How We Calculate the Monthly Cost of Owning a Car in Singapore

Key Takeaways

• At M Motors, we estimate that a practical used car may cost around $2,138 per month to own after accounting for depreciation, financing interest, fuel, insurance, road tax, parking, ERP, servicing, and repairs. Actual costs vary by vehicle and usage.
• Calculating car ownership costs goes beyond looking at the advertised price. A reliable car broker in Singapore should help you account for depreciation, financing, insurance, road tax, usage, and maintenance.
• Loan instalments show monthly cash flow, while depreciation shows how much value the vehicle loses. These figures should not be added together without adjustment.
• A practical monthly estimate should also include annual bills and irregular repairs, converted into monthly amounts.
• We recommend setting aside a buffer of around 10% above the estimated monthly amount to cover unexpected repairs, insurance changes, or fluctuations in fuel and parking expenses.

The Monthly Instalment Is Only the Starting Point

Over the years, we have noticed that many customers begin with one question: “How much is the monthly instalment?”

It is understandable, as this is the most visible recurring payment. However, the instalment alone does not represent the full cost of car ownership. Two vehicles with similar instalments can produce very different expenses once fuel consumption, road tax, parking, depreciation, and maintenance are considered.

We therefore begin by asking how the customer will use the car. Someone driving to the CBD five days a week will have a very different budget from someone who mainly drives on weekends.

We also check whether the proposed financing is realistic. Under Singapore’s current motor vehicle financing limits, the maximum regulated loan is generally 60% or 70% of the purchase price, depending on the vehicle’s open market value, with a maximum tenure of seven years.

Disclaimer: The figures in this article were checked against publicly available Singapore sources at the time of writing. They are estimates for general guidance only and may change due to market conditions, government policies, insurance quotations, fuel prices, and individual usage.

The Formula We Use

Our basic calculation uses the monthly average for each:

Monthly depreciation + financing interest + fuel + parking and ERP + insurance + road tax + maintenance reserve

This gives us a more realistic car ownership cost than simply adding the instalment to petrol expenses.

For cash-flow planning, we use the actual monthly loan instalment instead of depreciation and interest. We do not include the full instalment and depreciation together, as that would count part of the vehicle’s purchase value twice.

1. Depreciation and Financing

Depreciation is normally the largest component. We estimate it by taking the difference between the purchase price and expected deregistration value, then expressing that loss as a monthly average over the remaining ownership period.

For example, a used car priced at $100,000 with six years of COE remaining and an expected deregistration rebate of $20,000 would have an estimated monthly depreciation of about $1,111.

This does not mean $1,111 leaves your bank account every month. It represents the average value the car loses as it ages.

We therefore advise customers looking to buy a second-hand car to compare annual depreciation, remaining COE, rebate value, condition, and likely resale demand, rather than choosing based solely on the listed price.

Where financing is involved, we add the loan interest as a separate expense. The down payment is treated as capital committed upfront, not as a recurring monthly bill.

2. Fuel Usage

Published estimates commonly place fuel expenditure at around $150 to $250 per month for moderate usage, although drivers covering longer distances or operating less efficient cars may spend more.

In our experience, buyers frequently estimate fuel based on their daily commute but forget weekend travel, school runs, errands, and time spent idling in traffic. We therefore calculate expected monthly distance first, then apply the vehicle’s realistic fuel efficiency rather than its best advertised figure.

3. Insurance and Road Tax

Insurance is usually paid annually, so we calculate the car insurance monthly equivalent.

For example, an annual premium of $1,200 to $1,500 works out to approximately $100 to $125 per month. Younger or less experienced drivers, performance-car owners, and drivers without a no-claim discount may receive higher quotations.

Road tax should be handled in the same way. A typical 1.6-litre car may cost around $740 annually, or approximately $62 per month, although the exact amount depends on engine capacity, power output, fuel type, and vehicle age.

4. Parking and ERP

ERP and parking costs in Singapore are among the expenses we see customers underestimate most often.

HDB season parking for a first car generally starts from $80 per month for surface parking and $110 for sheltered parking. Regular commuters may also spend approximately $50 to $200 or more each month on ERP, depending on their route and travel time.

Office parking, shopping-centre charges, and visitor parking can raise the total considerably. An overlooked $200 per month becomes $2,400 over a year.

5. Servicing, Repairs, and Wear Items

General estimates suggest setting aside approximately $500 to $1,000 for routine maintenance annually after the warranty period, with older vehicles potentially requiring more.

However, servicing costs per year do not include every possible wear item. Tyres, batteries, brake components, suspension parts, and unexpected repairs do not follow a neat monthly schedule.

For many used cars, we prefer to create a maintenance reserve of around $100 to $180 per month. The money may not be spent immediately, but it reduces the financial impact when a larger repair becomes necessary.

A Worked Monthly Example

When customers compare used car prices in Singapore, we may illustrate the car ownership cost of a practical used vehicle as follows:

This illustrative estimate is based on a $100,000 used car with six years of COE remaining, a $20,000 expected deregistration value, approximately 16,400 km of annual driving, fuel efficiency of 12 km per litre, and the stated monthly allowances for financing, insurance, road tax, parking, ERP, servicing, and repairs. 

What We Have Learned From Buyers

We often find that customers who establish an all-in monthly ceiling make more sustainable choices than those who begin with a preferred model.

A lower-priced older car is not automatically cheaper if it requires an additional $2,000 to $3,000 in repairs during the first year. Similarly, paying slightly more for a fuel-efficient, well-maintained vehicle may reduce monthly uncertainty.

We also recommend keeping a buffer of roughly 10% above the estimate. A calculated monthly expense of $2,000 would therefore require a working budget closer to $2,200.

Plan Your Purchase With M Motors

At M Motors, our years of experience allow us to look beyond surface-level pricing and understand how a vehicle may fit into your wider financial commitments. We take the time to discuss usage, depreciation, condition, and potential running expenses so that your car ownership cost remains manageable after the keys have been handed over.

Contact us to discuss your budget and explore a vehicle that suits how you actually plan to drive.