Are you a car owner living in Singapore? If yes, then after 10 years of ownership, you will have to take a decision on whether you want to continue using it by renewing the COE or Certificate of Entitlement or you wish to send it to the scrap yard. A COE is a certificate that entitles you to own a car and use it on Singapore roads for a period of 10 years.
There are many in Singapore who prefer to send their car to the scrap yard after using it for 10 years, but there are others who feel that their car is in perfect condition and can be used for a few more years. If you are thinking of renewing the COE of your car, then you must consider the following factors before doing it:
1. The Best Time to Renew the COE
Like most other things in your life, it is good to plan well in advance before taking a major decision. It is the same with renewing the COE of your car. Ideally, you must make a decision at least 6 to 10 months before it expires. You have to consider things such as forgoing your PARF or Preferential Additional Registration Fee.
If you own a European brand, the amount that you will forgo as PARF will be huge unlike with Asian cars. For example, a 2008 Honda Accord might have an Additional Registration Fee close to S$25,000 which means that you will have to give up close to S$12,500 as PARF rebate. In comparison, for a Mercedes E Class, the Additional Registration Fee will be close to S$50,000 which means that you will have to give up close to S$25,000 as PARF rebate.
Even if you do not plan on renewing your COE a year before it expires, make sure you do it at least three months in advance as by the time you get a new COE for your car, the old one might no longer be valid and your car may be considered a scrapped car immediately.
2. Payment of an Additional Surcharge on Road Tax
If you continue using your car which is older than 10 years, you will have to pay an additional surcharge on your car’s road tax, starting from an additional 10% to up to 50%. For cars with a large engine capacity, the additional surcharge will be much higher. In addition, with each passing year, the surcharge will grow further. For example, for a car with an engine capacity of over 2,000 cc, the payable annual road tax at the end of the 10th year will be around S$1,500, at the end of the 11th year it will be around S$1,800 and so on.
3. Paying Prevailing Quota Premium or PQP
Prevailing Quota Premiums are the moving average of Quota Premium COE prices which you need to pay to the Land Transport Authority (LTA) that vary each month based on the COE prices of the bidding exercises in the last three months. If you fail to renew your COE, you will have to pay a late renewal fee in addition to the PQP for the last month.
The late renewal fee varies from vehicle to vehicle. If you are renewing the COE of your car, you can do it for five years and pay just half the PQP at the time of renewal. However, you must note that if you renew the COE for a period of five years, you will not be able to extend the lifespan of your car any further.
4. Renewing Your Car Insurance Together with COE
In addition to renewing your car’s COE, you must also consider purchasing a new insurance cover to keep your car protected if you meet with any unfortunate incidents, instead of renewing your current policy. It is a good time to re-evaluate your options as you may find better policies than what you purchased one a decade ago. However, your options might be limited as there will be fewer insurers for cars that are over 10 years old. For example, AXA offers a comprehensive cover for cars which are as old as 20 years.
5. Taking a Loan to Renew the COE
It is not a commonly known fact, but there are a few financial institutions that offer loans to renew your COE. However, there may be certain terms and conditions that you must read before choosing to apply for one to make sure it is a favourable option. You may also not get a loan approval to pay for the entire amount for renewing the COE, but it is still an option if you do not find any other way out.
6. Your Car With a Renewed COE Will be Eligible for COE Rebates Even After it Gets Deregistered
Even though you will be giving up your PARF rebates when you renew your COE, you will still be eligible to get a rebate if you choose to deregister or scrap your car. For example, if you renew your COE for a period of 10 years but decide to deregister your car after 7 years, you will be eligible for a refund. The refund will be awarded on a prorated basis depending on the amount of COE remaining. This is something that you can consider as your COE-renewed car will have some outstanding value after renewal.
7. Different Methods of Renewing COE Have Different Processing Times
You can make the payment for renewing the COE in the following ways:
- At the LTA Customer Service Centre
- Through Post
- Through the internet
If you pay through internet banking or through the LTA Customer Service Centre, your COE will be renewed much faster. On the other hand, if you choose to use the traditional way of making the payment, by post, you must do it at least 2 weeks before the expiry of your COE.
With the information mentioned above, renewing the COE of your car does not have to feel like an overwhelming task. You will also be better prepared to make an informed decision of whether it is feasible to renew your COE or not.