Car prices in Singapore these days seem to be going in only one direction – up, prompting car owners to look for alternative ways to reduce the cost of owning a car.
One option is to drive your car for as long as it is safe, but to do so you will need to renew your COE.
Understand COE renewal
Why do you need to renew your COE?
Private cars can only be legally driven on the streets in Singapore for a maximum of 10 years – this is the validity of the Certificate of Entitlement (COE). So if you want to continue driving the same car after the 10-year limit, you will need to renew your COE.
COE renewals come in two versions – a five-year renewal or a 10-year renewal. In addition to the duration, there is another important difference (applies to category A and B cars):
- Five-year COE renewals can only be performed once, after which no further renewals are allowed. After the renewed COE expires, your car must be de-registered.
- 10-year COE renewals can be renewed indefinitely. Each renewal must be in blocks of 10 years; You cannot switch to a five-year extension.
Also Read: Average Car Cost in Singapore 2022
How much do you have to pay to renew your COE?
When you renew your COE, you must pay what is known as the Prevailing Quota Premium (PQP).
LTA defines the PQP as “the moving average of COE prices over the last three months”. Therefore, the PQP varies from month to month and closely tracks COE prices in Singapore.
This is how much PQP you have to pay when you renew your COE:
- Five-year extension: 50% of the PQP
- 10-year extension: 100% of PQP
You can check the current PQP at OneMotoring.
Cost Comparison – Honda City 1.5L Sedan
We benchmarked a mid-size 1.5-litre Honda City sedan that falls within COE category A to allow for a quick cost comparison between three options – buying a brand new vehicle, buying second-hand and renewing the COE .
Here’s what we found.
|Used (7 years remaining on COE)*||S$99,988|
|Renew COE (PQP for Nov. 2022, Cat. A)||S$41,625 (5 year extension)
S$83,247 (10 year extension)
Most Expensive: Buying a brand new car
No surprises here; Buying a brand new car is by far the most expensive option.
The reason for this is of course the currently high COE prices, which unfortunately are not going down.
Buying a brand new car is no easy decision now more than ever; as you may have to service your car loan for up to seven years.
Middle ground: buying a used car
When you buy a used vehicle on the open market, you also inherit the remaining COE term for the vehicle. You don’t have to pay any additional fees.
Another benefit is that used cars come in a wide range of COE expiration dates, so you can select a vehicle with a COE expiration date that suits your plans exactly.
Additionally, used cars typically offer a lower depreciation rate as well; since most cars experience the highest rates of depreciation in the first few years of their life.
Cheapest option: Renew COE
As previously explained, when you renew your COE, you only need to pay the PQP. This allows for a large cost reduction compared to the other two options.
Additionally, if you opt for a five-year COE extension, you only have to pay 50% of the PQP, further reducing the cost of continuing to drive your car.
Factors to consider when renewing your COE
Renewing your COE is the cheapest option, but of course the downside is the advanced age of your car.
After 10 years of use, there is of course a certain amount of wear and tear, even if you take good care of your vehicle. Also, you’ll miss out on newer features and improvements in newer models, although some drivers might not mind as much.
Second, note that car loan interest rates for COE cars (the term for cars that no longer use their original COEs) are likely to be higher than for new cars. However, given the much smaller loan amount, you may not feel the sting as much.
Even if you love your car so much that you don’t have any qualms about renewing its COE, you probably need to invest in repairs and replacements, e.g. B. into new upholstery and seats, wheels and tires, suspension systems, entertainment systems, accessories and maybe even an engine overhaul.
You must plan how you will fund these additional expenses when you renew your COE.
Are you ready to take the plunge and refresh your car? Now compare the best car loans on the market and choose the best one for you here.