In the month of June, 64,822 new vehicles were sold, close to 50% more than what the average has been in 2018. The industry expects July to be another bumper month and likewise in August before the sales and services tax (SST) makes its expected return in September.
It’s okay if you care more about the national debt than your household debt, as long as you can afford to finance the new car for the next seven years, or nine. After all, nothing is sweeter than inhaling that new car scent. But apart from reading the fine print of the hire purchase document, you also have the small matter of disposing the current car. And this is where things get tricky.
With every new car sold, a used vehicle is probably being traded in – that’s how things work. It is also common for used vehicles to be traded in at around 30% below the market price to facilitate the timely purchase of a new car. But with the sudden rise in the number of used vehicles in circulation, residue values are likely to be further suppressed, which can offset whatever GST savings of a new car. Of course, an owner can elect to sell it on his/her own, but that process is likely to take longer since car buyers are more interested to buy new at this time.
So, while there is still time to take advantage of the GST tax holiday, do consider the nett savings in relation to what your current car is worth when it is traded in. Even if you miss this window of opportunity, there will always be attractive promotions (read discounts) as car companies still need to sustain sales in the post-SST period. Even better, maybe give your current ride a new coat of paint or a set of new tyres, you might fall in love again without having to sign up for another nine years of debt.