Is your car’s COE coming to an end? Here are 8 tips you should take note of if you intend to renew your COE.

According to the Land Transport Authority (LTA), nearly one in 4 cars whose Certificates of Entitlement (COEs) were due to expire in 2016 had their COEs renewed. This is why today CarSource would like to share with you more about the COE renewal. If you are age 21 & above, RenewCOE can finance 100% of your PQP.

How Car Source Are Able To Help You with Your COE Renewal Loans

  1. Please call us at +65 6909 3455 to find out more information.
  2. Instructions and other requirements will be sent to you via email by our COE Renewal Loan specialist.
  3. Interest Rates will be advised depending on the age of the vehicle and loan tenure.
  4. Submit all the requirements and/or signed documents needed to our fax at (fax number here) or email at (email here).
  5. Once all the requirements and/or signed documents were submitted, we will proceed with the submission of your COE Renewal application.
  6. Our COE Renewal Loan specialist will notify you within 1 working day via a call or text message regarding the status of your applications.

Unlike buying a new car, you don’t have to participate in an open bidding for a renewal of COE. When the COE of your vehicle is close to ten years old, you can revalidate it by paying a Prevailing Quota Premium (PQP). Otherwise, your car must be de-registered after 10 years.

A combination of higher car prices from an increase in import taxes and surcharges in recent years, as well as an uncertain economic climate, has resulted in the rising number of COE revalidations in recent years, as more and more owners seek alternatives to new car ownership.

In 2017, more than 100,000 cars on our roads, making up 15 percent of the population, will see their COEs reach their expiry date, and three out of 10 cars currently on our roads are now over eight-years-old. If you own one of these cars, you will have a decision to make as the car’s COE expiry deadline approaches. If you’re thinking of renewing your COE, here are 10 things you need to know before you take the plunge.

More than 100,000 cars, or about 15 percent of the population, will see their COEs expire in 2017

1. You will forgo your PARF/COE rebate

First of all, when you opt to renew your car’s COE, you’ll instantly lose your car’s PARF rebate.

Certificate Of Entitlement (COE) Rebate: This is the amount of money you get back from the Government once you deregister your car, and is also known as the scrap value.  If a vehicle is deregistered before expiry of its COE, the registered owner may be granted a rebate based on the Quota Premium (QP), or Prevailing Quota Premium (PQP) (in the case of a vehicle with a COE that has been renewed), which he has paid, pro-rated to the number of months and days remaining on his vehicle’s COE.
However, extending your car’s lifespan beyond 10 years would see you forgo the PARF rebate, which is something to consider if your car’s ARF value is fairly significant. For example, if you have a premium car and has an ARF value of around $80,000, you will be forgoing $40,000 in PARF rebates upon renewal.

In contrast, a family car typically has an ARF of about $20,000, then the amount that you forgo will be estimated to be $10,000 in PARF rebates.

Renewing your car’s COE will always be more financially accessible than buying a new car, as you’ll only pay the cost of the new COE. Therefore, the resulting depreciation over the next 10 years will be significantly less than if you’ve purchased a new car.

Taking the above example once again, a family car like Honda Civic retails for $115k inclusive of COE and has an ARF of about $20,000. The PARF rebate after 10 years will be $10,000, and thus the annual depreciation will be $10,499 a year. If you renew the COE of your existing Civic, the depreciation will simply be a straight-line division of the renewal premium over the next 10 years. Even if you take into the account the loss of the PARF rebate, the depreciation of the car will only be less than $6,000 yearly.

2. There is additional loading on road tax for cars over 10-years old

For cars over 10-years old, there is an additional surcharge levied on the car’s road tax. This amount is chargeable at an amount of 10 percent over the car’s regular road tax rate per annum, up to a maximum of 50 percent. For a car with a large capacity engine, the increase in costs can grow to be quite significant.

Using an example of a 2.4-litre car with an engine capacity of 2,362cc, the payable annual road tax before it is 10-years old would be $1,632. In the 11th year, this will go up to $1,802, and then $1,966 in the 12th year, and so forth, eventually reaching a maximum of $2,458 (150 percent of $1,632) from the 15th year onwards.

Cars above 10-years old get an additional 10% loading on their road tax, up to a maximum of 50%.

3. Your renewed COE car is still eligible for COE rebates upon deregistration

While a car with a revalidated COE is no longer eligible for PARF rebates, it is still eligible for a rebate on the renewed COE. What this means is that, should you scrap or deregister your car before your renewed COE is up, you will be refunded the pro-rated amount of the COE remaining.

For example, if you renew your car’s COE for 10 years at $50,000, and you decide to scrap it exactly five years later, you will get back $25,000 in COE rebates upon deregistration. It is a point worth considering as it means your COE-renewed car does have some residual value even after renewal.

4. Non-renewable if COE is only revalidated for five years

This is something that not many car owners are aware of. There is an option of renewing your car’s COE for just five years instead of 10, for which you simply pay half of the Prevailing Quota Premium (PQP) at the point of renewal.

This might be a more financially sound option for those who may not have as much ready cash for a full 10-year COE renewal but bear in mind that if you opt for a five-year renewal, you will be unable to extend the car’s lifespan any further once the COE’s tenure is up. A 10-year COE can be renewed in perpetuity, however. Do take note that commercial vehicles have a statutory lifespan of 20 years, and you cannot renew its COE for any further than that.

We will share more about the 4 other tips to renew the COE. Car Source specializes on both private and commercial vehicle COE loan. With our competitive COE loan rates, we are more than confident that you’ll get the lowest monthly payment possible. We are the first company in Singapore to offer COE Renewal Loan and is considered the most trustworthy auto finance industry expert.