The Car-and-COE Cash-Flow Trap

A car in Singapore is not a transport decision; it is a five-figure-a-year cash-flow decision, most of which is pure depreciation.

Nowhere is the gap between a need and a want clearer than a car in Singapore. The Certificate of Entitlement — the licence merely to own a car for ten years — recently cost around S$126,000 for a mainstream category (Category A, first June 2026 bidding; COE prices move sharply, so check the latest LTA results). That is before the car itself.

The trap is mental accounting: buyers anchor on the monthly loan instalment and ignore everything around it. The honest figure is the total monthly cost of ownership, which folds in depreciation (the COE and the car's value steadily melting toward zero over ten years), petrol and ERP, road tax and insurance, parking, and servicing. Add it all up and a typical car can cost well over S$1,500–2,000 a month — most of it depreciation, which is money you never get back.

None of this means never own a car; for some families the convenience is genuinely worth it. The point is to see the real number before deciding, and to weigh it against what the same sum could do elsewhere — a far larger buffer, years of investing, or simply a much lighter monthly budget.

Whatever you choose, choose with the true cost in front of you, not the instalment alone.

Illustrative example: the true monthly cost

The chart breaks the monthly cost of car ownership into its parts and totals them. The loan instalment people fixate on is only one slice; depreciation and running costs make up the rest. Seen whole, a car is one of the largest recurring wants a Singapore household can take on.