Buying 2nd hand car procedure question

[Pelican]

Hi,

 

i am considering to purchase a 2nd-hand car but i am not very familiar with the procedure. I have several questions. Can anyone provide me some advise?

 

i currently own a normal black plate sedan car. intending to sell my car and buy another 2nd hand car.

 

My car has 7 years loan, now at 4plus year.

 

Q1) Assume the 2nd hand car i am going to buy is 3 years old, what should i do first?

 

- buy the 2ndhand car, then sell my car? (will the bank approve my loan since i already have an existing car loan which i havent sell yet)

 

- or sell/trade-in my car, then buy the 2ndhand car?

 

Q2) If the 2ndhand car has 5 years left, is it possible to get 7 years loan? or i can only get a maximum of 5 years loan?

How about a car left 3 years? What is the max year to loan?

 

Q3) i still have $20k outstanding loan for my car.

If i sell my car for $42k in the resale market, does it mean i will get back $22k cash?

is there any other hidden fee that i need to pay anyone or the govt/LTA?

 

Q4) i always hear people talk about breakeven. May i know what does breakeven actually mean when changing a car? Eg. 7 years loan, 5 years is the best time to change car?

 

 

Sorry for the many newbie questions.

[XALmoN]

if i'm not wrong, breaking even is when your car is worth as much or more than than the outstanding loan repayment amount.

[Davidklt]

If you are buying from a dealer, they should be able to help you.

[Galantspeedz]

If you are buying from a dealer, they should be able to help you.

 

help him or carrot him? lol

[Jj5599]

If you buy a car from dealer, they can help you. However, if you buy from an owner, suggest you get in touch with someone from a finance company who will do the paperwork for you. Thats what I did.

[Iisterry]

Q1) Assume the 2nd hand car i am going to buy is 3 years old, what should i do first?

 

Check out the car, negotiate a price. Source for a buyer or trade-in your existing car. Arrange for the swap-over to be on the same day so you can settle everything together.

 

Most banks will still approve, they might ask if you are going to sell your current car. Some banks will insist that you produce a settlement receipt for the existing car before disbursing the new loan.

 

Q2) If the 2ndhand car has 5 years left, is it possible to get 7 years loan? or i can only get a maximum of 5 years loan?

How about a car left 3 years? What is the max year to loan?

 

Car loans are "secured loans". You can loan a maximum of remaining COE lifespan less 1 month.

 

Q3) i still have $20k outstanding loan for my car.

If i sell my car for $42k in the resale market, does it mean i will get back $22k cash?

is there any other hidden fee that i need to pay anyone or the govt/LTA?

 

You get back 22k cash. Buyer pays the transfer fee.

 

Q4) i always hear people talk about breakeven. May i know what does breakeven actually mean when changing a car? Eg. 7 years loan, 5 years is the best time to change car?

 

There is no such thing as break-even. That term is for peasants.

 

You have 2 variables involved. One is a depreciating asset (your car). The other is your reducing debt (your loan). So long as your outstanding loan is less than your car value, its mis-termed "broke-even".

 

Generally for a full car loan, you need to drive approximately slightly over half the loan tenure to "break-even".

[Crazecow]

Just to add for question Q3. Its not that straight forward if you are selling youtself.

 

This is because the finance company requires you to clear up all outstanding loans before they will release the car (they call it form B or something).

 

Thus, you have to pay cash upfront to clear the loan before you can sell the car. If you sell the car while its still under load, the buyer will not be able to do transfer of ownership till your loan is cleared.

 

If you do not have sufficient cash upfront, you have to negotiate with the buyer to pay you first, then you clear the loan and only do ownership transfer later. Of course, the buyer should be allowed to collect the car once he has paid.

 

Btw, once you sold the car, remember to cancel your insurance and get back remaining $$$. If not its your lost. Some companies also allow you to transfer to new vehicle.

[Pelican]

thanks for answering my questions.

 

Never thought of buying 2nd hand car in the past, so this is really informative.

 

Now new car is really expensive because of the coe so getting a reasonably new 2nd hand car is more affordable.

[Jli4]

good idea, with COE so high now, better to buy used cars with low COE

[S4logasa]

If Im planning to buy a 5yr old car with 5yrs COE left (Budget constraint), does it make sense to put a downpayment and pay off remaining loan in monthly installments for the next 5yrs? Doesnt this also means once the loan is fully paid, its also time for the 10yrs old car to be scrapped?

 

What will be a better option of repaying car loans for 2nd hand cars?