Once you’ve paid that big price tag, don’t forget that you have other expenses that really add up.

As the price of COE premiums fall (Cat A prices now at $61,000), some of my colleagues are considering buying a car. One of them decided to buy a used car with 3 years remaining on the COE (her old car was recently scrapped after 10 years). She’s in her 50s and figured that in 3 years time, she would either be semi-retired or have flexi-work arrangements, so she thought 3 years was more than adequate. But when she told me the price she paid on this supposed “good deal” ($35,000+), I was shocked and wondered if she had done the math. So I decided to in this post.

She lives adjacent to Clementi MRT Station and like most people, commutes to the central region. She typically works 6 days a week, and often uses the car on her off day to run errands and visit with friends and family. On her working days, the car is driven from her home directly to her workplace and then parked there for the entire duration of her shift. Likewise, when she returns home, the car is parked at the HDB car park. There is a food centre nearby so she typically doesn’t use the car after she returns home, though she might swing by a restaurant to get take away on her way back from work.

It is easier to compare the cost of different means of transportation by converting the costs into a per day basis. I compared the estimated cost of her car on a per day basis to that of taking a taxi or other form of transport. Hereโ€™s what I come up with.

Driving Your Own Car:

The Assumptions:

  • Assuming her salvage value is $5000, she is paying $10,000 per year for “use” of the car. ($35,000 – $5000 = $30,000 over 3 years = $10,000 per year).
  • Assuming she works 300 days out of the year (excluding off days, holidays, MC days, etc.), that’s $33 a day to use her car for commuting purposes (I labeled this the “daily rate for commuting”. I decided not to include her off days in the estimate since those days vary quite a bit in how much she uses her car.
Daily rate for commuting (for return trip): $33

However, this figure does not include carpark fees, ERP, petrol, maintenance, repairs, or insurance; and if you took a loan to buy a car, interest. Here is a conservative estimate taking into account the aforementioned expenses (on a per day basis).

Daily rate for commuting (fore return trip): $33
Carpark at work: $10
Carpark at hdb: $3
ERP: $2
Petrol (assuming $70 every 2 weeks): $5
Maintenance (assuming no maintenance cost): 0
Insurance (assuming $1460 per year): $4
Interest (assuming no loan): 0
Total: $57


What is Excluded:

  • Maintenance cost.
  • Interest on loan payments.
  • Intangible costs such as having to drive, time wasted finding a parking space, or any accidents or other such related expenses (e.g., parking tickets, traffic tickets, theft, vandalism).
  • The social & environmental costs (i.e., air pollution, noise pollution, productivity and time wasted due to traffic jams, etc.)
  • Intangible benefits such as the feeling of freedom and control, time savings, and not having to book a taxi or plan your route based on the public transport system.

Keep in mind two things. First, if these above items are applicable to you, the daily cost of using a car will be much higher. Second, I discounted many of the included items, which lowered the daily cost of using a car.

Taking a Taxi:

Now let’s take a look at if she were to use a taxi. The taxi charges, depending on which taxi she books (the majors ones are Comfort, CitiCabs, TransCab, and SMRT cabs; there are also third-party booking apps such as Uber and GrabTaxi), vary from $14 to $16 (includes booking fee) for a one-way trip. However, many taxi drivers will allow you to make monthly or weekly arrangements with them, particularly if they are heading in the same direction that you are heading in anyway, and will usually discount the fare by the booking fee. There are also taxi sharing, car pooling, and ride sharing platforms that make daily commutes even less expensive (as little as $5 per trip).

Taxi daily rate (U.P. for return trip) $28 – $32
Taxi daily rate (with arrangement discount) $22 – $26
Ride Sharing $10 – $20

In the case of my colleague, driving her own car costs her 2 – 6 times more compared to taking a taxi or ride sharing.

Of course, by owning a car, you have more control. You have the “ownership” status (and one of the infamous 5 “C’s”), but the flipside of ownership is responsibility. You are responsible for maintenance and upkeep, for safe driving, for observing traffic rules, and for loan payments. And responsibility can easily slip into obsession. I’ve seen grown men lose control and become deranged when a small pebble hits their car. The car would sometimes take on higher priorities in their lives than other things that should be more important, like their health and relationships. (This is often the case when a person feels they must work harder until burnout and exhaustion just to afford the car payments). And just like home ownership, an outsider looking at the situation would wonder what ownership really means Does you own the car? Or does the car own you?


Everybody’s situation is different and you will have to make your own estimates and calculations, particularly if you’re a business owner and must make frequent trips across the island on a daily basis. In that case, owning a car may makes sense. But do keep in mind that the more you use your car, the higher the daily costs, particularly with maintenance and petrol.

In my colleague’s case,ย  the numbers don’t justify owning a car, especially because she lives adjacent to an MRT Station and can take public transport for less than $5 a day for a return trip. Additionally, she doesn’t get much from the intangible benefits because she uses the car mostly for commuting to and from work. I didn’t tell my colleague any of this because what’s done is done, but you may be able to learn from this and decide for yourself whether car ownership is a frugal decision for you and your situation.

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