Hi,
Please be prepared because the cold hard facts are not exactly
pleasant to know......
Seems like you're one of the many who are caught at the losing end
of our "car casino" ( otherwise known as "car market" ). I'll try
to answer your questions in point form....
(1) If you SCRAP your car by yourself by driving it to a scrapyard,
you will get $38k back...in which case, yes, its a big loss. You
must also remember that you cannot get the $38k back in
cash....its just an electronic record in LTA's computers that they
are holding $38k of your money. The ONLY thing you can do is to buy
another new car with it. Its important to remember that you cannot
get the scrap value back in cash, if you de-register the car
yourself.
(2) If you ask a car dealer to SCRAP it for you, they will discount
about 6.5-7.0% from your scrap value - unfortunately, this is the
market rate now. The rest is their profit. The only advantage is
that you will get cash back.
(3) If you SELL your car to buyer directly, the very rough asking
price now will be as follows: http://www.sgcarmart.com/main/info-2foaBeQB-1000.html.
Actual selling prices will be up to a few thousand below asking
price. Used cars don't sell so fast now, so some patience is
needed.
(4) If you SELL it to a car dealer, the price will be quite a few
thousand lower than the asking price as shown above - because the
car dealer needs to make a profit. However, I have doubts if used
car dealers will be keen to take your car in now...because they're
all overstocked with cars which can't move. If you go to the
Automobile Megamart at Ubi, you will see 6 stories of used
cars....and maybe 10 potential customers walking around.
(5) I'm afraid that you're also right in that after
selling/scrapping, you still have to pay the bank for the remaining
loan - at one go. I don't know about your loan agreement, but some
banks do give rebates for interest if you settle the loans early -
better to check with your bank.
(6) Unfortunately, brand new cars lose most of their value (highest
depreciation) in the first 2-3 years of their lives. Sometimes,
even 40-50% of it within 3 years. Your case is not that bad
already....I know people who lose S$50k in 2 years!
(7) Well, it is not really unfair, because the buyer is expected to
know the conditions before he/she enters the deal. But I know it
comes as a shock and it hurts like hell. Lots of people have gotten
caught in situations like yours, so you're not alone.
I'm sorry for throwing bricks at you, in giving you directly these
cold hard facts. I hope its not an urgent case that you need to get
rid of your car.
My advice to you is to keep the car for now if you can.....till its
at least 5 years old, then examine selling/scrapping it again to
see if its better (by then, the depreciation per year would have
dropped significantly). If its really urgent, then try to share the
car with a family member - eg. try to get your
brother/sister/parent/spouse/whoever to use the car half the time,
and help to pay for the instalments.
Post Script
I'm going off on a tangent here.....(nothing to do with your
case).....
This case illustrates what many people here have asked questions
about. As I've always stressed....just because the COE is low,
doesn't mean that brand new cars are good buys. In any business
decision (cars, shares, forex, etc), you not only need to know the
buying price, but also the selling price.
Also, it is never advisable to take a loan with too long a tenure,
or with too big an amount.
