Prying Eyes Everywhere

LTA is going to install another 129 J-Eyes to monitor for red light offence at traffic junctions. It is almost double the total number with the 132 J-Eyes already in use. Singapore's land size is 682 square kilometres and thus, there is a J-Eye within an average area of 2.6 square kilometres. If you drive about 15 kilometres to work daily, you may drive through an average of SIX junctions with J-Eyes .... think about that.

LTA is also looking for camera technology to catch offenders for bus lanes, illegal parking, stopping and even modification to vehicles. And I am thinking that camera phone is the norm ... if LTA offers a small fees for all residents to submit proof of offence via MMS, LTA will be swarmed since most motorists will violate the many rules that are in existence.

I also notice that there are cameras mounted on lamp posts along the expressway. I think they facilitate the monitoring of the traffic condition and you can even view the traffic cameras at the OneMotoring website http://www.onemotoring.com.sg/publish/onemotoring/en/on_the_roads/traffic_cameras0.html. Well, it should be easy to put in a software that compares the time and location of a passing car among the cameras to determine if one exceeds the speed limit.

With all these eyes around Singapore, my driving habit is adjusted to be mostly compliant ... only exceeding speed limits by less than 10km/h. I find that if I give myself enough time to get to my destination, I have a more relaxed drive and do not have tendency to rush past a changing light. Try that ... afterall, most of us possess a phone that has functions to fill our time if we get to our destination ahead of the appointment time. Drive safely especially when you are being watched all the time!

Up Up Up Up!!!!

The pump price has gone up! Yes, all the brands - Caltex up, Esso-Mobil up, Shell up and SPC up prices by 5 cents across all grades of petrol. Free market? Gee .... can you believe that?

My colleague introduced a site PetrolWatch http://www.petrolwatch.com.sg/ which primary function is to track pump prices and keep subscribers posted via SMS on any increase. It is a paid subscription to get the info and hopefully, you can quickly drive to the petrol stations of the other brands that are slower in increasing the pump price to make the investment worthwhile.

I think that is an interesting business model and I wonder if the site owner has recouped its capital on the web service and SMS gateway .... and also make profit after covering the operating cost. I don't think I would subscribe to the service as pump prices do not change on a frequent basis and I probably will not benefit much in the long run.

Would you subscribe to the service? Well, you would have to also consider the other functions of the website ....

Private Settlement of Minor Accident

My colleague is an easy-going fellow and it is too bad that he was involved in a minor accident which he was at fault. Since the damages to both vehicles were not major, he offered and the other party accepted a private settlement. Both of them exchanged their personal particulars and he thought the inconvenience was over after his car was repaired.

When his insurance company called to inform of a claim against him for the accident, he was flabbergasted that the other party had not honoured the private settlement. He could not prove that the private settlement had taken place as they did not sign any agreement in black and white. It turned out to be an expensive lesson as his No Claim Bonus on his insurance premium was affected.

These days, our group are equipped with a private settlement form in our cars so as to prevent such an unpleasant experience from recurring. I like this one (130 kB PDF) better than the current A4-size form on Income website https://income.com.sg/forms/claims/.

Do be prepared as you do not know what kind of people you may bump into ... or conversely, may bump into you ....

Update - Effective June 1st 2008, the Motor Claims Framework (MCF) will require motorists to report the accident to the insurer within 24 hours or by the next working day regardless of any private settlement arrangement. Motorists may indicate in the report that a private settlement was reached.

Transport Minister in 2020

The Great Transport Challenge 2020 was launched via OneMotoring where the e-Game gather feedback on three aspects in Singapore Transport - you are asked to prioritise the competing demands and balance the trade-offs to achieve the following if you were the Transport Minister in 2020:

• Making Public Transport A Choice Mode


• Managing Road Usage


• Being Responsive to Diverse Needs of the Public

It is kind of a survey-cum-educational tool. I personally do not like it as the questions are closed-ended with only two options. I have difficulties with some questions as I disagree with both options. There is no space for open-ended responses .... I am guessing that the agency cannot afford the resource to seeve through returning volume of information.

In my opinion, the tool is neat in educating the public but does not garner ideas on innovative or radical strategies. It really felt like driving on a one-way street. Proven mechanism like internet forums can be used to solicit opinions from the public and I believe that some of us can make a contribution in shaping a world-class transport system. I wonder if our Transport Minister surf the OneMotoring Forum.

Try out the e-Game to understand my view on the approach ...

Where is COE Heading?

I predicted before the last bidding exercise closed on Jul 4 that the COE quota premium will soften marginally and it turned out to be so.

http://forum.carma.com.sg/showthread.php?t=1231505

We have seen a dip in Cat A premium in the last bidding exercise. Do you think it will soften further? I guess it will be slightly lower due to the Great Singapore Sale fatique since most folks have dipped into their pockets to buy that larger flat-screen and jewellery ahead of the GST increase. However, you can see dealers holding promotional events .... Nissan carnival ... Strait Times car-nival ... there is always an excuse for buying - less COE quota from Oct, freebies like more servicing (note that these are dealer's fixed cost), lucky draw (hey, how many of you have won frequently?) .....

It was reported today on the Strait Times that its Cats Classified Car-nival chalked up S$31.8 million of sales with more than 555 cars sold. So there are already at least 1,100 serious bids with the new purchases and 550 unsuccessful ones from the last bidding exercise. I think the outcome in the next bidding exercise should be similar.

I am trying to use regression analysis to predict the trend ... I am still working on it so do stay tuned.

Give Up Your Car and Use Taxis?

Picture: Taxis near Taipei 101, Taiwan

Would you give up your car and use taxis? Think about the advantages you will have:

• No parking charges
• No summon for parking or driving offences
• No vehicle maintenance
• No road tax and radio license fees
• No need to purchase petrol

I have thought about giving up the car since taxi service is also able to bring me from point to point but I could not bring myself to do so due to two key reasons - safety and availability. Taxi operators are profit-making companies and reducing cost will increase profitability. I am always concern about the road-worthiness of the taxis that ply our roads. Although LTA has set minimum safety requirement and regular inspection, management of the taxi companies will always try to stretch the maintenance intervals and lifespan of tyres while not violating regulations to meet business objectives and get their performance bonus. I hope they will balance short term gain with long term sustainability as I am appalled to see taxis with bald tyres and smoking exhaust.

I have on one occasion hired a taxi with the driver who is constantly checking the booking system for new calls as we are near my destination. He would whisper his calculation of how long to reach my destination and then to the pickup point and lament about not being able to make the booking. His behaviour really had me worried as his mind is not focus on the road condition. On several other occasions, I had drivers who were almost dozing off at the wheels and I had to keep up a conversation to maintain their alertness. I certainly ensure that my safety belts are securely fastened.

There have been many letters written to the local papers’ forum about the taxi booking fees. You cannot find any empty taxi during peak hours and rainy weather. They are strategically parked and will appear as soon as you make a booking. Many foreign tourists must have wasted precious time queueing at taxi stands in vain and seeing all arriving taxis with “on call” sign lighted up. The booking fees have become a talking point and it is one that foreign delegation should come to study it as a negative example - they should NEVER implement such a system back home. I am sure that LTA is aware of the complaints from the public so what is LTA doing about it? I felt that the taxi booking fees should be scrapped before we can claim to have world-class public transportation.

In the meantime, I will renew my road tax and continue driving my trusty MPV. I have full control over the servicing, tyre change, etc. and safety in my own hands. I would just have to bear with using taxis to and from the airport for my overseas travel.

Boy ran down on Pedestrian Walkway

A delivery truck hit and killed a 8-year-old boy when it reversed onto the pedestrian walkway at Simei MRT station (see CNA) on May 22. I am appalled that a witness said the truck sounded its horn while reversing from the main road and expect that all pedestrians will stay clear of its path. The driver was later arrested by the police.

Is there a flaw in the design of the area? How can motor vehicles be even allowed to go onto the pedestrian walkway? If there is a proper and safe loading/unloading bay nearby, then the truck driver is surely guilty of reckless driving. I think he does the same delivery routine every few days and this is one day that he made a bad decision.

I hope the Traffic Police and LTA will do something to prevent such accident in future. Concrete columns have been added to bus stops near road bends but that again is an after-accident action taken. Designers of our buildings and road infrastructure should take safety as an important component into the design blueprint.

Accidents happen when we least expect them so do always carry out your safety checks especially for your daily routines. An example is at the carpark near your home or workplace where you do the same routine everyday …. Don’t take for granted that the pathway is always clear for you! Drive safely everywhere …..

(Originally posted on WordPress blog on May 23, 2007)

When should an Elderly Driver give up driving?

Would this be the vision of an elderly driver? I am in New Jersey after my previous post on Veteran Taxi-Drivers and had read the May 2 edition of USA Today. It had the feature story of “Stopping older, dangerous drivers a growing problem” (you need to purchase the article to read it in its entirety).

The issue is serious enough to be the cover story on USA Today’s front page. The case featured was a 90-year old lady drove past a red light near her home in Dallas and crashed into another car driven by a 17-year old girl who was going to school to take a test. She died five days later and her family pushed the Texas Legislature to pass a bill to tackle bad elderly drivers.

As our population ages, there are more elderly drivers on our roads and the attention to ensure safety will be increasingly important. Aging affects our mechanical reflexes, visual acuity and ability to focus - all these capabilities are integral to safe driving. Although elderly drivers are slower but their misjudgement at intersections posed much risk to the other drivers who are going at higher speed.

Drivers above the age of 65 years old have to pass the medical examination every three years mandated by the Traffic Police to renew their driving license. Should more be required on the elder drivers? I strongly feel so especially using on-road assessment and also involving their family members who are able to monitor their health status during the three years between medical examinations. The ability to quickly respond to illness symptoms and near-misses is essential to assure road safety for all.

(originally posted on WordPress blog on May 5, 2007)

More Veteran Taxi-Drivers?

You should have read about the recent case of the taxi-driver running down the driver after a minor collision. I believe that most of us would be angry at the merciless taxi-driver and sympathetic towards the victim who is lying in coma. The motoring public did rally for the key eye-witness (lady passenger in the taxi) to come forward and she did finally surfaced to give her side of the story.

The taxi-driver is a 68 years old relief driver - he may a grandfather by this age and I cannot imagine that he would intentionally run over the young man. I hope that the circumstances of the incident be analyzed in details for a fair trial. I have the hunch that his health and visual capability may have strong bearing on the case. So I googled and found a related article at OneMotoring’s FAQ on Taxi Drivers’ Age Limit.

Taxi Driver Vocational License can be renewed to qualified taxi-drivers age up to 73 years old from 2006 as long as they pass the medical examination. The medical examination is required on a biennial basis for those from 50 to 65 years old and on an annual basis for above 65 years old. For the group from 70 to 73 years old, there is an additional special test conducted by qualified occupational therapists with two components i.e. off-road tests and on-road driving assessment. The tests include reaction times, vision, cognitive abilities, physical control of vehicle, etc.

I wonder if HE at 68 years old could pass the special test … Should LTA consider lowering the age limit for the requirement of the special test?

(Originally posted on WordPress blog on May 1, 2007)

UN Global Road Safety Week

April 23 - 29 is the United Nations Global Road Safety Week. I am pleasantly surprised to read the articles in the Sunday Times about how the Traffic Police tackles the road safety for motorcyclists. Motorcyclist fatalities contributed significantly to the total fatalities in 2006. The article describes how the Uncles and Aunties may pull the speeding and wreckless motorcyclists over and give them a lecture on Road Safety instead of issuing them a summon. The guilty motorcyclists should realize that the law enforcers are concerned about their well-being and do not want to have more dead bodies on the road.

I have personally observed that LTA and Traffic Police have changed their approach in improving Road Safety through one example of one accident black spot - barrier was set up along the road divider at Boon Lay Way some years back to block pedestrians going between Jurong East MRT/Bus Interchange and IMM Shopping Mall. The intention is to encourage more pedestrians to use a nearby overhead bridge. However, one has to go away from the direction of IMM to cross the bridge and thus, take a much longer walk. I then started seeing many pedestrians climbing over the barrier and some had even landed onto the edge of the road after they jumped over the barrier, resulting in some very scary moments for themselves and approaching motorists. Some months back, LTA finally installed a traffic light at that point and made an opening in the barrier - I applaude the new approach even though my drive may be interrupted by yet another traffic light along Boon Lay Way.

Pedestrians should be patient to wait for the “green man” signal to come on before they cross the road. The new problem that I notice at that black spot is that impatient pedestrians would just dash across when possible and ignorant followers are surprised by fast approaching vehicles. Thus, I would always slow down when approaching traffic signals even though it is green in my favour.

Drive safely, not just this week, but all the time in your motoring life!

(Originally posted on WordPress blog on April 22, 2007)

Accident-prone Spots: ERP Gantries

Last July, I was already in town when I drove to Orchard passing the Dhoby Ghaut ERP gantry. I was less than ten metres from the gantry when I realized that it was in operations and I did not have my cashcard inserted in the IU. My immediate thought is to slow down and insert my cashcard but did not do so as I had read sometime ago that a fatal accident had occurred due to a sudden braking by a motorist at one ERP gantry. Although I checked my rear view mirror thereafter and found that there was no vehicle trailing my car, it was a right decision not to risk my fellow motorist and my life. So what is the penalty for non-payment of ERP charge?

Motorists who pass through an operational ERP gantry without a properly-inserted CashCard in the IU, or one with insufficient monetary value in the CashCard to pay the ERP charges, will receive a letter within a few days of the violation requesting them to pay the outstanding ERP charge plus an administrative fee of $10, within two weeks from the date of the letter. The administrative fee is reduced to $8 if payment is made electronically via OneMotoring website, AXS, SAM, vPost, ATM, Phone and Internet Banking.

I received the summon from LTA promptly within 5 days and was convinced that the technology works very well and it is a well-oiled process for LTA to penalize forgetful motorists.

I understand the rationale for using Cashcard in the IU since the metaphor is similar to paying cash on the spot of usage ie. we know that we pay for the ERP charge as the IU sounds a beep before showing the balance on the display. We can also use a Cashcard reader to check the past transactions on the card. However, there is no alternative for motorists who prefer electronic payment. A registered post-paid card with a deposited sum of security and approved automatic electronic payment can certainly put the minds of the forgetful motorists at ease. In the event of theft, the post-paid card can be cancelled as soon as possible to minimize loss but then again, it is worthless to the thief since the sensor identifies the IU that holds the card. Investigation into transaction disputes is straight forward since the data exists for evidence. However, the privacy issue would be major concern as you can easily piece together one’s vehicular movement with all that data.

If you have not know prior about the penalty, please be conscious that it is just a $8-10 fine versus trying to beat the odds of causing an accident and perhaps that change in decision may also prevent the loss of lives. The strange thing is that you cannot count the near misses but it is a life-changing event when a serious accident occurs …. think about that and reflect on your near-misses …. I hope you have improve your driving habit after those near-misses.

(Originally posted on WordPress blog on April 17, 2007)

Buyer Bid versus Dealer Bid

There have been many forum postings by unhappy buyers about the double whammy they have suffered in the recent plunge of the COE quota premium in February’s second tender. Most of them got little or nil back in COE rebate and found themselves owning cars with lower paper value. The debate is whether it is better for the buyer to bid directly versus taking up a COE inclusive package from the dealers. With the rebound in COE premium quota in the March tenders, many dealers failed to secure the COEs for the bargain hunters and are asking the buyer to top up a few thousand dollars.

As most sales contracts do not guarantee successful COE bidding, many buyers are not able to get any recourse in the event that the dealers fail to get the COE. Some cried foul as they have opted for a cheaper car while the dealer for more expensive cars have secured COEs for their customers. We can analyze the profit margin of the dealers to have a better appreciation of the strategy taken by each dealers.

In the illustration table below, the data is taken from LTA website’s Facts & Figures about Cost For New Cars Registered in the previous month (February 2007 1st tender: Cat A - $11,489, Cat B - $12,152). Basic cost in my illustration includes OMV, Custom Duty, GST, ARF and Registration Fees but excludes COE, Insurance Premium, Number Plates, Road Tax, IU, Radio License, Dealer’s Commission and all other Overhead Expenses. The basic cost information is given by LTA while the selling prices are provided by the Singapore Motor Traders Association. You may wish to note that some of the selling prices are after cash rebate so the dealer’s profit may be higher than what is shown.

Cost versus Selling Price
Make & Model, Basic Cost(a), SP w/o COE(b), SP with COE(c), Profit (c)-(a)-COE
Honda Civic 1.8A , 47,659 , 64,500 , 76,000 , 16,189
Mazda 3 SP 1.6A , 35,016 , 47,300 , 53,300 , 6,795
Mitsubishi Lancer 1.6A , 27,311 , 36,488 , 46,488 , 7,688
Nissan Latio 1.5A , 32,231 , 51,500 , 55,000 , 11,280
Subaru Impreza 1.6A , 29,472 , 47,488 , 52,988 , 12,027
Suzuki Swift 1.5A , 25,977 , 43,500 , 51,500 , 13,534
Toyota Altis 1.6A , 36,385 , 48,988 , 54,988 , 7,114

You may be surprised that the margin can vary widely between dealers. If I have the time to analyze in greater detail, I may uncover other trends in their approaches to pricing and COE bidding. You have to also consider the breadth of the motor business of the dealer - servicing, rental/taxi, etc. The related businesses will be considered in their strategy. One dealer may be more aggressive to put more of its make onto the roads as their servicing arm brings in a significant portion of their profit and revenue. Thus, it may be more willing to sell its make at a lower sales margin.

You can also observed that the selling price without COE is not exactly that of the selling price with COE minus the current COE quota premium. Most experienced dealers would have put in some buffer to bid beyond the current premium while not turning away potential buyers. They have also experienced unexpected windfalls when COE quota premium plunge. So while it is fully under your control to bid for the COE on your own, you would have to find a make that is priced fairly without COE.

There are many Parallel Importers in the market and their selling price is only a few thousand dollars below the authorized dealers’. Do you feel confident buying from them? I appreciate the investment put in by the authorized dealers in marketing and after-sales service. It is especially important if the car has a complex Engine Control Unit (ECU) and the authorized workshop has the fancy automated tuning machine.

As a buyer, you can do the study using information from LTA to decide on the fair value of the purchase. It is a difficult decision as most makes have only one authorized distributor so the pricing is similar from all its dealers. On top of that, personal preference on a make is a key criteria that cannot be easily substituted by another make so the best option may be to time your purchase well when the pricing and COE quota premium are at a level where you feel that you are getting a fair deal.

(originally posted on WordPress blog on March 31, 2007)

Need for Speed? Remember that You Only Live Once …

I was sad to have read some time ago about two separate cycling accidents in the local newspaper. A sixteen year-old boy was killed when his bicycle was hit along Yuan Ching Road and a ten year-old boy was knocked down by a taxi as he was cycling home after his tuition class. At such young tender age, they may have made a mistake and lose their lives.

I have a friend whom forbids her daughters from crossing road by themselves until they are eighteen. I thought that is an overkill on road safety but then again, it is better to be safe than to leave them to face road danger at a young age.

Who suffers in these accidents? The victims will experience pain before death but the agony on those who remain is more painful emotionally for the rest of their lives. Their parents, the drivers of the accident vehicles, friends and loved ones will have to bear with the loss.

No driver in his or her right mind would want to take a precious life. However, with the fast pace of our lives and the tendency to arrive at your destination just in time, most motorists are rushing on our roads. Some of the young ones even have the need for speed … to be the first off the green light. Why hurry? It may rush you to the grave.

I strongly encourage all motorists to plan their trips with sufficient time to get to their destination. We should always strive to arrive earlier by at least five minutes since there may be unforeseen heavy traffic to slow us down. It may take slightly more time per trip but be reminded that this practice may save you the REST OF YOUR LIFETIME. Drive safely!

A Deep Dive into the Cash Rebate scheme

The business Objective of banks is to make money for its shareholders. So when the Cash Rebate scheme for Motor Loan was introduced, it seems too good to be true that the banks are giving back cash that they should have earned for its shareholders. How does this scheme milk money from the customers? Read on for a deep dive into the scheme.

I recently consider buying a new car to replace my aging but reliable MPV and visited several showrooms. All dealers have tied up with the banks to offer motor loans and a few offer the cash rebate scheme. Aha! The attractive low selling price advertised in the classifed is a result of deducting the cash rebate; On-The-Road (OTR) price is btween three to five thousands more.

What are the terms and conditions of the scheme? To get the cash rebate, you have to loan a principal of at least 70% of the car price for a loan tenure of at least seven years. Full refund of the rebate is required in the event of a prepayment within two years and thereafter, prorated refund of the rebate for the balanced months till the end of the loan. Rule of 78 computation with 20% penalty also applies to prepayment. A naive consumer like me will be attracted to the upfront cash rebate and overwhelmed by the good feeling of buying a car priced low aka “I bought it cheap” mindset.

How do you decide whether to sign up? It is not easy there and then. I created the first verion of this worksheet to help understand the specifics of the scheme in my earlier post. I have since updated it to Version 1.1, adding a chart for a better illustration. Please download it here as my analysis will also require you to change some parameters on the worksheet for a better understanding of the observations.

In the worksheet, the illustration is done using the Cash Rebate offer at 3.5% versus a traditional loan offer at 2.8%. You can see that the two loans have the same financial charges:

Example 1 - Cash Rebate scheme: total interest $9,800 with deduction of cash rebate $4,199 = $5,601
Example 2 - Traditional Loan scheme: total interest is $5,600

However, the loan tenure is shorter for traditional loan scheme is shorter at five years. Another key difference is that the monthly instalment is higher by $166 ($760 versus $594).

I believe that there is a large group of buyers who take loans with tenure of five years or less as Singapore residents are quite obsessed with having the latest model (similar to the trend in mobile phone ownership but to a lesser extent) and that has resulted in two-third (67%) of all private vehicles on Singapore roads is three years old or younger (source: Land Transport Authority http://www.lta.gov.sg/).

Now, turn to the Chart and see how much the buyer has to cough up - an additional sum of between $880 to $1,810 for prepayment within two years and between $450 to $600 from the third to the sixth year. What is the probability of the buyer keeping the vehicle till the seventh year? I reckon that it will be less than 30%. Thus, the banks are likely (more than 70% probability) to make more from the Cash Rebate scheme over the traditional ones as it encourages these who can afford full payment or short loan tenure or smaller loan principal to take a longer and larger loan.

This scheme is not bad and disadvantageous to the bank customer. Let me show the Effective Interest Rate (EIR) for the two examples:

Example 1 (Cash Rebate scheme) with principal of $40,000 with tenure of 7 years at 3.5% flat has an EIR of 6.44%.

Example 2 (Traditional Loan) with principal of $40,000 with tenure of 5 years at 2.8% flat has an EIR of 5.28%.

I will now introduce another buyer, probably a young working adult who endeavour to own a set of wheels but he will be putting a significant part of his monthly pay packet to finance it. He has little choice but to stretch his loan repayment period for seven to ten years. I will use an example that is easier to compare to the earlier ones - he plans to take a loan of $40,000 at 2.8% for a tenure of seven years. The total interest will come up to $7,840 and the monthly instalment is $571; his loan EIR is 5.22%

Fortunately, the Sales Engineer attending to him recommends for him to take advantage of the Cash Rebate scheme ie. Example 1. Now, change the loan period parameter for the traditional loan to seven years for a comparison or download this file. The advantage for the Cash Rebate scheme now surfaces …. see the difference in cash outlay from the 25th month (also the lock-in period). As long as he uses the car for more than two years, he will save some costs and hitting a maximum savings of $2,239 if he passes seven years. There are two impact to him:

1. The selling price of the car is lower by $4,199 and
2. His monthly instalment is increased by $23 from $571 to $594.

The first impact is good and he can probably stomach the second one.

We can also look at the loan from another perspective, starting from actual prepaid interest ie. $9,800 - $4,199 (rebate) = $5,601. A traditional loan with principal of $40,000 with a tenure of seven years would be at a flat rate of only 2.0% (EIR 3.79%). Can you find a flat loan rate of 2.0% these days? I must applaude the bank for being kind to its younger (or cash-strapped) customers.

At the end of the day, you should consider the loan that is most suitable to your financial needs. There is no one size that fits all. In simple and plain English, I would not recommend the Cash Rebate scheme unless you are stretching your financial capability to own the car. But the MOST important point in this post is that you will not know the actual finance cost for your car until the point of time when you sell it. I must also warn you that your financial stability is another important consideration as that may force you to sell your car premature of the loan tenure.

The two tools used in this article can help you to make a better decision - they may appear complex but once you start to plug different numbers for your possible scenarios, you will come to appreciate their usefulness. If you have read till this point, thank you for the attention … as the title has stated, this is a DEEP dive of the Cash Rebate scheme. If you come cross a new scheme which you would like me to analyze, drop me an email.

How attractive is Cash Rebate from Motor Loans?

Advertisements in the classifieds these days show cheap car prices but most of them are prices after deducting the attractive cash rebate from motor loans. Why would banks give you a chunk of its profits? Well, no business is that generous and it is likely that you will cough up more cash when you sell the car.

I have created an Microsoft Excel worksheet to compare the cash outlay between the Cash Rebate scheme versus the traditional loan. It is rather difficult to decide as the key factor to a better utilization of your loan is to use your car for at least the loan period. Get the latest version of the tool here.

At the end of the day, it depends on a few key factors:

1. Ownership trend - if you intend to keep your car for more than the loan period, go for the rebate by all means. You should forgo the rebate if you change your car every three years or less.
   
2. Deep pocket - if you can pay for your car in full, forget the rebate … but in the case that you have a good investment instrument that give returns of more than the effective interest rate (click here to see my earlier post on computing EIR) , then get the rebate and invest the sum to make additional cash.
   
3. Need to Loan - if you are going to for the traditional loan (eg. 2.8% flat) without any cash rebate, you should consider the rebate scheme as you may keep your car for a longer period than anticipated and that may result in some savings.

It is not an easy decision when you are tight on cash. Good luck!

Best Measure for Cost of Car Ownership

What is the BEST measure for Cost of Car Ownership? Most buyers consider the selling price in their purchase while others may include the loan interest. These days, buying a car gets even more complex as dealers bundle insurance, loan with interest rebate and different COE bidding scheme such as non-guaranteed and guaranteed bids. You may be able to have an estimate of how much you are going to pay for your purchase but the total cost of ownership for a vehicle is really impossible to determine until you actually sell it.

After you have sold the vehicle, you would then have all the financial information such as the selling price to the used car dealer or scrap price and the balance of loan payment minus the Rule of 78 rebate and prepayment penalty. You can then compute the total incurred cost over the total number of months used to find the average monthly cost.

You can get an estimate of the monthly depreciation in my post on Cost of Ownership. Thereafter, you can compare the average monthly cost of each vehicle that you have owned and hopefully, the number is coming down as you gets wiser. However, if you have been upgrading, the number is bound to go up.

Low COE = Good Deal ?

My brother-in-law told me that his friend is so lucky to have gotten COE rebate in the latest bidding exercise. Lucky? Good deal? Let’s gone through the numbers before coming to the conclusion.

The quota premium for the Category A COE is S$5,200. This is the lowest premium in over ten years and the annual COE cost of the registered vehicle is only S$520. The owner will only realize the downside when he wishes to sell the vehicle as the COE rebate would be LOW and a corresponding lower resale value is expected.

Most dealers set the COE rebate at S$6,000 and so the actual rebate to a buyer is only S$800. The selling price usually include a minimum of the moving average of the COE quota premium. In this latest exercise, many dealers should have gotten a good windfall. A recent letter to the ST Forum highlighted the issue but how many buyers want to bid for the COE by themselves? Most will not mind paying more for the dealers to bid on their behalves but they may not have anticipated the low COE. If you go around asking for the new car price without COE, it is not going to be the regular selling price minus the current quota premium.

New car dealers have reduced the selling price between $1,500 to $2,500. Thus, this is the best time to buy - low price with an expected rebound in quota premium. Seize the opportunity while it lasts! Some dealers have already increased the price after recording strong bookings.

Now, do you think our friend is lucky?

How to Compute Effective Interest Rate?

I have googled but failed to find a formula to compute the EIR for the flat interest rate usually quoted on motor loan. Most articles suggest asking the finance company or bank to provide the EIR and some stated a good estimate is EIR = 2 x flat interest rate. Is the estimate good or even fair?

Being trained in Six Sigma, I cannot help wanting to be accurate to an acceptable precision and research a little into how a banker would do that computation. I stumbled upon a template within Microsoft Excel named “Loan amortization” which is usually used for illustrating housing loan but I managed to tweak it into a tool to compute both the Effective Interest Rate and the Nominal Compound Interest Rate. There is a manual step involved to set a rate that will match the total loan including incurred interest with the assistance of an adjustment indicator. Click here to get the latest version of the tool.

Hope you will find it useful! And as usual, your comments are welcome.

CBD Parking

It was reported in the Straits Times on Jan 20 that many carpark owners are raising parking fees in the CBD. The following carparks are having the lowest charges:

Venue, First Hour, Subsequent Hours
Chinatown Point, $1.00, $2.00
Suntec City, $1.05, $2.10
URA public carparks, $2.00, $2.00
China Square 1+2, $2.40, $2.40
Amara Hotel, $2.70, $2.70

Avoid these expensive ones with minimum of $4 per hour rate:

One Raffles Quay
SIA Building
UOB Plaza
Capitol Tower
Market Street/Golden Shoe

I have created pages detailing the parking charges at each car park in town (see Pages listing). Please drop a comment if you identify any update to the rates and I will have this post updated accordingly. You can also send me a picture (from your mobilephone) of the parking charges board at the entrance of the car park; please remember to include the name and location of the carpark. Thanks.

Stretch the useful life of your Parking coupons

Disclaimer: This technique may get you a summon for not following instructions.

The design of the parking coupon requires the motorist to tear off the tabs to indicate the year, month, day, hour, minute for the start of the parking payment validity. It is clear when one coupon is used but when a motorist wants to park beyond the validity of one coupon, multiple coupons must be used. While the instructions on the back of the 50 cents coupon booklet (instructions are not printed in the back of the $1 coupon booklet; I did not check the others as I rarely buy them) state that:

When parking for one hour, motorists can use two coupons with tabs torn at 30
minutes’ interval. Example: 1st coupon: 8.30am, 2nd coupon:9.00am

I usually tear the tabs off all the coupons at the same time as it is so troublesome to figure out all the different required intervals. Till date, I have not received a summon for doing so.

On one Saturday morning when my mind was very clear, I had parked for 3 hours from 9am to 12 noon at an URA carpark ($1 per half hour rate) to attend class and then I drove off to lunch. I then parked at a HDB carpark (50 cents per half hour rate) and almost tore a new coupon before realizing that my $6 worth of morning coupons are valid at this carpark from 9am to 3pm. Yes!

So I have found a loop-hole for stretching the useful life of my parking coupons but this is only possible in a scenario of parking at a higher rate before moving to a lower rate car park. Thus, you may want to plan your sequence of activities …..

Wisma Atrium

Check SG Carpark Wiki for updated information

Vivo City

Check SG Carpark Wiki for updated information

West Mall

Check SG Carpark Wiki for updated information

Raffles City

Check SG Carpark Wiki for updated information

Queensway Shopping Centre

Check SG Carpark Wiki for updated information

Plaza Singapura

Check SG Carpark Wiki for updated information

Ngee Ann City

Check SG Carpark Wiki for updated information

Marina Square

Check SG Carpark Wiki for updated information

Jurong Point

Check SG Carpark Wiki for updated information

China Square

Check SG Carpark Wiki for updated information

Bugis Junction

Check SG Carpark Wiki for updated information

Parking Charges

Check SG Carpark Wiki for updated information

Effective Interest Rate and Compound Interest Rate

Current Version: 1.2 dated December 9, 2008
This worksheet helps you to compute the effective interest rate and the compound interest rate for your motor loan. You should read the following post for more information:

• How to Compute Effective Interest Rate?

You can download the file SMEffectiveInterestRateV12.xls (MS Excel format, 290 KB) from my Shared DropBox folder https://www.dropbox.com/sh/4kwkgarn1qw0bej/AAAd-NqSxLxoVw6g2u7WXL6Ta?dl=0

Cash Rebate

Current Version: 1.1 dated March 11, 2007
This worksheet helps you to analyze the total cash outlay when you want to prematurely pay up the motor loan. You should read the following posts for more information:

• How attractive is Cash Rebate from Motor Loans?
• A Deep Dive into the Cash Rebate Scheme

You can download the file SMCashRebateV11.xls (MS Excel format, 153 KB) from my Shared DropBox folder https://www.dropbox.com/sh/4kwkgarn1qw0bej/AAAd-NqSxLxoVw6g2u7WXL6Ta?dl=0

Helpful Tools

Disclaimer:The author will use reasonable efforts to include up-to-date and accurate information at the time of writing in this blog, but make no representations, warranties, or assurances as to the accuracy, currency, or completeness of the information provided. The owner of this site shall not be liable for any damages or loss resulting from your usage or reliance on any information provided in this blog.

About Singapore Motoring

Singapore 1° 18′ N 103° 50′ E



Singapore is deemed to be one of the most expensive place in the world for motoring. Residents here need to catch up with the constant changes in the system ….. my posts may be bundled with either with MS Excel worksheets or tips that would help fellow motorists to be better off with their motoring needs (that is my sole intent). Please feel free to comment or provide me your suggestion of interesting topics to research. I may not be able to tackle all of them but they will surely trigger my thoughts and others too. Thanx!

skxly

About my rides:
2009 Nissan Latio (SJM)
2002 Nissan Pairie (SDS)
2000 Nissan Sunny (SCZ)
1998 Mitsubishi Lancer (SCR)
1994 Hyundai Elantra (SCA)
1992 Daihatsu Charade (SBT)
1987 Toyota Starlet (SBC)

Cost of Ownership

One of the biggest ticket items that one may buy in Singapore is a set of wheels to zip around the island country. However, it is extremely complex to understand what makes up the total cost of owning a car …. especially with the Certificate of Entitlement (COE) bidding, Additional Registration Fees (ARF), Motor Loans (flat rate with Rule of 78 that favours the finance company and BANKS too) , bundled Motor Insurance (expensive premium if you renew after a year without getting a competitive quote) and many other little costs that add up.

Here’s a Helplet that explains the cost of running the car over the 10 years’ validity of the COE. With the current low COE, many owners (like me) are tempted to trade-in for a “cheaper” new car ….. but, what is the amount that you are writing off on the current car? Is the trade-in value fair? The analyzer will also illustrate the effect of Rule of 78 for interest rebate when you prematurely pay up your motor loan and also the depreciation of the car over the 120 months.

I have created Version 1 some years ago and updated it to Version 2 with all the new LTA rules till date. Hope you will find it useful! Click here to get the latest version.

Cost of Ownership

This worksheet helps you to compute the Cost of Ownership for your motor vehicle. You should read the following posts for more information:

• Cost of Ownership migrated over from my Wordpress blog
• When is your Ride Breaking-Even? migrated over from my Wordpress blog
• Costly Frequent Car Refresh? posted on August 3, 2007
• Financial Cost of Ownership for Used Car posted on January 7, 2008
• Overtrade for a New Ride? posted on June 15, 2008

There are two versions of the tool available in the DropBox folder: https://www.dropbox.com/sh/4kwkgarn1qw0bej/AAAd-NqSxLxoVw6g2u7WXL6Ta?dl=0

• Financial Cost of Ownership for New Car, Version 2.6 Release Date December 14, 2008 (MS Excel format, 118 KB).


• Financial Cost of Ownership for Used Car, Version 1.2 Release Date December 14, 2008 (MS Excel format, 118 KB).

When is your Ride Breaking-Even?

I came across this discussion on the OneMotoring Forum and wonder if I would even break even on my car. Below are some extracts from the discussion.

http://forum.onemotoring.com.sg/mvnforum/mvnforum/viewthread?thread=3647&offset=15
Fongs:

The so-called ‘break-even’ date is the time when yr outstanding bank loan amount is equal or greater than the market value of yr ride (in the case of COE cars, market value = scrap value + scrap metal token $$). This is not applicable if yr ride is already loan-free.

See Ho Ee:

I am always intrigue by this ‘breakeven’ date, and how car-owners used them to decide when to change ride or get rid of their ride. Based on this definition: the breakeven date depends very much on loan amount ($) and duration (yrs).
1) If you take a loan (at 70% of total value of car for 7 years) and let this be $49k (principal + interest), repayment is $7k per year. Since PARF rebate is highest before the 5th year, it is most likely that breakeven date is ard 3 yrs.
2) If the same loan is change to 5 years tenure, the breakeven is slightly less than 2 yrs.
3) If you change this to 3 yrs tenure, the breakeven is slightly over 1 yr.
4) If you don’t take a loan, any day is breakeven.
Hence, it can be concluded that the breakeven serves no purpose. It is all about affordability. If you can afford, no loan needed. If you cannot afford, you stretch (max) your loan as long as possible. To use the residual value (PARF + COE) to pay off loan is really no brainer! It is still borrowing that you have to repay!
Therefore, back to my contention in previous posts: that buying a car of your choice all boils down to two factors:
1) falling in love with the particular made/model
2) affordability

http://forum.onemotoring.com.sg/mvnforum/mvnforum/viewthread?thread=3299
See Ho Ee:

The balanced equity point is what the non-accountants called ‘breakeven’. I had a hard time trying to understand this term as much as the terminology called ‘COE car’. I thought all cars on SG roads required COE. So if there is COE car, there must be oso be non COE car? That was what went thru my mind! Well the motoring industry is full of ‘beng’ terms. “Break-even” is a term used in economics referring to the point where the cost and the revenue is equal (also profit = zero).

For motoring, the appropriate term should be equity of the vehicle. There are three kinds of vehicle equity:

1. Negative equity is when the amount you owe for the loan on the vehicle is more than the vehicle’s market worth. This is where dealer will offer overtrading ie. loan a larger amount than the cost of the new car to cover the prepayment on the old car.
2. Zero equity is the point when the amount you owe on the vehicle is about equal to the vehicle’ market worth.
3. Positive equity is when the amount you still owe on the vehicle is less than the vehicle’s market worth. Buying a car using cash keeps you in positive ground.
   If you are at point 1, I would not advise you to overtrade as it will put you deeper into the negative zone.

I have revised the Cost of Ownership tool to reflect the vehicle entity as well as allow the Overtrade Loan ie. Loan Amount is greater than New Car Price to settle the prepayment of the outstanding loan on the existing car. The worksheet will show you how the new ride in an overtrade deal will become a significantly negative equity …. so do consider carefully before signing on the sales agreement.