Car Owners: Do You Make More Than $7,650?

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If you are a car owner, does your pay match your car ownership status? If you don’t have a car, how do you know whether you can afford one? In this article, Salary.sg proposes using $7,650 as an income guideline for car ownership in Singapore.

We all know that owning a car in Singapore is a luxury. A small saloon costs around $50k while a family MPV can easily set you back by $80k or more. Don’t forget you also need to pay for road tax, car insurance, servicing, petrol, ERP, parking fees, cleaning, grooming and what have you.

If your income is not high enough, it may be a stretch for you to fund the costs of owning that set of wheels in Singapore.

According to the Household Expenditure Survey (HES) report recently released by the Singapore Department of Statistics, only 38% of households here own a car.

From the popular Salary.sg household income comparison tool, we can find out that the top 38% highest earning households make more than $7,650/mth. Though this group of 38% may not be exactly the same as the car-owning 38%, we argue that this is the group that can well afford a car. If this group can’t afford a car, we don’t know who can.

Hence the $7,650 guideline.

So, if you and your spouse own a car but make a combined salary of less than $7,650 a month, it may be a wise thing to do your sums again.

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53 Comments

  1. for me, it’s about 1k inclusive of erp, parking, insurance, tax and the occasional fine :). but there are people who spend more esp those who drive to work in cbd area where season parking alone costs more than $300 pm.

  2. Dunno leh, a lot of people I know has a car even though they earn less than that. I even know a guy whose salary is less than 3k getting a car. Don’t even know how he can afford the installments.

  3. a lot of people are slaves to their cars. i’m one of them. if you earn below a certain amt, it’s extremely hard to save much money. most of it is spent on the car.

  4. This is personal opinion since everyone has their own prerogative in life.
    I have been driving ever since I graduated but I would not consider it being a slave to my cars.
    It’s a lifestyle and convenience that I fully enjoyed and I have no regrets from my youth.
    But yes it was definitely true that I did not save much when I was younger.
    But I don’t think I missed out on anything.
    When I first started working I did not earn that much so even if I scrimped and invest I would not have gotten much savings anyway.
    As I grow older and income grew as well it really does not make any difference that I’m starting to save now.
    I estimate I already saved more in 2 years than what I could have in my first decade of work life without living like a slave to money.
    Again it’s up to different people to decide their own way of living their lives.

  5. This $7650 guideline is for families. How about for singles? Does it still apply? I don’t think there are many singles who make $7650.

  6. aiyo this is juz a guild only lah,
    if only 15% of ppl live in condo meaning only top 15% earner suppose to live in condo?
    if only 10% ppl own diamond ring meaning only top 10% earner suppose to have diamond?
    Different ppl spend their money in different way, take it as a guild only lah,
    and if you can afford or the car brings you convenience save you more time give you better value than you what you pay for then it is ok to own a car in my opinion.

  7. agree with middleclass on

    5.
    middleclass Says:
    December 14th, 2009 at 11:07 am

    i couldnt more agree with middle class. Different poeple have different lifestyle. We cant just use a standard of S$ 7560 as a gauge to whether the car is affordable but as as rough gauge its ok.

    Well you may not or able to earn much but well whos knows as some people have rich family or plain lucky, strike toto, 4d etc….

    Some people may have passion for driving even they may not earn that much but well it may be more than worth it, passion is beyond the figures.

  8. Any idea whether S$ 7560, is refering to own a car that cost 50k or 100k? I dont think we need that much to own a less than 40k Picanto.

    What is your opinion of the affordable car price range for that salary as benchmark?

  9. 7650 is already at the bottom of the benchmark, so it already applies to small cars like picanto.

    i think the idea is that we should not spend a big proportion of our income on cars.

    for mere mortals who are not crazy about owning a car, there are better things to spend money on – long term investment, good food, great holidays, kids enrichment, parent allowance, etc.

    you may disagree with me, but i think spending 30% of one’s salary on a car is just too much. not forgetting that a car’s value depreciates with time. it’s a major liability in my accounting book.

    do a mental exercise: if you allocate 30% of your income to your car, how much would you allocate to (1) food (2) entertainment & holidays (3) your children (4) your parents (5) savings & investment (6) etc.

    i don’t particularly envy people who enjoy a certain “mobility” and “lifestyle” only to stint on some or all of (1) to (6). especially those who drive a posh ride but mistreat their parents & family.

    what’s wrong with taking taxis and public transport?

  10. Driving a posh ride can be a form of luxury for the family/parents as well. Some people buy a “better” car just to give the family a better and more comfortable ride. Might be hard for you to emphatize since you do not own a car and you seem to have the “accountant” kind of mentality whereby even dollar and cents need to be accounted for.

  11. Owning a car is just for status here in SG. For the the money I would spend on parking alone I can take a taxi every day and still have money left!
    My rule: don’t spend any money on things that don’t appreciate in value.

  12. different people have different expectations, lifestyle etc so there is no right or wrong in buying/owning a car. Just need to ensure that we are spending within our own limits.

  13. Huh? 7650 salary is just meant for owning one of the smallest car as picanto? By making such comments, I think your thinking thought is abnormal. Can’t listen to your advise anymore as you are only based on your own subjective thought.

    How many ppls salary is 7650 or below can only afford picanto? In reality and I can bet with you, that even a person (99.999…%) with merely a 3k salary is driving a bigger car than that.

  14. that’s why many people are poor in singapore and they complain it is the government’s fault, their parents’ fault and the society’s fault.

    i did not say you MUST earn 7650 to buy a picanto. i said it is silly to spend a big proportion of your pay on your car.

    btw, the 7650 figure is a figure that admin plugged from some stats data. the methodology used is debatable but like someone said above, just take it as a guideline.

    by all means, if you want to, go ahead and buy the biggest car your salary can pay for.

    it’s your money. to each his own.

    btw again, cars in other countries are much much cheaper than the super inflated cars here.

  15. instead of specifying the income levels needed to own a car, this post should have given the estimated cost to maintain a car [small size, medium, luxury]. Say, the cost to maintain Picanto is 1000SGD, I will know based on my income, if I am willing to spend 1000SGD or not.

    my wife and i earn around 9000 SGD in total but our priority is to buy a house asap. So, we will wait for a car even though we can afford to spend 1000 on a small car. so, its not the income that matters, its the cost of a car and if i am willing to spend that cost.

    so, i request a detailed analysis of costs needed to maintain a car. maybe, also the procedure to buy a car.

  16. to add on, 7650 divided by 2 is just about 3.8k. many young couples earn that amount in 5 years after graduation. for some of them: after taking public transport for half a decade, maybe they’ll decide buy a picanto, civic or even a bmw depending on their priorities.

    is it that hard to take public transport for a few years?

  17. from that asiaone article, a director of a parallel importer said:

    “If the person has a minimum income of $2,000, he can consider buying a car.”

    hmmm… who should i listen to har…

  18. aiyoh, everyone has their own perspective, so we just respect each other opinion to buy or not to buy or buy wat car.

    Anyway any people actually thought that some people buy off peak car ? thought its about 10% of sg car population if i m not wrong according to stats.

    i have a small japs salon car which after minus the 17k cost about 30k, thats was in 2008 and plus road tax, car insurance, servicing, petrol, ERP, parking fees, etc, each month about 400+ for us, at most 500+. (about a tenth of our salary, not even the S7,650 guidline)

    Anyway, the car means more than the money we paid for it. for the past 1yr +, we have much good memories wiht hte car of driving around sg places and also to msia. wat i mean is, a car is more than the monthly figures we paid for it, not as if we buy a souvieur to put at home at look at only.:)

  19. oh ya, some peoplp will say can only drive on off peak period.

    true, whye leh, cus my spouse takes the public tpt to work daily and i have company vehicle to drive. 🙂

  20. I belong to the no-car camp so let me add one more piece to this side of the argument. Given that more Singaporeans are owning cars than they can afford, I would say that the last few percentage points are stretching it. So I would take a conservative percentage of top 30% before you can own a car.

    Anyway, just in the mood to state the obvious, we all know we cannot trust the PI director because he/she wants to sell more cars!

    The argument to each its own is fairly weak sometimes because of opportunity costs. I am sure the money saved could be spend on something that returns much more value. While not as serious, it is akin to an addict resisting advice to quit his/her addiction.

  21. Wah if everyone listen to that “director of parallel importer” then I can buy BMW already liao. I think it’s irresponsible to buy a car when your income is 2k, especially if you don’t have much stashed up as your safety net.

  22. Talking about owning cars. It is much of an ambition, an ego a recognition needs, stated by Maslow Theory. We are all human. This is the product of Meritocracy. Did your teacher teach you or tell you ” hey youngman you must work hard and aim for a picanto or worst still drive a Mercedes Benz not as a proud owner but a taxi driver.”

    But the guideline $7650 indirect meaning is” if you do not have a big buttock do not seat on a big chair”.

    Again the by product of Meritocracy is if you can achieve number one, fake it or borrow it or Boast it without having it to show off to your friends.

    Singaporean of $7650 below achiever, a pathetic rats in a race, wearing designer accessories, platimium card, Cars to show off but unable to make payment on the credit card bills.

    I chose to be myself without having to substantiate to you I have material things, I will not be bothered by your comment whether i looks rich to you or not, whether i drive a picanto or a BMW or take public transport.

    Most Singaporean Yuppies is subjected to peer pressure not me.

    When I can’t finish my food in food court, I take away. “People looking at me like I am an alien to them”.

  23. I’m surprised by the strong opinions and assumptions expressed here and I cannot understand why it is so difficult to respect how other people can choose how to spend what they earned.
    I certainly don’t go around telling other people not to waste money on rolex watches, 50″ LCD TVs, Montblanc pens, iPhones etc.
    Or try telling your wives or gfs not to buy that 50th pair of shoes or Gucci bag.

  24. To middleclass: the lesson from the U.S. is that you do NEED TO care how other people spend their money, because when they screw up, who do you think is expected to come to their rescue? People who don’t spend their money, that’s who.

  25. We’re talking about cars here. You may have a point if you are talking about the property market. Let’s not get carried away with the comparison.

  26. As a disclaimer, I am stating a philosophic point.

    When we do not let heroin addicts continue their lifestyle, it does not mean that we do not respect them. You may say that this sounds extreme.

    But suppose this heroin addict is rich and is conscious of his decision, do we respect his decision and let him do harm to himself?

    Similarly, do we respect cigarette smokers decision to continue to smoke?

    I feel responsible to highlight the risks of certain decisions (financial in the case of car ownership, health in the case of smoking) to people I care about.

  27. kevin: since i find it incomprehensible to compare drug/tobacco addiction to a utility item i’m going to have to decline comment.

  28. Well cars in Singapore is a luxury, no? Compared to the US the cars here are at least twice or thrice as expensive and yet the general income level is lower + people will still need to buy a house later, etc. I think the point of this article and many other similar ones is that you need to compare the things you buy with your income. I am not worried about expats or highly paid people, for them it’s truly their choice but it appears that quite a few people are stretching it. I certainly have no problem with all of the above if everyone who screws up is allowed to fail, but sadly that will usually be the last option nowadays.

  29. good estimation of monthly costs of $1780 of owning a car, taken from
    http://www.mycarforum.com/index.php?showtopic=2646375

    — BEGIN QUOTE —
    consider civic 2.0 at abt 86k?

    hmm ok la me poor man… saving got better use… so i borrow 70k down 16k…

    2.2% interest for 7 years loan… run up to abt $960 monthly instalment…

    insurance… now cut throat… maybe 1.2k? cos got ncd etc… so monthly $100 laio

    tax e.g 2.4k??? so already $200 monthly laio…

    parking $90 + maybe $50 extra like coupon… cashcard parking etc so $140 monthly

    then petrol? abt $280 a monthly for normal drive…

    hmm not inclusive of erp… office parking etc cos different people may kanna different amount… let jus set $100 monthly too

    so total = 960 + 100 + 200 + 140 + 280 + 100 = 1780 ???

    so family income ard 9k should be comfy…

    of course if single guy different story… can afford more toward car… then those rich one can down more money also diff story…

    so the point is… 20% rough guide… you must play ard the figure yourself to achieve wat u wanted… mine is done with the calculation both couple share share 50/50 which may not happen in other couple relation… some wife expect hubby pay 100%… their own salary is their own money to buy LV etc… so too bad hahaha
    — END QUOTE —

  30. I feel pretty inaccurate to just use a fix sum as a gauge. as discussed, different folks have different priorities. So they may earn much less but still they still drive. I feel with $7650 and drive a picanto or geely will still have some left over for other necessities.

    More accurate to use % of salary as a gauge as to what is excessive.

  31. Which loser above a certain age in SIngapore doesn’t have a car nowadays?! I’d never ever consider dating a guy who doesn’t have a car.

    No one buys a car thinking that its an investment or expects its value to rise. Its just something that A LOT of men (yes here in Singapore) have it, its convenient and you can go anywhere with it and it’s only decent to have it.

    I think guys who can’t afford to their own cars shouldn’t bother dating please.

    Go work harder on your career first.

  32. Renter, go scrooge elsewhere, loser. Why don’t you leave SG and migrate to Msia or something?

    And the amount loaned to car buyers is not anywhere close to the amount loaned to finance mortgages. Do many cars cost the same as homes here? No wonder you’re not smart enough to have done well enough in life to own something as commonplace as a car.

  33. To belle, you are entitled to your opinion but, unlike you, many people have moved on from shallow, materialistic values. They couldn’t care less about impressing their peers and people like you with overpriced and overvalued products like LV bags and cars.

  34. To Bimbo Belle on

    I love gurls like Belle. With the money that I have, I have no problems snagging materialistic, shallow girls like her. The best part is, men who can afford people like her, will only have fun with her but not marry her. She’s just like a commodity to rich men. 🙂

  35. the Belle is smart enough to get a guy with a car but not smart enough to buy a car of her own, i guess. is it so hard for women to buy a car in singapore. or maybe she cant hold on to a decent job since she is brainless.

    advice to belle – Go work harder on your career first and buy ur own car. else ur a loser like most women.

  36. Let’s back off from misundertood notions of car ownership a little bit. I have just read an article about car insurance, and it does make me think twice about getting a car, especially when you are not informed on how much it will cost you in the long run. A sizeable portion of maintaining a car would involve premiums determined by insurance companies so it is best to make an motor insurance quotes from several companies and select one that gives you the largest savings. This could be one way of stretching the limits presented by the $7650 guideline.

  37. Dear all,

    I think the underlying topic of this discussion is, what’s the value of the car in your life.

    Different ppl with different income range would view the value of having a car differently. A person earning $10K income might value having a car as disgustingly wasteful in terms of his resources, therefore opt for public transport. However, there are ppl who earn $5K income value having a car as one of their to-have list.

    It all boils down to much of consumer surplus is one willing to forgo.

  38. Obviously, there are outliers in the bell curve. There will always be someone you can find who earns $30k a month and refuses to drive and people who make $2.5k a month and quickly buy a car in eagerness.

    Citing outliers are not meaningful in any form of discussions or decision-making. Any leader knows that.

    What is a no-brainer is that the more you earn, the more you can afford a car without hurting your ability to spend normally on other stuff.

    If you make $6 or 7k gross, you can afford a car while still spending comfortably (or normally) on the other things necessary for a fruitful and comfortable life.

    So if the more you make, the more you can afford a car COMFORTABLY, which means you don’t need to “forgo consumer surplus”.

    So at the end of the day, it boils down to your earning power.

    Do you seriously think someone earning $10k or $20k have the same spending powers as someone earning less? At the end of the day, its down to how much you earn. And not some outlier. if you earn a lot, you can buy a car, finance it every month and eat in restaurants often, give money to parents, and still have room for investment and savings.

  39. Hi,

    I share the same sentiment as Kevin:
    ‘I feel responsible to highlight the risks of certain decisions (financial in the case of car ownership, health in the case of smoking) to people I care about.’

    Without going into too much details, let’s just say I am watching real life shows with Person A and Person B.

    Person A: Employee (late 30s, Manager). Salary greater than S$10K. No car. HouseS paid in full.

    Person B: Employee (Mid 20s). Salary ~S$4K. New average Jap car. ‘Ethically’ challenged to advance career.

    Will update if this thread is still active in future.

  40. It depends, I know of a banker many years ago who just joined a bank as a junior level relationship manager at 1.8k per month after leaving NUS. By the end of the 1st year (still at 1.8k), he already had a spanking new car. HOW? The bank pays GREAT BONUSES!

    That’s also why we are now in recession!…cos the banks take our monies and replace it with paper money that are not real assets and then pass these out as bonuses through ‘unrealised but positively reported investments’.

    The only way we can really know if a bank really has money and not just talk is to shut it down and rampage its books.

    Money is really just a piece of paper and its value is determined by our demand and valuation of it.

  41. I make 155K a year and I dont have a car… why….? When would I drive said car? I drink almost everyday… I do NOT want to get caught drinking and driving in this country.. and people drive like idiots here so why bother. I have cabs and limo cab drivers I can call and they will send their buddies down in 5 to 10 mins… let someone else do the driving…..

  42. To conti: I don’t think buying a car at a young age is necessary a financial mistake as long as you know how to manage your finances overall.

    Interestingly, I started out like person B (bought a jap car when i was earning 4K-plus), now person A after growing in my career and investments (mid-30, salary above 10K, condo in prime district fully paid-up), but still using the same average jap car to ferry my wife and kids around.

  43. One very important point besides salary, which is missed out is Inheritance. Many (not all) young people are driving their parents’ car. They did not buy it by themselves. Secondly, if they come from a well off family, the person will have a substantial sum of money to afford a car upon graduation, never mind their low starting salaries.

  44. Pingback: High COE Prices – Can You Afford That Car? | Salary.sg - Your Salary in Singapore

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