Buying a New Car
A brand new car, equipped just the way you want it with a full factory warranty and that new-car smell is an attractive proposition. Buying a new car in Japan is an option for those interested in driving the same vehicle for many years and willing to assume full responsibility for maintenance and repairs. Buying is not a popular option for expats in Japan because:
- It is challenging to obtain financing with no credit history in Japan
- Residing here short term makes it impractical and expensive
- Arranging maintenance, repairs, and performing required administrative tasks is difficult with the language barrier
Instead, most foreign residents who want a new car find leasing the best and most hassle-free option available to them. However, if you are still interested in buying, the first thing to note is the deceptively low sticker price at car dealerships. Sticker prices in Japan reflect neither the real cost of car ownership nor the actual purchase price you will pay “out the door.” Instead, the sticker price includes only the purchase price of the car and consumption tax. The price you will pay will be higher when you include:
Vehicle Registration
The cost of vehicle registration is relative to how much of the process you are either willing or able to complete yourself. You will need to receive documents from your ward office, landlord, and local police station. These will need to be taken to the vehicle registration office to register your car. None of this process is in English.
Shaken Inspection
Shaken is commonly referred to as a “vehicle inspection.” It is a mandatory 60-point inspection, which includes both essential safety equipment (headlights and indicator lamps) and functional equipment (tires and wheel alignment, brakes, speedometer, emissions, suspension, steering, driveshaft, muffler, engine (oil or coolant leaks), etc.
A shaken inspection is required:
- For initial registration at purchase of a new car
- Three years after the initial registration of a new car
- Every two years after that in perpetuity
The final cost of each shaken inspection will depend on how many parts the mechanic replaces for your vehicle to pass inspection. The fees for foreign car shaken inspection tend to be 20% higher than their domestic equivalent, but the typical cost of the inspection is between JPY 100,000 and 200,000.
Annual Vehicle Tax
Based on the engine size of the vehicle in 500cc increments. (0-500cc, 500-1000cc, etc.) Smaller engines incur less tax than larger engines. Annual vehicle taxes run between JPY 30,000 and 80,000 each time.
Weight Tax
Weight Tax is based on the curb weight listed on the shaken certificate of the vehicle, measured in increments of 500kg. This tax is paid when purchasing a new car or when renewing the shaken. Weight taxes run between JPY 10,000 to 80,000 each time.
Acquisition Tax
Paid when purchasing a new or used car that:
- Is no more than six years old
- Has an *acquired value of over JPY 500,000. (*not the purchase price)
The Acquisition Tax is hard to estimate, but a two-year-old car will likely be taxed around JPY 50,000.
Recycling Certificate
This certificate proves the owner has pre-paid for the required legal disposal of their vehicle at the end of its useful life. The amount paid is based on the volume and material composition of the car. A recycling certificate generally costs between JPY 10,000 and 50,000.
Compulsory Liability Insurance (CALI or JCI)
This insurance coverage is legally required and protects the driver from liability if a third party suffers an injury in an at-fault accident. The policy is purchased as a part of the shaken process and covers the shaken period. Mandatory Liability Insurance can cost between JPY 30,000 to 40,000 each time.
* Drivers should note that compulsory coverage is very limited in its protection, and additional optional insurance is highly recommended.
Buying a Car From a Dealer
The benefit of buying a new car from a dealer, besides the new car smell, is the convenience of having all the registration and paperwork largely taken care of for you. Registering a car in Japan can be challenging, especially if you don’t speak or read Japanese.
To buy from a dealer, you will need:
- Valid international driver’s permit and foreign drivers license or Japanese driver’s license
- Copy of your Residence Card
- Original Resident Certificate issued by the ward office within the last three months (a Juminhyo)
- Seal Registration Certificate from the ward office (an Inkan Toroku Shomeisho)
- Your registered hanko, or name stamp (recorded at the ward office)
- Car park certificate from the owner of the property or car park where you will park the car
- A loan from a bank or credit agency (you will need a guarantor, and even then, it is a bit iffy)
- Cash upfront
Pros of buying a new car in Japan
- New car smell
- The dealer will complete most, if not all, required paperwork for you.
- Once paid for, the car is yours and free of car payments.
- If you can sell your car when you leave Japan, you may be able to recoup some of your money back.
Cons of buying a new car in Japan
- In the event of an accident or other problem, you will be solely responsible for all paperwork and payments.
- You are responsible for the ongoing maintenance, paperwork, and ownership costs, such as periodic shaken inspections and annual vehicle and weight taxes.
- You must sell the car or arrange or and pay for its disposal when you leave Japan.
- Unlikely to be more economical if residing in Japan short term
- Requires full amount in cash if you cannot arrange a car loan
Due to the difficulty of obtaining a loan, the short-term nature of expat assignments of only two or three years, and the lower upfront costs associated with leasing, most expats lease their car for the duration of their time in Japan.
Buying a Used Car in Japan
Buying a used car in Japan is similar to the process of purchasing a new vehicle, requiring many of the same taxes and forms a new car does.
Used cars are good bargains in Japan primarily because of the shaken system. A new car’s shaken is valid for three years, at which point the vehicle must once again pass the mandatory 60-point inspection (costing between JPY 100,000 and 200,000) to renew the registration. After that, the shaken must be renewed every two years. The result of this is cars are sold just before the shaken runs out by people who prefer instead to buy a new car and let their dealer handle it. This shaken impact creates a phenomenon where most used cars for sale are 3, 5, 7, 9, or 11 years old. When buying a used car, the first thing to note is the length of the shaken remaining.
Buying from a dealer
Buying a used car from a dealer is relatively straightforward; they will handle most of the paperwork and leg work, making the process simple; pick out a car, paying the dealer, filling in some forms, and getting on the road in a “new to you” car. Dealers also provide the ability to wander a lot and see the actual vehicles they have on offer. Still, they do not offer much in terms of the car’s history, mostly require Japanese ability to deal with, and there are still issues getting loans as a short-term resident.
Private Sales
Buying a car directly from its previous owner is less common in Japan, but it offers significant benefits for buyers and sellers. The seller gets more than they would if they traded it in, and the buyer gets a lower price compared to a dealer. On top of that, private sales between individuals are tax-exempt, saving you even more. The downsides of private sales are that loans are not possible, and the buyer must complete the paperwork and assorted leg work.
Auction Sales
Auctions sales through Lease Japan are an excellent way to get the car you want for the price you need. What is an auto auction? Auto auctions are where car dealers and exporters make bids to buy cars wholesale. Every week tens of thousands of vehicles are sold at auction at many locations throughout Japan, and among them, you will find almost any type of car you can think of in any budget range.
How it works
When a car is submitted to the auction for sale, it is inspected by the auction house, whose inspectors add it to an online database of photos and information, including:
- Engine size, condition, and mileage
- Year
- Exterior condition (rating) and color
- Interior condition (rating) and color
- Shaken expiration date
- Service history (accidents, maintenance, major repairs)
Once uploaded, members of the auction can search available cars and decide which they want to bid on during the auction.
Auction Sales
Lease Japan specializes in helping expats find cars that suit their needs while offering a level of service that exceeds their expectations. If you are looking for a reasonably priced, quality used car with low mileage, the easiest way to find it is to let Lease Japan’s professionals find one for you amongst these auction cars.
In addition to the official inspection by the auction house, Lease Japan’s inspectors will thoroughly check the car on the day of the auction before submitting a bid. Our strict inspection process means you can buy with confidence, and all our sales come to with:
- All English language service
- Assistance with registration and paperwork
- Your car delivered to your door
- Assistance with car insurance
