COE hike: Why now is the best time to purchase a used car

We've all had those passing thoughts: "A car would do me some good". Perhaps you may have even shortlisted a few potential vehicles that you'd like to buy.

But alas, the timing seems to be all wrong. With COE prices at a seven-year high, it makes little fiscal sense to purchase a brand new car. It's back to public transport and private-hire cars for the time being then.

Or is it? New car prices may have been inflated as a result of the COE hike, but if you really need a car in a pinch, you can look to the used car market to beat that COE hike.

Not convinced? Here are some reasons why buying used now is the better option.

Used car prices are more stable 

Whilst dealers and car owners may massage their list prices to cash in on the increase in new car COE prices, the increase will never be significant.

We say never because the used car market is really competitive - a big uptick in the list price will just drive consumers to purchase an example from another seller.

Lower servicing costs 

With an asterisk. Used cars are more likely to require more maintenance, as you'll probably have to replace more items as they expire.

But as older vehicles are generally simpler, you are less likely to need specialist diagnostic equipment should you need to troubleshoot any potential faults.

This means you can drop your used car off at any workshop, and chances are that their technicians will be able to resolve any issues and address any queries that you may have.

Also, parts are aplenty for an older vehicle, so you'll be able to repair it for less, and with a faster turnaround time!

Immediate handover

Again with a caveat. If the car is in the ownership of a used car dealer, upon loan approval, you'd be able to have ownership of the vehicle.

If it was a private seller or sold on a consignment basis, you'd be able to negotiate the exact handover date, allowing you to more effectively plan your finances to welcome a car into your life.

New cars, especially those from Authorised Dealers, may need time to be shipped over from their country of origin. They then need to be registered for road use.

You may need to wait weeks or months before you can even see what you've bought!

Further savings

If you are able to purchase a COE car outright, you can opt to save even more by purchasing a Third-Party (TPO), or Third-Party, Fire And Theft (TPFT) insurance policy.

Comprehensive policies are expensive, and are as its name implies. Typically, it is what your bank would mandate you to sign up for if your car is still under financing.

Third-Party Only (TPO), or Third Party, Fire And Theft (TPFT) policies are designed to be more cost-effective, but with reduced coverage.

These policies will only pay for damage caused to third parties - you'll have to pay for your own damage out of your own pocket.

TPFT policies add coverage against Fire and Theft-related losses.

Your premiums will vary based on the make and model of your car, its age, your age, whether you are entitled to an NCD, and even the excess amount (the higher the excess, the lower your premiums!).

Playing Devil's advocate 

Obviously, there is a risk with buying used. However, the allure is there - affordable last-generation premium cars allow more of us to experience a luxury vehicle, albeit one on a revalidated COE.

But there is a risk of hidden accident damage, or unresolved recalls. There's the Lemon Law, yes, but it only applies if your car was purchased from a used car dealer, not from an individual or from a dealer but on a consignment basis.

It is also worth noting that COE cars have higher road tax rates. Road Tax is calculated based on the vehicle's engine size, age, and the type of fuel it uses, and COE cars will experience an incremental increase in the cost of the tax up to the 15th year mark.

Just what's the correct car for me? 

If you let nostalgia get the better of you, you'd perhaps look at something like a '90s JDM Civic.

It offers a portal to a time that no longer exists - an escape from the harsh realities of modern life.

If you have your sensible thinking cap on, then you'd probably look at a ruthlessly reliable, and more modern, Japanese economy car.

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Big enough to shuttle your family around for all their meetings and appointments, but still being modern and efficient enough to be used as your daily driver. As a general guideline, MPVs, with their seven seats, are suited for larger families. SUVs are physically larger, though usually, they can only carry five people.

Their size and off-road prowess lead many to believe that these cars are superior in a collision.

For younger families, a Hatchback or a Saloon would do nicely. Even within these general body styles alone, there are many other subcategories, though as a rule of thumb, these cars offer the lowest barrier of entry into car ownership, combining enough space inside that a growing family needs!

Purchasing that used car 

Ultimately the choice is yours to make. Used cars offer significant financial advantages over their brand new counterparts, but that is only if you get it from a reputable car dealer and with a comprehensive service history.

Cars are a big-ticket purchase, and you should really work out just how much you are comfortable with.

Also, do remember to factor in road tax, parking and fuel costs (for a quick and very rough calculation, you can expect your monthly car-related expenditure to be about the same as your car's instalment)!

This article was first published in Motorist.