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5 Things To Know Before Buying Pre-Owned Cars In Singapore

At the current COE price, buying a pre-owned car is going to be an appealing choice for many car buyers.


This article was written in collaboration with Inchcape. All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

For anyone looking to buy a car in Singapore, hearing news that the COE prices have hit yet another record-high during November 2021 (first bidding) is somewhat concerning. At the point of writing, CAT A COE price is at $53,709 while CAT B and CAT E COE prices are at a whopping $82,801 and $88,000 respectively!

For those who need a new car, it makes a lot of financial sense to look at the pre-owned car market instead. However, purchasing pre-owned cars isn’t as straightforward as compared to buying a brand new car from an authorised dealer.

Before we purchase a pre-owned car, here are the 5 things we need to know.

#1 Calculate How Much We Are Saving When Buying Pre-Owned Cars

The main reason to buy a pre-owned car is obviously cost. Given the same car model, pre-owned cars will be cheaper compared to buying a brand new car. If we opt for a car that is as good as new (e.g. mileage of less than 10,000 km), we can save a significant amount compared to buying it new.

For example, taking a vehicle from Inchcape Certified Pre-owned, we see a beautiful Mazda 2 Red Hatchback 1.5 (Deluxe) listed at $88,800. The mileage for this vehicle is just 2,100 km, with a remaining COE of 9 years and 5 months.

On the Mazda website, we see that the cost of a new Mazda 2 would cost you $97,888 for the entry-level base model. So we are paying about $10,000 less.

Another way of looking at savings is to compare depreciation. This refers to how much the car would cost us on an annual basis.

For example, a brand new Honda Civic 1.5 VTEC Turbo (A) would cost $133,999, or depreciation of about $12,000 a year. This gives us a new car with a 10-year-old COE. However, if we purchase a Honda Civic 1.6A VTI (the previous Honda Civic variant) with a remaining COE of 6 years, 11 months, the list price is $86,800. This translates to a depreciation of $11,010 per year, or savings of about $900 a year compared to getting a new car.


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Of course, the savings aren’t just limited to the purchase price of the cars. Unless we intend to buy the car without a car loan, a lower purchase price means taking a smaller loan, thus saving on interest costs.

#2 Consider Certified Pre-Owned Cars

Besides paying a lower price, one of the other main reasons car owners prefer to buy a brand new car is to have peace of mind. No one wants to buy a car that is considered a “lemon”.

In fact, this “lemon” problem, first published in a 1970 research paper by George A. Akerlof, an economist and professor at the University of California, Berkeley, utilised the used car market as an example of how uncertainty and asymmetrical information between buyers and sellers can cause market transactions to fail.

The TL;DR version of the study is this: If buyers cannot differentiate between good used cars that are valued for money from the ones that are bad and overpriced, then it’s going to be hard for them to be able to make a purchase.

For buyers, one way to overcome this problem is to consider buying certified pre-owned cars from reputable dealers that we trust. Certified pre-owned cars are vehicles that have gone through an extensive check by the dealer, including doing repairs and reconditioning of any parts that are needed, before the cars are listed for sale.

An example of such cars are those listed by Inchcape Certified Pre-owned. For those of you who are not familiar with Inchcape, Inchcape is the parent company of Borneo Motors, the authorised dealer in Singapore for car brands like Toyota and Lexus.

While Borneo Motor is a familiar brand in Singapore among car buyers, what many may not know is that Inchcape, its parent company, also sells cars directly through Inchcape Certified Pre-owned.

Located at 7 Chang Charn Rd, Inchcape Certified Pre-owned offers a wide range of pre-owned car models, beyond just Toyota and Lexus. All the cars that are sold by Inchcape Certified Pre-owned have gone through an extensive check by their experience technical team and are certified to be in good condition to be listed for sale.

#3 Condition Of The Pre-Owned Cars

To get the best bang for your buck, we obviously want to buy a pre-owned car that is in good condition.

Checking the condition of a car before purchasing it is important. For most car buyers, the exterior of a car is the easiest to observe. Scratches, bumps, wear and tear are tell-tale signs that a car may not have been well-maintained or have been in an accident.

What is a lot harder to observe is the internal condition of the car. Even with a test drive, it would be hard to identify problems with the car unless you are a very experienced driver. This is where we want to ensure that the dealer we are buying from is reputable and have also done their internal checks before selling the car to us.

For example, Inchcape Certified Pre-owned does a 145-point vehicle health check on every vehicle to ensure that it is in proper condition. If a car does not meet the internal standards of the company, it will not be sold to customers.

It’s worth noting that Inchcape Certified Pre-owned does not accept pre-owned cars that are not in good condition (there are also some cherry picking on their end in the first place), so this isn’t just about making a once-poorly-conditioned car somewhat usable.

Inchcape Certified Pre-owned strictly only takes in cars that are in reasonable condition, put the cars through the 145-point vehicle health check, make improvements as required so that the cars are in their best possible condition before they are listed for sale.

#4 Warranty & Aftersales Service

There is a misconception that we can only enjoy warranty and good aftersales services if we buy brand new cars. Thankfully, this isn’t true. Even when purchasing pre-owned cars, we can (and should) expect a high level of assurance and aftersales services.

For example, cars that are purchased through Inchcape Certified Pre-owned will enjoy a 12-month/20,000 KM warranty, whichever occurs earlier. In our opinion, this warranty provides two levels of assurance for buyers.

Firstly, it shows the level of confidence that the company has for the cars that they sell such that they can offer this 12-month/20,000 KM warranty that covers parts such as the engine, drive axle, suspension, brakes and aircon compressor.

Secondly, for buyers, this ensures that the problems (if any) that they discovered after a period of driving can be rectified at no additional cost.

In addition to the warranty, Inchcape Certified Pre-owned also offers 24/7 roadside assistance and one-time complimentary vehicle service performed by their highly trained in-house team of technicians. Car owners can, of course, continue servicing their car after that if they want by purchasing additional servicing packages.

#5 Confirm Affordability Of The Car

Purchasing a car, even a pre-owned one, is no small purchase. In fact, it might be the second biggest purchase many of us make in our life after our home purchase. This is why we can’t afford to miscalculate how much we can afford.

For pre-owned cars, the down payment that we have to make is either 30% or 40%, depending on the Open Market Value (OMV) of the car. This needs to be an upfront cash payment, and we must ensure we have sufficient funds on hand.

The remaining amount can be serviced using a loan. The maximum loan duration is dependent on the remaining COE years of the car, capped at a limit of 5 years. For example, if we are buying a 2-year-old car, then the maximum loan duration would be 5 years. If we are buying a 6-year-old car, then the maximum loan duration would be 4 years. Do note that the monthly repayment for the car loan will form part of your total debt to be repaid under the Total Debt Servicing Ratio (TDSR).

While it’s good to do your own research before making any purchase, you can also check with the sales team from Inchcape Certified Pre-Owned if you are unsure about your affordability, or any other aspects of purchasing a pre-owned car. To do so, make an appointment and head down to their showroom, or use the live chat function on their website for any enquiries that you may have.

Score An Even Better Deal Through Inchcape Certified Pre-Owned Monthly Online Auction

By now, it should be clear that the pre-owned car market is a place where buyers can potentially enjoy great deals when shopping for cars.

But for those who want a chance to score for themselves an even better deal, why not consider participating in the Inchcape Certified Pre-Owned monthly online auction?

This monthly online auction, which is the first in Singapore to be offered directly to consumers, is where we can find a few selected cars that will be made available in the auction. To participate, simply put down a $500 refundable deposit and bid for the car that we want. If we are the highest (or only) bidder and our bid is above the reserve price set, then we will get the car at a price that is going to be potentially much lower than what we can find in the open market.

Best of all, any cars sold through the monthly auction also enjoy the same level of quality assurance, such as the 145-point check, 12-month warranty and the aftersales services that Inchcape Certified Pre-owned provides for all its vehicles.

Find out more about the cars on offer in Inchcape Certified Pre-Owned monthly online auction here.