Buying a 2nd hand car.

[Koh Li Kuan]

Hi,

I am new to this. OMV=Scrap value? Where do I put PARF into the equation?

I have this scenario.

A May 2003 car. OMV is $14851, PARF is $9653. Owner is selling at $67000.

So there are still about 8-9 years to run.

If I were to take up a 10 year load. Down payment = $7k, it works out to 120 months X $650 = $78K.

If I were to scrap the car in 2013, how much do I get back?

Looks like a secondary school Maths question.

Thanks in advance.

LK

 

[dreamseeker]

Hi LK,

This should be the answer you are looking for.
The scrap value of the car at the end of 10 year = 0.65 x $14851 = $9653.
At the end of 10 years, you will get back slightly less as the scrap car dealer makes some $$ from you.

The 0.65 factor can be trace to the current LTA rules. It used to be diff.

Assuming that you have 9 yrs left, & buy at $67k.

downpayment = $7k, therefore loan amount = $67-7= $60k

Assuming interest rate at 2.5%, 9 year loan, interest = 60x 2.5% x 9 = $13.5k
(all car loans are based on simple interest)

Total loan amount = 60+13.5 = $73.5k
monthly payment = 73500/(9*12) = $680.5

Regards.

 

[Koh Li Kuan]

Hi LK,

This should be the answer you are looking for.
The scrap value of the car at the end of 10 year = 0.65 x $14851 = $9653.
At the end of 10 years, you will get back slightly less as the scrap car dealer makes some $$ from you.

The 0.65 factor can be trace to the current LTA rules. It used to be diff.

Assuming that you have 9 yrs left, & buy at $67k.

downpayment = $7k, therefore loan amount = $67-7= $60k

Assuming interest rate at 2.5%, 9 year loan, interest = 60x 2.5% x 9 = $13.5k
(all car loans are based on simple interest)

Total loan amount = 60+13.5 = $73.5k
monthly payment = 73500/(9*12) = $680.5

Regards.

Thanks Dreamseeker,

My mind is much much clearer now....

Rgds
LK

 

[etgoh]

new car is so cheap now ...with $67k you can get a new 1.6litre car. Y dun consider a new car.

 

[vince123123]

yeah contrary to popular conception, it appears that cars depreciate kind of linearly...so unless you want to buy a 2nd hand car with like 2-3 years left, u might as well buy a new car instead...price wise almost same.

new car is so cheap now ...with $67k you can get a new 1.6litre car. Y dun consider a new car.

 

[Phildate]

Hi there,

As someone who recently went through the same painstaking process that you are going through, maybe I can give some advice.

If you buy a new car, you are looking at roughly $6000 depreciation a year. Most 2-3 year old cars depreciate at this rate too so it seems more sensible to get a new car, especially as they seem to have dropped in price recently.

I've just bought a new Honda Jazz for 70000+ (i can't remember the exact figure) - if you are thinking of scrapping in next 4/5 years you will need to take loan over 7 years unless you want to be left with another lump sum to pay.

At the end of the day, you are not going to get a bargain, it doesn't work like that in Singapore (everybody's too good at Maths!). At least with a new car you will get a warranty and the satisfaction that the new leather smell gives

 

[canonsiao]

Sorry for asking a stupid question (never owned a car before, but targeted a 16-17 yr old car)

What is the scrap value of a COE car? (I'm looking at a Starlet)

 

[vince123123]

a 16-17 year old car has no scrap value, only cars < 10 years

scrap or PARF value depends from car to car. whats a "COE Car" btw?

Sorry for asking a stupid question (never owned a car before, but targeted a 16-17 yr old car)

What is the scrap value of a COE car? (I'm looking at a Starlet)

 

[dreamseeker]

LK,

Phil is right about the scrapping of car after owning it for 4/5 years.

Looking at the sum, 9653/680.5 = 14.2 months. You will only break even approx. 14 months before the COE expires. Which means you still have about 1 year of loan pay.
If you decide to scrap the car or change the car before this time, you will have to fork out $$ on top of the downpayment $$ for your next car.

Just make sure it is a Jap car you are buying cause at the 8-9 year of the car, many things WILL start to give you trouble. Jap car can get used parts or are generally cheap.

For $67k, you can consider a Mitsubishi Lancer new.


P.S & OT. There are some chio C&C salesgirl in the show room. Incentive to get you there.

Hi there,

If you buy a new car, you are looking at roughly $6000 depreciation a year. Most 2-3 year old cars depreciate at this rate too so it seems more sensible to get a new car, especially as they seem to have dropped in price recently.

I've just bought a new Honda Jazz for 70000+ (i can't remember the exact figure) - if you are thinking of scrapping in next 4/5 years you will need to take loan over 7 years unless you want to be left with another lump sum to pay.

:

 

[Koh Li Kuan]

That's what I was thinking too....getting a new one....no point driving a car with problems creeping up...now..what make shall I look into??? Another headache....

Thanks for all the advice...really appreciate...

LK