If you are a car owner in Singapore and your car is nearing the 10-year mark, you will be faced with the dilemma of either scrapping your car altogether and purchasing a brand new car or you could think of renewing the COE of your old car. If you are planning to purchase a new car, then you do not have to go through the process of getting the Certificate of Entitlement or COE renewed. However, if you are in two minds about whether to renew the COE or purchase a new car, there are many aspects that you must consider. Here is a list of things that you should look at before you take a decision.
You can renew the COE of your old car if it is still in good working condition. One major benefit of renewing the COE of your car is the low depreciation over the years. There are many cars in Singapore which if maintained properly can be used even after they are over 10 years old and would still cost less than a new car. If you wish to keep them even after they are 35 years or older, you can even register it as a classic. However, you must be willing to pay a premium for expenses such as servicing costs, road taxes, frequent inspections, and a lot more.
The Prevailing Quota Premium (PQP) which you will have to pay when you renew your COE is different for different categories of vehicles. PQP is the moving average of COE prices in the last three months and it varies every month. The table below shows the PQP rates for different categories of vehicles from September 2017 onwards:
(1,600 cc & below)
(1,601 cc & above)
Good Vehicles & Buses
So after going through the table above, you can get a better understanding of how much you will have to spend on upfront costs when you decide to renew your COE.
If you scrap your old car and purchase a new one, there will be many insurers who will be willing to offer car insurance. However, if you choose to renew the COE you will find it quite difficult to get comprehensive coverage for your car. Most insurers will offer you fire and theft and third-party insurance at best. To get comprehensive coverage you will have to put in a lot of effort and time to find out which insurers are willing to offer you comprehensive car insurance.
When you opt for renewing the COE of your car, you will have to spend a lot on the servicing of your car even if you have maintained your car properly over the past decade or so. For example, you will still have to take into account the fact that most vehicles will require parts that will have to be replaced and other repairs to ensure the car runs smoothly. Therefore, you will have to set aside a few thousand dollars when you choose to renew the COE. If the car you own is no longer produced, then it would be even more difficult to get spare parts.
In addition, there are numerous stringent annual inspections introduced by the Land Transport Authority (LTA) for cars older than 10 years. If you wish to continue using your car when it is older than 10 years, it will have to pass these checks and you will be charged for such checks. If your car fails even a single check, you will have to take it to the workshop and fix the issue and go for another inspection that will again lead to more expenses.
On the other hand, if you are opting for a new car, most manufacturers will offer a warranty for the first few years of the purchase.
When you choose to renew the COE of your car, you will have to pay a road tax surcharge. This surcharge goes up by 10% every year after the first 10-year period up to the 14th year. After that, you are supposed to pay a 50% surcharge each year until the end of your COE. On the other hand, for brand new cars there are no additional surcharge applicable on the road tax.
If you choose to deregister your vehicle before your COE expires, you will receive a portion of your money back in the form of the Preferential Additional Registration Fee (PARF) rebate. To know how much you could get back, you have to take into consideration two factors - the ARF (Additional Registration Fee) value and the age of the vehicle. The table given below shows the PARF rebate that you will get based on the age of vehicle:
|Age of the vehicle at the time of deregistration||PARF Rebate|
|Over 10 years||NA|
|Over nine years but less than ten years||50% of ARF|
|Over eight years but less than ten years||55% of ARF|
|Over seven years but less than ten years||60% of ARF|
|Over six years but less than ten years||65% of ARF|
|Over five years but less than ten years||70% of ARF|
|Less than five years||75% of ARF|
In the end, you should decide for yourself whether to purchase a new car or renew the COE based on the state of your current car. If you are spending too much already in maintaining your car, it is a reasonable assumption that you will only end up spending more in the future, so you could consider buying a new car. In contrast, if your car is not giving you any difficulties and is offering a relatively decent mileage and requires fewer trips to the workshop, extending the COE might be a cheaper option.