Used Cars: Should I Buy a PARF Car or COE Car?
If you’re looking for a vehicle to get you around Singapore without having to pay the equivalent of what a small BTO flat costs, then you’re probably in the market for a secondhand car.
Aside from thinking about the make, model, type, colour, and condition you want your new old car to be, there’s also this consideration to make: To buy a PARF car or COE car?
In this article, we’ll cover:
- The differences between PARF vs COE cars
- Is it just a financial difference?
- Whether a PARF or COE car may suit your needs better
- Common mistakes to avoid when buying a PARF or COE car
What Are the PARF Rebate and COE Rebate For?
First of all, it’s important to remember that with the COE system in Singapore, cars are given a lifespan of 10 years. When you sell your car before its 10-year lifespan ends, you get some money back in the form of a PARF rebate, and a COE rebate.
PARF stands for Preferential Additional Registration Fee. When you buy a new car, you pay the Additional Registration Fee (ARF) as part of the total costs. The PARF rebate is simply getting some of that ARF money back if you scrap your car before its 10-year lifespan ends.
Same goes for the COE rebate — selling your car before its time is up entitles you to receive some of the money you initially put into getting its Certificate of Entitlement (COE).
To use an analogy, it's like signing up for a 10-year gym membership, but you only use it for 8 years. If you then cancel, the gym refunds you for the unused 2 years.
Essentially, PARF and COE rebates are the government’s way of saying ‘Thank you’ for keeping older cars off the road, and thereby reducing accidents and traffic congestion.
*Note: Deregistering or scrapping your car when it hits the end of its 10-year lifespan does not entitle you to any rebates. However, there may be a separate scrap value if you take your car to a scrap car dealer.
| TIP! Check out LTA’s website for all the details on PARF and COE Rebates, and access the digital services to calculate the PARF rebate or COE rebate value of a vehicle. |
What’s the Difference Between PARF Cars vs COE Cars?
The main difference is age, because it results in different rebate eligibility.
Simply put:
PARF Cars: Cars that are younger than 10 years old are eligible for both PARF and COE rebates upon scrapping.
COE Cars: Cars that are older than 10 years which have already been renewed once and are only eligible for COE rebate and not PARF.
| PARF Cars | COE Cars |
| Less than 10 years old | More than 10 years old |
| Never been renewed/extended | Owner extended car for another 5 or 10 years by paying the Prevailing Quota Premium (PQP) |
| Upon deregistration, eligible for: * PARF rebate (50-75% of ARF) * COE rebate (unused portion of COE) | Upon deregistration, eligible for: * Only COE rebate (unused portion of the PQP, not initial COE) |
A Practical Comparison of PARF Cars vs COE Cars
So COE cars are not entitled to PARF rebates upon deregistering. Is that the only difference when deciding whether to buy a PARF car or COE car? No. Here are other important factors to consider:
| PARF Cars | COE Cars | |
| Price | PARF cars tend to be more expensive, since the car is newer and still eligible for PARF rebate | 👍COE cars tend to be more affordable, since they are in an older condition and not eligible for PARF rebate |
| Price negotiation | The resale value of newer cars is structured based on their Open Market Value (OMV), less around 10% depreciation per year | 👍Older cars are no longer valued according to their OMV, so there is more room for negotiation with the owner to bring down the cost |
| Downpayment | If the OMV is > $20k, you’re restricted to a car loan of max 50% of the OMV, meaning you have to pay a 50% downpayment | 👍If the OMV is <$20k, you’re restricted to a car loan of max 60% of the OMV, meaning you have to pay a 40% downpayment |
| Monthly repayment | Higher | 👍Lower |
| Transfer fee | Required | 👍Not required |
| Scrap rebate | 👍Eligible for PARF and COE rebate >> Calculate here (LTA) | Eligible for COE rebate of PQP >> Calculate here (LTA) |
| Resale value | 👍Most likely still high (thanks to PARF rebate eligibility) | Most likely much lower |
| Condition | 👍Newer cars are usually still in pretty good condition | Older cars tend to have more wear and tear, and more mileage |
| Repair & maintenance | 👍Less frequently needed | May need more frequent maintenance, and older spare parts may be harder to find |
| Technology | 👍Newer safety tech like advanced driver assistance systems, automatic emergency braking, blind spot monitoring | May lack modern safety features that are now standard |
| Fuel efficiency | 👍Newer engine technology offers better fuel economy and lower running costs | Older, less efficient engines with higher fuel consumption |
| Eco-friendly options | 👍There are more options for hybrid and electric cars | Less options for hybrid and electric cars |
| Smartphone integration | 👍Should support Apple Carplay / Android Auto | May not support |
| Warranty | 👍Still applicable | No warranty anymore |
| Road tax | 👍No road tax surcharge | Older cars have to pay 10-50% road tax surcharge based on age |
How to Decide If a PARF Car or COE Car is Better For You?
Considering both types of secondhand cars have their own advantages and disadvantages, deciding which one is better for you is a matter of thinking about what best fits your personal vehicle needs, budget, lifestyle, and priorities.
PARF Cars Are Best for People Who:
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COE Cars Are Best for People Who:
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Common Mistakes When Buying a Secondhand PARF or COE Car
Mistake 1: Only looking at the sticker price
Many buyers choose COE cars simply because they're cheaper upfront, without calculating total ownership costs including fuel, maintenance, road tax, car insurance, and depreciation.
Mistake 2: Not calculating the number of years left
Some buyers think PARF cars are automatically better than COE cars because they are newer and still on their original COE. But with an 8-year-old PARF car you only have 2 years left to drive it, vs a 12-year-old COE car where you could still have 8 years left (if the owner extended it for another 10 years).
Don’t get trapped by the “newer is better” mentality without doing the math. It’s important to focus on the remaining lifespan of a car rather than just the car’s age or PARF/COE status. Always check the COE expiry date and calculate how many years of driving you’ll actually get for your money.
Mistake 3: Not checking PARF eligibility before buying
Never take the seller's word that a car is "PARF eligible" without verification. LTA has provided easily accessible digital services on its OneMotoring site, so make sure that the seller is able to provide evidence of the car’s PARF rebate value.
Mistake 4: Assuming PARF cars are automatically in better condition
While we say that newer cars tend to be in a better condition due to age, this is not an automatically true statement. A 7-year-old PARF car with 200,000km and poor maintenance history could be in worse condition than a well-maintained 12-year-old COE car with 80,000km mileage.
Always check the odometer against service records, ask to see maintenance records and inspection reports, ask the seller to provide accident history and insurance claims if any, and where possible, hire a qualified mechanic for pre-purchase inspection if you are unsure.
Look out for some red flags such as:
- Seller refuses pre-purchase inspection
- Missing or incomplete service records
- Unusually low price for a PARF car
- Recent major repairs just before sale
Mistake 5: Not planning ahead
Some buyers purchase a secondhand PARF car with only 1-2 years left on the COE, thinking they’ll buy a new car using the 50% PARF rebate. However, they get caught off-guard by inflating COE premiums, and end up reluctantly paying the (also expensive) PQP to extend for another 5 or 10 years — essentially getting locked into an older car they didn’t originally plan to keep long term. Not only do they lose their PARF rebate, but now they also have a much lower-valued COE car on their hands.
To avoid such a scenario, think realistically about how long you’ll need a car, while always assuming that COE prices will always be much higher when your renewal comes up. Try and plan ahead for your next steps, whether the plan is to trade it in early for another secondhand car, save up for COE renewal, or enjoy the PARF rebate and car-share when not owning a car.
PARF Cars vs COE Cars In Short:
PARF cars are under 10 years old and still eligible for 50-75% PARF rebate, but come with a higher sticker price. COE cars are much cheaper to purchase but also worth less when you sell or scrap because the PARF rebate opportunity is gone forever.
The choice ultimately comes down to your budget, driving timeline, and priorities. If you can afford the higher upfront cost and monthly repayments, and want fuel efficiency and better resale value, PARF cars offer better long-term value. If you just need basic transportation occasionally for 1-2 years, and you don’t want to pay too much for a car, COE cars can make greater financial sense.
Most importantly, don't just look at the sticker price - calculate the total cost of ownership over your intended driving period, including fuel, maintenance, car insurance, and potential rebates. And always plan ahead for what happens when the COE expires, so you don’t end up completely ‘car-less’.
