Saturday, February 28, 2009

Can I Afford a Car?

This is a frequently asked question on many local motoring forums. I am surprised if any of the topic starter actually rely fully on the responses to make the buying decision. There are many tools to compute depreciation, paper distribution, motor loan repayment schedule, etc. but I could not find a good tool to analyze the Total Cost of Ownership including ongoing operating costs. Thus, I had embarked on a mini project back in October 2007 to study the Total Cost of Ownership (see the site on Wordpress) for motoring in Singapore. However, I did not get many responses and therefore, the idea was sitting on the backburner for quite some time.

Earlier this week, I got inspired and managed to put the tool together in a few hours. These are the components that I take into consideration:

1. Loan Instalment

2. Road Tax and Radio License - road tax can be computed from the formula at and radio license is $27 per annum as given at Adhoc rebates from the government is not reflected.

3. Motor Insurance - annual insurance premium with No Claim Discount of up to 50% can be computed. The estimation is assuming that the annual premium stay constant and no accident occur so the NCD will increment each year up to 50%.

4. Fuel Cost - monthly cost is computed from the average mileage x fuel price x fuel consumption of the vehicle. You can estimate the monthly mileage from the regular destinations (eg. home to office to home on working days) and some buffer for weekend and adhoc trips.

5. Servicing - maintenance of the motor vehicle is necessary every 10,000km so estimated servicing cost is added every 10,000km driven. However, one standard cost is used for the estimation as different costs per 10K, 20K, 30K, etc. servicing cannot be easily captured.

6. Parking - monthly season parking charges, average coupon costs and adhoc parking costs can be estimated.

7. Electronic Road Pricing - monthly ERP charges can be estimated ( with some buffer.

8. Cleaning and Grooming - package cost or allowance for car washes can be estimated.

9. Inspections - required for vehicles at age 3, 5, 7 and 9 years. Inspection cost is taken from VICOM (

10. Others - tyre change, in-car entertainment system upgrade and adding other accessories.

The tool can help the new motorist understand the Total Cost of Ownership and the schedule of cash flow needed to fund the operation of a motor vehicle. The tool is also useful to the seasoned motorist as a log to record the actual cost incurred for each component. Do note that once an actual cost is entered, it will overwrite the formula in the cell and you will need to download the tool and start from scratch again if you need to revert to the original numbers. Please feel free to provide me with your feedback of the tool.

Ready to test drive the tool? Click here to proceed.

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