When nearing the 10-year mark of your COE, should you renew? Or should you just buy a new vehicle?
Editor's note: COE bidding happens twice every month. The figures below were last updated on 18 July 2019.
Most car owners approaching the 10-year mark will inevitably ask themselves, “Should I renew the COE of my car, or should I buy a new vehicle?”
More often than not, most individuals will choose to buy a new one. After all, who wouldn’t want to drive around in a brand-new car? However, with the rising costs of car prices, and the increase in taxes and surcharges, renewing one’s COE might actually be a more viable option from a financial standpoint.
If you’re still on the fence, this article will (hopefully) convince you to renew your COE instead of splurging on a new ride.
In most cases, it’s always best to weigh out your options by examining your driving needs, condition of your car, as well as your personal income. Who knows, your trusty ride might still have a few good years left in her.
Without further ado, here are 5 reasons why renewing your COE might be a better option than buying a new car.
1. It's more affordable than buying a new car
The most obvious reason why car owners are choosing to renew their COE instead of buying a new car is the lower upfront cost.
Unlike buying a new vehicle – where you’d have to bid for a new COE and pay for the full price of a car, including car loan interest rate – COE renewal only requires you to pay for the Prevailing Quota Premium (PQP). This amount is calculated based on the moving average of COE prices in the last three months.
However, be advised: renewing your COE means forfeiting your PARF rebates, which could be worth a few thousand dollars. This PARF rebate, including the COE rebate, could be used to offset the price of a new car. To find out the PQP amount for the current month, check out the motorist.sg COE result page.
Ultimately, car owners should decide if their current car is able to sustain them for the duration of a new COE period. There’s really no point in renewing a car’s COE if it’s already failing and you’re spending tons of money on repairs.
Remember to weigh your options out; don’t simply renew your COE just because it seems to be the cheaper option.
2. You can choose to renew your COE for 5 or 10 years
Owners who choose to renew their COE have the option to extend it for 5 or 10 years. Before deciding on the length of the renewal, you should consider how much longer you intend to drive your vehicle.
As mentioned above, you will only need to pay for the PQP when renewing your COE. This amount will be cut by 50% if you choose to renew your COE for five years.
This is obviously a more viable option for those who are not ready to commit to another 10 years of COE or plan to change the vehicle in the near future.
On the flip side, you won’t be able to extend your car’s lifespan if you’ve chosen to renew your COE for only 5 years. For 10-year COE renewal, you can renew it again (and again) once those 10 years are up.
3. Enjoy lower depreciation on your car
Vehicle depreciation can be rather difficult to explain; therefore, we’ve put together the following table to help you better visualise it.
Let's assume both vehicles are of the same price, make, and model. For the COE and PQP values, we’ll use July 2019's COE bidding results as reference.
|New Car||Car with COE Renewed|
(Market value + AF + ARF)
|$70,000||Not applicable since the car has already been paid for|
|COE for Cat A vehicle||S26,667||Not applicable because you don't have to purchase a new COE|
|PQP||Not applicable||$30,512 |
(The amount that you pay when renewing your car's COE)
|PARF Rebate |
(The PARF rebate is taken off because you'll get this amount if you decide to scrap your car)
(PARF rebate is added because you'll be giving up this amount when you renew your COE)
For a COE renewed car, only the PQP and PARF rebate that was given up will be calculated for annual depreciation.
As you can see, the annual depreciation for a new car is significantly higher than a COE renewed car. The reason mostly comes from the total cost of the new vehicle, which includes the purchase price of the car and the COE bidding.
Oh, and in case you weren’t sure, vehicle depreciation is the value that your car loses over time. Obviously, the lower it is, the better it is for you as a car owner.
4. COE renewal can be 100% financed with a loan
In case you didn’t know, but you can actually take a loan from a bank or financial institution to renew your COE.
This is unlike a regular car loan, where you can only borrow 60-70% of your car's OMV.
The repayment terms for a COE loan differ depending on how long you plan to renew your COE. If you are renewing for 10 years, the maximum term is 7 years. For 5 years, the maximum term is 5 years.
If you are concern about the interest rates, don’t fret – because motorist.sg offers a complimentary service (yes, it’s free) where they'll help you find a COE renewal loan with the lowest interest rates.
5. Receive COE rebates after renewal
That’s right! Your vehicle may no longer be eligible for PARF rebates after renewing, but you’ll still receive COE rebates if you choose to scrap or deregister your vehicle before its new COE term is up.
Similar to a PARF vehicle, the rebate amount depends on the balance of your COE term.
Here’s an example: if your car had its COE renewed for 10 years at $30,000 but was later scrapped at the 5-year mark, you’ll receive $15,000 in COE rebates upon deregistration.
Yup, even after renewing your car’s COE, it doesn’t mean your vehicle doesn’t have any value.
If you’re still unsure about whether COE renewal is right for you, click here to arrange for a FREE COE renewal consultation. This service comes with no obligations. Not only will we help you weigh out pros and cons of renewing your COE, but we’ll also help you find the lowest rates for your COE renewal loan.
Motorist.sg is Singapore's leading autoconcierge vehicle platform. We help you manage your vehicle and provide you with a range of auto services, such as selling or scrapping your car, COE renewal and auto insurance.