​Car Sales Terms Every Car Owner in Singapore Should Know

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Motorist Car Sales Terms
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When buying a car for the first time, you might be bombarded by a bunch of acronyms and car sales terms you might not be familiar with.

These terms and jargons might confuse first-time car buyers and cause them to make the wrong choices. Thankfully, we at Motorist have created this handy guide to help you make a smarter and more informed decision before buying a car.

Without further ado, let’s dive right in.

Authorised Dealers (ADs)

Refers to the car dealer that has distribution rights for a certain car brand from its manufacturer. This means that vehicles bought from such dealers are supported directly by the manufacturers. Such authorised dealers include Borneo Motors for Toyota, and Kah Motors for Honda.

Parallel Importers (PIs)

Apart from Authorised Dealers, you may also choose to buy your vehicle from Parallel Importers or PIs. These are companies that are not appointed by the manufacturer to be an official distributor. Instead, PIs usually buy the vehicles directly from the factory and import them into Singapore. As they are not limited by distribution rights, PIs are able to sell any make of car they like and are sometimes seen as the preferred choice due to the cheaper prices.

Non-Guaranteed COE

As the name suggests, there is no guarantee of securing a COE despite purchasing your car. In this package, you pay a booking fee and the dealer bids for a COE for a fixed period, usually to a maximum of three months. If he fails to obtain a COE, he will refund you the booking fee. Do note that this is the least favoured COE package, as buyers are often at the mercy of the Dealer. FYI, they can make you wait for three months before telling you that they have failed to obtain a COE for you.

Guaranteed COE

In contrast, a Guaranteed COE means that Dealer is obligated to obtain a COE for you, usually at an agreed-upon COE price. Do note that there might be modifiers to it, such as top-ups, the number of bids, rebates, etc. This COE package is usually recommended as you will definitely get your car within one to three months.


Stands for Additional Registration Fee, a tax imposed when registering a new vehicle. The ARF is calculated based on a vehicle’s Open Market Value (OMV), the formula of which can be found here. The ARF also determines a vehicle’s Preferential Additional Registration Fee (PARF) Rebate, a component of a vehicle’s de-registration value.

Balloon Scheme Financing

A Balloon scheme financing is a type of car loan that leverages a car’s PARF Rebate. It gives lower monthly payments in favour of a larger lump sum payment at the end of the car’s lifespan. Overall interest rates for this scheme are usually higher than that of a conventional car loan, which will result in an overall higher price paid overtime. However, many new car owners may prefer this scheme as the lower monthly payments allow for more financial flexibility while giving more time for the owner to save in preparation for the final lump sum payment. This scheme would benefit you most if you are sure you’re going to stick with your vehicle for its entire 10-year lifespan, as you’ll be able to use your PARF Rebate to offset the final payment.


The amount of value your vehicle loses over time, usually calculated in $/year. The annual depreciation of a car is usually calculated as follows:

(Total Cost of Vehicle – Sale Value of Vehicle) / Number of Years in Service.

For example, a brand new Honda Jazz 1.3 is sold at $73,999 and assuming a scrap value of $5,000, someone who buys it and drives it for the full ten years would see a depreciation of ($73,999 – $5,000) / 10 years = $6,899. Other factors like mileage and vehicle condition also play a part in how much value is lost throughout your ownership.


A downpayment is a partial amount a prospective owner has to pay first for a new vehicle. It is dependent on the Open Market Value (OMV) of the vehicle. For cars with an OMV below $20,000, a 30% downpayment is required. For vehicles with an OMV above $20,000, a 40% down payment is required. This also means that you are only able to take loans for 70% and 60% of the vehicle’s value, respectively.

In-house Finance

It refers to a loan scheme offered by the Dealer themselves as opposed to a loan from a bank. However, these in-house schemes can often be out to get as much money out of you as possible, so do your research and compare it to other available loans before signing anything.

Indent Stock

This refers to when a dealer does not have the specific model you wish to purchase in stock and has to indent an order from the factory or the manufacturer. This will, of course, affect your delivery date as the vehicle has to be ordered, manufactured, and then delivered. This entire process can take anywhere from one to six months.

VAC Ready Stock

VAC stands for VITAS Approval Code Ready Stock. This refers to vehicles that have already undergone all necessary tests and checks by the Land Transport Authority (LTA) and Vehicle Inspection & Type Approval System (VITAS), and is ready to be registered and driven on the roads. Such vehicles can be delivered to customers within a week, once their COE is registered.

In-house Warranty

Refers to a warranty scheme offered directly by the Authorised Dealer or Parallel Importer for owners to service their cars either with the Dealer’s own workshop and service centre or a partner workshop with the Parallel Importer.

Lemon Law

Buyers are entitled to legal action against their dealers if the purchased vehicle is not of satisfactory quality, not fit for the purpose it is obtained for, or not meeting reasonable performance expectations, as stated by the Consumer Association of Singapore (CASE). Within six months of purchase, buyers can seek compensation or replacement from their dealers if the vehicle bought has defects or irreparable faults, respectively. The Lemon law also applies to second-hand cars. However, buyers must be aware that the condition of a second-hand vehicle cannot reasonably be the same as a brand new one.


When buying a vehicle, your Dealer might throw this term at you with the lure of a cheaper upfront payment. This is done by raising the value of your trade-in vehicle, and offsetting that from the cost of the new car. For example, a buyer of a $100,000 new car will need to put down at least $40,000 as a downpayment. In overtrade, the seller will raise the car price to $110,000, and at the same time giving $10,000 more than what the trade-in car is worth. Even though the buyer now needs to pay $44,000 for his downpayment, he will receive an additional $10,000 more for his trade-in. Effectively, he only needs to fork out $34,000 for his initial payment. However, you will need to read the fine print and calculate whether this is beneficial to you or not.

VES Rebate

Introduced in 2018, the Vehicle Emissions Scheme (VES) added upon the CEVS scheme

which aimed to curb vehicle emissions in Singapore by offering a rebate to cleaner vehicles and a surcharge on more polluting cars. All new cars are classed under a specific VES band, and that band determines whether you’re eligible for a rebate or are required to fork out an additional sum of up to $20,000.

With this new information, go forth and make better informed decisions on your future car purchases or sales.

Did we miss out on explaining any other car sales terms used in Singapore? If we did, do let us know in the comments below!

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