Only buy a car if you feel the cost of owning and maintaining one is worth the convenience. Find out how much it will cost you to own a car, what you can afford and how car loans work.

Owning a car is an aspiration for many people. You may think it is a necessity, but are you prepared for the costs of buying and keeping a car?

Before you decide to buy, think about other ways of commuting. Can the bus or MRT meet your needs? What about taxis or private hire car services?

Try adding up the cost of each journey you and your family make every day. Compare this to the cost of owning and running a car. Owning a car may not be the best option.

How much does it cost?

Buying a car is expensive. Even an entry-level car will need substantial cash to upkeep over 10 years.

The value of a new car drops the moment you drive it out of the showroom. If you need to sell it later, you will likely find that the price you receive may not be enough to pay off your car loan.

Factor in all costs of buying

Don't only look at the showroom price but factor in all the other often forgotten costs of car ownership. See if it is really worth buying a car when you work out your sums.

Add up all these:

• Cost of car
• Certificate of Entitlement (COE)
• Interest costs of financing
• Road tax
• Motor insurance
• Parking and Electronic Road Pricing (ERP)
• Petrol - use the Fuel Cost Calculator for your particular make and model
• Servicing and repair

Taking a car loan

A car loan is an additional debt. If you need to take a loan to buy a car, work out what you can afford to borrow first. Check your budget to make sure you have enough money for upfront payments to buy the car, service the loan and other expenses that come with owning a car.

Your car dealer is likely to introduce to you some car financing packages. They will even offer to help you apply for it.

Lenders may quote different interest rates. The methods of computing interest may vary as well. Find out more about the actual interest cost and compare all your options.

Check if there are any penalties if you wish to settle the loan earlier.

Insuring yourself

It is against the law to drive a car without valid motor insurance to cover personal injury to the other party.

There are three main types of motor insurance policies:

• Third party policies
• Third party, fire and theft policies
• Comprehensive policies

Learn more: Motor insurance