- Is your COE coming to expire?
- Not sure whether to renew your COE or to deregister your vehicle and get a new car?
- What is the better option other than renewing COE?
Here we analyse for you what are the advantages and disadvantages to Renew COE or to Deregister it.
Why You Shouldn't Renew COE?
1. Your COE and PARF Rebate is Forfeited
You are entitled to 2 cash rebates when you choose to scrap your car in Singapore: COE and PARF rebates. Both of them depreciate along with the age of the car. When the car is de-registered, these 2 cash rebates will be returned to the car owner depending on the age of the vehicle.
However, if you choose to renew your COE, Your Vehicle’s PARF Rebates will be forfeited.
Good news here if you choose to deregister the old car and buy a new one, you are able to use these rebates to offset some cost!
If you are still considering whether to renew your COE or scrap your car at JA8 IMPORT AND EXPORT, read here for more information.
2. High Maintenance Cost
The major issue you should consider will be the chances of breakdown of your vehicle as well as your vehicle maintenance cost.
A reminder to car owners who wanted to renew COE, it’s not just a one-off payment that you pay upon renewal.
You should also factor in other expenses such as the cost of servicing, cost of maintenance, and inspections of an old car.
Renewing your COE might appear to be cheaper and affordable than buying a new car. However, the truth is, the wear and tear of the car is relatively way much higher. A 10 year-old car, plus another 5 or 10 years that you renew on the COE can be old and weary. The regular servicing and maintenance fees are just the minimal expenses.
Old cars often need more of the regular change of the car parts. You might experience frequent car breakdowns in a short period over and over again. Moreover, these are all costs on your own without any car warranty.
As compared with buying a new car, maintenance cost would be a smaller concern as a new car comes with warranty. If you were to take good care of the car, there wouldn’t be much expenses involved here.
Some of the new car warranties come with their own terms and conditions. Make sure you know what is covered under your car warranty to ease your future claims.
3. Higher rate of Road Tax
Take into consideration on the road tax that you are going to pay. Car Owners that decided to renew their COE are charged with higher road tax in Singapore. Do you know that in Singapore, the road tax will be increased 10% each year after the first 10 years of your vehicle.
The rate of roadtax will raise by 10% every year and capped at 150% after 15 years.
What If You Want to Renew COE?
1.100% Bank Loans
For COE renewal, majority of the banks in Singapore would only allow a loan tenure for up to 7 years. But at the same time, the financing rate for the COE renewal loan can be up to 100%.
Whereas purchasing a new car, owners can only enjoy a financing rate of up to 70% maximum of the loan.
Thus, if you do not have enough budget to pay for the 30%, it is suggested that you should renew your vehicle COE instead of deregister it and go for a new car.
2. Lower Depreciation Value
Vehicle’s value depreciates once you own it. The longer the age of the cars, the more value is lost over time. Of course, as a car owner, it’s better to have lower depreciation value. From the original price to the final price you get back from the car when you decide to scrap the car or deregister it. The difference in value is the cost of depreciation.
Renewing your COE give your vehicle a lower depreciation value as compared to buying a new car. This is because you do not need to pay for the old car anymore. When you renew the COE, only the forfeited PARF are unavoidable sinking costs that will depreciate in the next 5-10 years.
When you buy a new car, the depreciation value is commonly higher because more costs are involved. COE, PARF Rebate and the car body value are all costs that you need to factor into the depreciation.
3. Lower Upfront Cost
Renewing COE will cost you a lower upfront cost which is the Prevailing Quota Premium (PQP) while excluding the new car cost. For your information, the PQP varies monthly depending on the COE bidding exercise in the past three months that is conducted.
As mentioned earlier, for owners can get 100% bank loans if they choose to renew COE . This also means that you do not need to fork out a great lump sum of money. Due to the full loan practice, you would only need to pay an upfront cost that is as low as $1,000 and that bank loan can be repaid in 7 years.
Of course, don’t forget to add in the interest rate of the bank loan as part of your cost. The longer the year of loan tenure, the total amount of interest paid would be higher at the end of the period.
Final Words
Generally, we would suggest you to think twice before making your decision as the general maintenance and all other costing will be higher. Deregister and scrap your car will be getting back a better value out of your vehicle.
As the the best scrap car agent in Singapore, JA8 IMPORT AND EXPORT uses transparent assessment to calculate your scrap car value.
If you are looking for scrapping your car at highest value and least hasslement, contact us now! We will respond in short with the best quote in town. Check what our customers reviewed about our service!
All paperwork on us! We will prepare all related documents. All you need to do is to pass us the vehicle, and get your payment on the spot. Everything else will be handled on our end!