5 Things to Consider Before Renewing Your COE
Reading time: 4 mins
As a car owner in Singapore, you should be aware that after five or ten years, your vehicle’s Certificate of Entitlement (COE) needs to be renewed.
Good news is, Singapore’s Land Transport Authority (LTA) recently announced an increase in COE quotas for May to July 2022. The total COE quota is an increase from the eight-year low of 10,452 – from February to April this year – set at 11,951.
What this means is COE prices could come down. So, if you’re considering renewing your COE, now may be a good time. Bidding under this quota starts on the 4th of May, and the allocation will be split amongst various categories as follows:
But, before you decide to renew your COE, here are 5 important things to consider:
1. COE Renewal Period
In Singapore, you can opt to renew your car’s COE for either 5 or 10 years by paying a Prevailing Quota Premium (PQP). Even after 10 years, you can choose to renew your COE and not go through the mandatory parting of your vehicle, which is a common practice by drivers in Singapore.
However, if you choose to renew your COE after 10 years, your Preferential Additional Registration Fee (PARF) rebate will be forfeited. Where else, if you choose to buy a new car for the next 5 years, you pay only half of the PQP. But, opting for a 5-year COE renewal also means that you will not be able to extend it any further after that.
Either way, renewing your car’s COE is a great option if you are planning on driving it for the next 5 to 10 years.
2. Car Maintenance Costs
Another thing you should know before renewing the COE of your car is whether it’ll still be road worthy in the next 5 to 10 years. If it’s an old car, you’ll be stuck with maintenance costs over the years, just to ensure that you can drive it on Singapore roads.
Bear in mind, it is not easy to maintain an old car with just the basic maintenance tools, and car spare parts don’t always come cheap. Let’s say, a major mechanical issue with an aged car roughly costs around $1,000 a year to repair. If you are renewing your COE for 10 years, you should be ready to shell out around $10,000 for your car’s maintenance.
3. Singapore Road Tax Surcharge
Do you know that when it comes to road tax in Singapore, there’s an additional surcharge for cars over 10 years old? The additional surcharge levied ranges from 10% up to 50% of your car’s regular road tax rate per year.
Besides that, there is also an increase in road tax cost for vehicles with a large engine capacity.
4. Preferential Additional Registration Fee (PARF) Rebate
The Preferential Additional Registration Fee (PARF) rebate is the amount of money you get back for the unused timeframe of your existing COE.
In other words, you will receive a PARF rebate if you deregister your car before the COE expires. However, if buying a brand new car breaks your budget, then you should certainly consider renewing the COE of your current car instead. Although this means you’ll lose out on your PARF rebate.
5. Getting Car Insurance
Many insurers in Singapore offer Comprehensive car insurance for cars not older than 10 years.
You should also be aware that the insurance premium for cars with renewed COE could be around 10% or 20% higher, than new or secondhand cars. But, this may not be applicable for all insurers, so it’s best to do your checks before you purchase car insurance.
Connection Between Your Car’s Market Value and COE Renewals
Basically, when the market value of your car rises, COE renewals tend to be more cost effective. The COE for high-end cars is usually about 20% of the car’s total price. Whereas for family sedans, the COE is about 60% of the vehicle’s overall cost. This is why it may be better to consider renewing your COE if you own a high-end vehicle.
Weekend Car (WEC) or an Off-Peak Car (OPC or Revised OPC) scheme
Finally, you should also think twice about renewing your COE if your car is a Weekend car, or an Off-Peak car. It may not be worth it because you will end up paying the Prevailing Quota Premium (PQP) for your car as if it is a regular car for everyday use.
The subsidised rates of Weekend or Off-Peak cars have nothing to do with its COE renewal. So, just bear in mind that even after you pay the PQP, the car will still be a Weekend car, or an Off-Peak car.
Should You Buy a New Car or Renew Your COE?
If your car is still in good condition and you don’t plan to buy a new car, then renewing its COE may be a better choice. However, if it’s an aged car over 10 years old, you must be prepared to maintain the car well enough so it can be used for another 5 or 10 years.
On the other hand, if you decide to buy a new car, you will need to have your deposit ready, get a car loan, pay for road tax, purchase COE and car insurance, amongst other things.
The final option car owners can choose is to de-register the vehicle. And, after you de-register it, you’ll have to properly dispose of it, or you can choose to scrap your car. Either way, you can do it through a car dealer or you can do it yourself.
There are 3 ways you can dispose of your car, through;
- LTA-appointed Scrap Yards
- LTA-appointed Export Processing Zones (EPZ), and
- LTA Counter for cars eligible for PARF rebates as well as vehicles exported out of Singapore.
Bottom line is, if you don’t have the budget to start over with a new car, renewing your car’s COE is your next best option.