Since our last post about the news of ” zero growth rate“, many readers had called us to check about the renewal of COE.imagesAnd one of the most commonly asked questions is whether they should renew the COE for 5 years or 10 years. Things such as cash rebates or condition of the car could affect your decision. This is why we would like to share our opinion on this today so that our readers like you can make a more informed decision.

1. Cash Rebates and PARF

First, let us understand what is PARF and OMV.

In Singapore, all new cars come with an Open Market Value (OMV). This is the original cost of production of the vehicle. If the vehicle is de-registered within 10 years from its first registration date, the registered owner will be entitled to a Preferential Additional Registration Fee (PARF) Rebate. This is normally a percentage of the OMV.

Car COE Cash Rebates

(Source: OneMotoring)

Now, you need to be aware that during COE renewal, the PARF and COE rebates for your car will be forfeited. As shown in the table above, the PARF will depreciate as time goes by, until it reaches the minimum PARF value and then it will halt its depreciation. As seen from the figures above, owners of cars aged 9 to 10 years will be returned 50% of what they paid for ARF.

Eligibility for PARF Rebate

Private / Off-peak / Company / Private Hire Cars registered must meet all of the following criteria to enjoy the PARF rebate:

  • Must not be more than 10 years old at the time of deregistration;
  • Must not have been laid-up before (i.e. must be licensed at all times); and
  • Must be a new car at the time of registration in Singapore or an imported used car registered in Singapore on or after 1 September 2007.

COE rebate, on the other hand, depreciates by the days that you use the car. If you used the car for the full 10 years till its last COE expiry date, you will not get back any COE rebate. Contrary to the PARF rebate, COE rebate does not have a minimum value. Thus it will depreciate to zero.

As mentioned, once COE is renewed, the PARF rebate and the COE rebate will be forfeited. This forfeit is usually added on as part of the cost of renewing COE. Therefore, based on car depreciation, it is generally better to renew COE for 10 years, compared to 5 years, as this cost can be depreciated for a longer period of time.

In other words, lower depreciation means you are spending less each year for your car.

Still confused about your car’s depreciation if you renew COE? Contact Us

2. Prevailing Quota Premium (PQP)

(Photo Credit: OneMotoring)

Some of the new car buyers might be confused over PQP and COE. PQP is referring to the amount you pay to renew your COE.

The Prevailing Quota Premium (PQP), is the moving average of the COE prices (QP) in the last 3 months. This is why it is important to note that PQP is not equivalent to the COE prices (which are revised twice every month). The results will affect the PQP but it is not the same thing.

Find out the latest PQP results.

To illustrate, the recent Category A COE prices for the 2nd bidding of Sep is $42,902. This does not mean that the PQP is the same amount. Instead, the COE price affected the PQP and caused it to decrease from $44,000 to $42,000.

As PQP is the average of the COE prices for past 3 months, each QP for the month contributes to the result of the PQP, which is the price you need to observe when you renew your COE.

For a 5-year renewal, you will need to pay 50% of the Prevailing Quota Premium (PQP) while for the 10-year renewal, you will need to pay the full amount of PQP. This is the amount of money you will need pay to renew for your COE. Renewing for 10 years means paying a bigger amount upfront, which also means you will incur more interest if you are taking a COE renewal loan.

Why is PQP important? It gives you insights on when is the best time for you to renew the COE of your car.

3. Condition Of The Car

Owners tend to overestimate the value of their car, which can lead to unrealistic expectations. You may think your car “drives like new”, but its value will depend on its actual condition, so you’ll need to be both knowledgeable and realistic about it.

Imagine your car only last for a few days after you renewed its COE! Consider going to your mechanic for an assessment. They can identify problems with the engine, plus things you may overlook, like a broken tail light or features you don’t use.


You can also get reliable advice on the life-span of the car so that you won’t be spending an absurd amount of money to maintain your car in the future.

A pre-sell inspection can be worth the investment because getting your car inspected, you can change all the necessary parts for it to stay running for the next 5 years (or 10years)  before you renew your COE.

4. “To keep, or not to keep, that is the question.”

One important thing to take note when it comes to deciding the renewal period will be the eligibility to renew again thereafter. If you are planning to keep the car for three decades or more, your only choice is to get the 10-year renewal now, and then renew again when this new COE expires.

Renewing the COE for 10 years allows you to renew it again at the end of the second decade. However, there is no way that you could renew a car’s COE after a 5-year renewal. This is because the car will need to be de-registered by Land Transport Authority at the end of the 5-year renewal period.

Thus, if the car has special meaning and you plan to keep it for a longer period, please remember to renew its COE for 10-years. But if you’re open to the idea of letting your car to get a new one in the next 5 years or less, then this will not be a major concern for your decision.


5. Additional Loading On Road Tax

pexels-photo-133826One of the downsides of renewing your COE is that you have a road tax increment of 10% every year, up to a maximum of 50%. Which means, if your road tax is $1000 this year, it will be $1,100 next year and $1,200 on the subsequent year.

It will finally be capped at $1,500/year from the 5th year onwards. This could add up to quite a significant amount, especially if you are driving bigger cars. For a typical Cat B car (Cars above 1600cc or 130bhp), the original road tax of $1,214/year would become $1,821 by the 5th year. This will add up to a whopping $3,035 extra in road tax payment just from year 5 to year 10 of your car’s renewed COE!


To conclude, renewing your COE will forfeit your PARF and COE rebates. In the event that depreciation is your major concern, then go for a 10-year renewal as the depreciation value will likely be lower than getting a 5-year renewal.

5-year renewal just requires payment for half of the PQP while a 10-year renewal expects you to pay everything. If you have difficulty paying a large upfront payment, or wish to avoid incurring interest from taking up bigger loans, a 5-year renewal may likely be a better decision.

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In terms of road tax, your road tax will be 150% of its original amount by its 15th year. This is an unavoidable cost, that should be factored in when making your comparison. And finally, if you want to keep the yearly cost of maintaining your car to be as low as possible, renewing it for 10 years is also the better choice.

To find out more information regarding the COE renewal, contact CarSource today.