What are the Car Sales Terms in Singapore?

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Every profession has its own terminology. If you belong to that profession, it will be quite easy for you to understand. But if you are novice to that field then you cannot comprehend anything. One need not bother, if one cannot make out an unimportant thing. But, when you are buying a car, it involves huge amount of money and loads of legal documents to be attached.

Unless you are very proficient with the terminology used in the car sales field, it will be very difficult for you to take further step to go ahead with the transaction. Sometimes, it will be even worse that you end up doing some grave mistake which may lead you to unfavorable consequences.

To save you from such kind of situation, here we have come with the terminology that is frequently used in the documentation and other areas of the car sales field.

Authorized Dealers (ADs)

This word refers to those who have exclusive distribution rights of a particular brand of car from its manufacturer. The vehicles that we buy from these dealers have the direct support of the manufacturers. For example, Performance Motors Limited for BMW.

Parallel Importers (PIs).

They are not the official distributors of the manufactures. They directly buy cars from the manufacturers and import them into Singapore. They can import any car of any make from any company as there are no restrictions that they have to sell only a particular brand of car.

Lemon Law

As stated by the Consumer Association of Singapore (CASE), buyers can take legal action against the dealers, if the buyers are not satisfied with the condition of the car or its performance or if it has some defects, within six months of its purchase they can sue them and get compensation for the damages or total replacement for the car from them. This is called ‘Lemon Law’ and it applies to used cars also. The used cars condition will not be as perfect as the new cars and keeping this in your mind you should proceed to take action against them, in case something happens to your used car in future.

Depreciation

It is the amount of value of a car that reduces over a period of time. Usually, during the first 3 years a car’s depreciation rate will be high and stabilizes eventually. Depreciation is calculated annually. It is calculated by Total cost (at the time of purchase) – Sale value (at the time of Sale)/ no.of years used.

Non-Guaranteed COE

From the very name itself we can understand that, despite purchasing the car there is no guarantee that you will get the COE as well. The dealer offers you a package in which you have to pay the booking fee. Usually, the COE bidding exercise are for 3 months and there is no guarantee that you co

Guaranteed COE

In this the dealer will agree to get the COE for a certain price. This is the Guaranteed COE. But make note of some changes that may happen in this process like discounts, number of bids and additional top-ups. Once you agree for the Guaranteed COE with the dealer you can rest assured that it will be done.

Indent Stock

When you like a particular car model and want to purchase from the dealer, but it is out of stock, then he will indent or order the stock from the manufacturer. This type of placing the order is called ‘Indent Stock”. He has to order, and with the manufacturer also it should be in stock or else it as to be manufactured and then only delivered. But this whole process takes time and the delivery date will be delayed usually by months.

VAC Ready Stock

The full form of this is ‘VITAS Approved Code Ready Stock’. In Singapore, the LTA and Vehicle Inspection & Type Approval System will conduct all the necessary checks, and tests for all the vehicles to be registered and driven on roads. If a dealer has VAC Ready Stock, once their COE is registered, the vehicles can be delivered within a week.

Down payment

When you buy a car, you have to initially pay certain amount of money. It depends on Open Market Value of the vehicle. If the OMV of a vehicle is less than $20000, then 30% has to be paid as down payment. If the OMV is more than $20000, 40% is to be paid as down payment.

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In-house Financing

It means that when you approach a dealer to buy a car, your car loan will be given by the dealer himself. It’s not through any Bank or any Financial Institution. Usually, the interest rates will be very high in this type of financing. Make sure to compare the interest rates and other loan conditions before you proceed to buy from them.

In-house Warranty

This means that either the dealer or the parallel importer of the car will directly offer you the warranty scheme. In future, you want to take your car for servicing, it can be done at the Dealer’s workshop or a partner workshop.

Additional Registration Fee (ARF)

This is the tax that will be imposed when you register your new car. It plays a key role in determining the Preferential Additional Registration Fee (PARF) Rebate that in turn is a part of vehicle’s deregistration value.

Overtrading

When you go to trade-in your vehicle, some dealers may tempt you with some offers. They increase the trade-in value of your car and deduct that amount from the total cost of the new vehicle. As there are many hidden costs included in that, be cautious in reading the conditions otherwise you will end up paying more.

Vehicle Emissions Scheme Rebate

In Singapore, to curb vehicle emissions a Rebate was given to clean vehicles and more surcharged was levied on polluting vehicles. This is called VES Rebate. The VES band under which all new cars are grouped, determines whether the vehicle has the eligibility for the rebate or not.

Balloon Scheme Financing

In this type of financing, you will be given an option of paying your monthly instalments lower in favour of one time bulk payment at the end of the loan tenure. But the monthly interest rates will be higher than in the other types of financing. Finally, you end up paying much more than what you really have to pay. Some buyers think that it’s a better option as it gives them some breathing time initially to pay the loan.

Hope this terminology will be useful for your future transactions. For any other guidance, we at BRZE are always available. Please do not hesitate to contact us at BRZE.