Is Renewing Your COE Worth It?
Singapore has managed to control the number of cars in the streets through its policies. Aside from the fact that Singapore has the most expensive cars in the world, it also has the strictest renewal policy. Cars that have been around for 10 years should stop operating unless charges for COE renewal are paid.
It is important as early as now to be familiar with the limited options you have once your car reaches 10 years old. This will prepare you to avail of the best alternative in accordance to your own personal situation.
There are some facts that you need to know before choosing between renewing the COE and purchasing a new automobile.
Renewing Your COE Vs. Buying a New Car
Summary table of cost comparison
| Renew 10-year COE | Purchase brand new | |
| Purchase price | $34,197 | $96,999 |
| Upfront cost | $34,197 | $29,100 |
| Loan amount | — | $67,899 |
| Interest rate | — | 2.78% |
| Annual depreciation | $3,420 | $8,714 |
| Monthly instalment | — | $966 |
| Rebate after 10 years | — | $9,860 (Preferential Additional Registration Fee value) |
From the above table, COE renewal could be very expensive. The upfront cost when you choose to renew your COE is taxing. You will have to pay the Prevailing Quota Premium (PQP) to renew COE.
However, there are many COE renewal loan that you can rely on to ease your COE renewal expenses. Take note, however, that these COE renewal loan come with higher loan interest rates compared to the interest rates of traditional car loans.
Renewing Your COE
When you really want to keep your current automobile, there are two options available to you. You may choose between:
- Paying 50% of the Prevailing Quota Premium (PQP) for a 5-year COE renewal, or
- Paying 100% of the Prevailing Quota Premium for another 10 years.
Choosing the former (of keeping the car for another 5 years) means that you will be paying as little as $321 per month. Your monthly repayment is only 50% that of a car loan for a brand new car.
Just make sure that when you choose COE renewal, your car has been diligently maintained for the last 10 years. Otherwise, your savings will end up paying off car repair and maintenance.
If you’ve been slacking off on your oil changes or your regular car servicing routine, then the chances of your car surviving for another 10 years are slim.
Remember that opting for a COE renewal means being ineligible for the usual car loan.
Take extra precaution of any company that claims to offer ‘COE loan’. Only a limited number of banks that legitimately offer bank loan for COE renewal purposes like Maybank’s car loans and UOB COE car loan.
Look into the terms and conditions of any COE renewal loan like loan amount and interest rates and avoid too-good-to-be-true deals as a way to shoo away scammers.
When you do not want to take the chance of getting a COE renewal loan, your best alternative would be to avail of a personal loan from a bank.
The amount of the personal loan you may have depends on your income. Although you can get a loan up to 4 times your monthly salary, the exact amount would be dependent on whether you have other existing credit facilities such as credit cards with a bank.
In other words, unless you’re earning $10,000 a month, you can forget about taking out a big enough personal loan to pay off the full Prevailing Quota Premium.
Another consideration when deciding to renew your COE or not is the current state or condition of the car. It would be pointless to undergo the COE renewal process when your car can barely satisfy your transportation needs not only in the present but also in the years to come.
The older the car is, the higher road tax will be charged. In Singapore, the road tax imposed on cars of more than 10 years increases at a rate of 10% per year. This reaches an overall additional cap of 50%.
Not only that, older cars have higher insurance premiums compared to that of a new car at 10% to 20% more.
In terms of fuel economy, a modern car is definitely more efficient than an older car. It is without a doubt that the older your car is, the worn out its engine would be. Worn out engines tend to consume more fuel.
New car would be better should you be travelling long distances as it would be more cost-efficient in the long-run.
Renewing a Loan Vs Buying a New Car: Which Should You Choose?
It is important to factor in what really matters more to you when choosing between renewing COE or buying a brand new car.
Buy a brand new car if…lower upfront costs, more advantageous car loan interest rates, and existence of warranties are important to you, then your better option would probably be buying a brand new car.
Renew COE if…car owners really like to retain their cars. But in order to maximize this option, they need to note the following considerations that make up the strongest case for renewing a COE:
- The car must be in good condition.
- There must be low Preferential Additional Registration Fee (PARF) value.
- The upfront cost of the Prevailing Quota Premium should not be crazy excessive.
Purchasing a new car and renewing COE for another 5 years, 7 years or 10 years both have their own advantages and disadvantages. You only have to be weighing things in accordance with your own personal financial situation.
Should you decide to do either of the two, you may get 1 Fullerton Credit personal loan for your COE renewal. 1 Fullerton Credit is a low-cost and flexible loan provider. Getting your COE renewal loan from them will not entail the same hassle as compared to getting COE renewal loan from a bank.
