when toll rates are the highest, you may be able to find alternative routes to where you’re going that can minimise the amount you pay in tolls.

Though the daily savings may be small, shaving even a few dollars off how much you need to spend every day just to get from Point A to Point B in your car can translate to big savings in the long run. It goes without saying that you should always weigh the savings you could make from paying less in ERP tolls against the potential additional cost of spending extra time or money taking detours or less direct routes.

If you’re interested in seeing which routes might best get you where you need to go for the least amount of toll fare, the LTA has an interactive map available on OneMotoring.com where you can see the locations of ERP gantries and the fares charged for passing through affected routes during different times of the day. Additionally, the LTA has published a table of ERP rates for different roads and different classes of motor vehicles that will be in effect from May 8, 2017 until August 6, 2017.

6. Letting your road tax expire

If you let your road tax expire without renewing it, you’re essentially throwing money away. For starters, if you keep or use a vehicle without a valid road tax, you could be prosecuted under Section 15 of the Road Traffic Act and have to pay a fine of up to S$2,000 upon conviction. And the longer you wait after your road tax expires until you renew it, the larger of a late fee you’ll have to pay upon renewal. Road tax is also more expensive for vehicles with a larger engine capacity.

The following table shows how much you’ll be liable to pay in late fees if your road tax expires, based on information provided by the LTA.

This article first appeared on Value Penguin, a guest contributor on The Seedly Personal Finance blog.

Editor’s note: In Singapore, there are a ton of different options to choose from. Here are some other articles which may help you save more money on transport: