In Singapore, owning a vehicle comes with additional expenses. Apart from regular vehicle maintenance, motor insurance, and yearly road taxes, cars and motorcycles need to have a certificate of entitlement (better known as COE) in order to be legally used in the country. A COE only has a lifespan of 10 years, upon which, it can either be renewed for another term or the car/ motorcycle can be de-registered. The emphasis of this article is to inform vehicle owners on the options and consequences of renewing their COE. To learn more about the process of renewing your COE, do check out our previous articles – Want to Renew Your COE? – All You Need to Know and What To Do With My 10 Year-Old Car? Your Smart Guide.
Renewing Your COE
The most notable advantage in renewing your vehicle’s COE is the cost. Cost is significantly cheaper if you opt to renew your vehicle’s COE rather than buy a new vehicle. When buying a new vehicle, you have to consider the value of the car and the cost of the COE whereas simply renewing your COE will only cost you the price of the Prevailing Quota Premium (PQP). The PQP is the moving average of COE prices in the last three months.
You have two options when it comes to renewing your COE. You can either renew it for a 5- or 10-year COE period. If you decide to renew it for a 5-year COE, it will only cost 50% of the current PQP. As of September 2016, PQP was at $53,339 (Category A) and $56,835 (Category B). The only downside is that you will be unable to renew your COE for another term and will be forced to de-register your vehicle after the 5-year term. Renewing your COE for another 10 years will cost you the entire PQP for that month. But you will be able to renew your COE for another term.
Renewing your COE does have its downsides. Here are some factors you should consider before renewing:
- If your vehicle is difficult or expensive to maintain, the economical benefits of renewing your COE will be highly ineffective. Unforeseen mechanical wear and tear can cost you thousands of dollars to fix. Additionally, the low supply of older car parts will make it expensive to source these materials.
- You will be unable to insure your vehicle for comprehensive auto coverage. Car insurance companies in Singapore will only insure older vehicles under the Third-Party Fire & Theft coverage. This means that should you get into an accident, you will have to pay for the damages to your vehicle yourself*.
- Renewing your road tax will be more expensive if your vehicle is more than 10 years old. Once your car passes the 10th year mark, you will have to pay a 10% road tax surcharge. Increases in the surcharge are also to be expected in the succeeding years.
*Do you know that DirectAsia Insurance provides Comprehensive Plan for your vehicle up to 15 years? Do call us if you need a quote on Comprehensive cover for a vehicle that is more than 10 years old. We’ll be happy to help.
De-Registering Your Vehicle
The second option car owners can choose is to de-register their vehicle. You will have to de-register and properly dispose the vehicle. You can opt to dispose of the vehicle through a motor dealer or you can do it yourself. There are three ways you can dispose your car through LTA Appointed Scrapyards, LTA Appointed Export Processing Zones (EPZ), and the LTA Counter for cars eligible for PARF rebates and vehicles exported out of Singapore.
If you de-register your vehicle before your COE expires, you will be eligible for a PARF/COE rebate. This will allow you to offset the cost of buying a new vehicle. Those eligible for a Preferential Additional Registration Fee or PARF rebate are those who have de-registered their vehicle after their first COE term. PARF rebates range from 50 to 75 percent of the paid ARF depending on the age of the vehicle at de-registration. You can get a COE rebate if you have de-registered before the end of your COE term. This rebate will take into consideration the unused time on your COE.
Before deciding on renewing your COE, make sure you have your car checked and assessed by a professional. There is no point in renewing your vehicle’s COE if your car requires constant maintenance. If your car is in good shape and it is inexpensive to maintain, renewing your COE will be more cost-effective. Cars in Singapore are certainly a depreciating asset. However, through smarter choices you can significantly save money in the process.