Stress comes in many forms and in Singapore, a unique conundrum car owners face is the renewal of their Certificate of Entitlement (COE) after a decade. A multitude of factors such as higher car prices due to an increase in import taxes and surcharges, as well as an uncertain economic situation, have brought about a surge in COE renewals in recent years. Before you jump onto the bandwagon though, here are 8 things you should note when the time has come.
1. Forfeiting your PARF and COE rebates
Deregistering your car grants you a PARF rebate from the government. A sum of money otherwise known as the scrap value. Renewing your COE however, means you lose out on that. This could be a big deal if your car’s ARF value is substantial. Let us use a 2007 Mercedes-Benz E200 as reference. A car of this calibre would usually have an ARF value of about $50,000. This equates to about $50,000 in forgone ARF rebates. For comparison, a modest family car like the 2007 Toyota Altis tends to have an ARF of around $20,000. This would forfeit potentially $10,000 in PARF rebates.
Similarly, the LTA offers a rebate on any remaining COE value should you deregister before the 10-year term is fully utilised. When drivers renew their COE, they would also be giving up on this in addition to the aforementioned PARF rebate. To cut their losses, they would often wait till closer to the expiry date or even on the day itself to renew.
2. Additional road tax
Paying 150% of your original road tax amount. Sounds intimidating? Unfortunately, it is a very real possibility facing cars over 10 years old. This is because of the additional 10% surcharge on your annual road tax that increases by another 10% each subsequent year, up to a maximum of 50%. It is perhaps of some consolation that cars with a smaller engine capacity may feel less of a pinch.
3. Non-renewable on a 5-year tenure
If you do decide to renew your COE, you are given two options; either a 5-year or 10-year term. It is worth noting that opting for the former would require you to pay 50% of the PQP amount. On top of that, you’ll be disallowed from renewing again once the new term is up and scrapping your car is compulsory. On the other hand, a 10-year COE renewal offers an opportunity of a further extension after the 10 years although you do have to fork out the full PQP price. Things are slightly different for commercial vehicles that have a fixed lifespan of 20 years and ineligible for COE renewals.
4. Prevailing Quota Premium (PQP)
Find the COE bidding process a pain in the neck? You’ll be relieved to know that renewing your COE means paying the PQP in place of the standard COE price. The PQP is calculated using the moving average of COE prices in the most recent 3 months. For example, if the average COE prices over the past 3 months were $50,000, $45,000 and $43,000, then the PQP you’ll have to pay would be $46,000.
If your vehicle falls under a Category E Open COE, your PQP will be based on the respective category that it belongs to. Car owners under the Weekend Car (WEC), Off-Peak Car (OPC) or Revised Off-Peak Car (ROPC) scheme are required to pay for the PQP of the relevant normal car category. There are no discounts or rebates given for this tier of cars and they will retain their status post-renewal, though you are subsequently given the option of converting it to a normal car without any additional surcharges.
5. Grace period for renewal
It is highly recommended that you renew your COE 2 months prior to its expiration date. This gives you plenty of time to work out how you would like to finance your PQP payment. In the event of an oversight, you are granted up to 30 days after expiry and will inevitably be subjected to a late renewal fee.
There are 3 ways you can go about renewing your COE, each with its own processing time which you should definitely factor in in your decision-making. The first and most convenient way would be to do it online of course. With just a valid internet banking account, NRIC and vehicle details, you’ll be done in a jiffy! Or, you can personally head down to the LTA Customer Service Centre where the processing time is almost instant unless you pay by cheque. Alternatively, you may also submit the documents and payment through post although there is no real reason to since it takes about 2 weeks to process.
6. Eligibility for COE rebates upon deregistration of COE Renewed Vehicle
Earlier we mentioned that a vehicle with a renewed COE is not eligible for PARF rebates. The silver lining is that should you eventually decide to scrap or deregister your car before the renewed COE is up, you will receive a refund on the pro-rated amount of the remaining COE. As a guide, let us assume that you have opted to renew your car’s COE for 10 years at $50,000. For one reason or another, you scrap it after 5 years. In this case, you will get back $25,000 in COE rebates upon deregistration. In layman terms, your vehicle still holds some value after renewal despite the omission of the PARF rebates.
7. COE Renewal Loan
Getting approval for a loan to cover your COE renewal amount shouldn’t leave you with sleepless nights as they are readily available. Interest rates vary from 3.25 to 4.75% for terms of up to 7 years. Research is key as most banks and finance companies offer unconventional loan arrangements that you should seek to take advantage of. Do bear in mind that finance companies include an additional transfer count in view of the change in ownership of the car.
8. Comprehensive insurance coverage
Speaking of finance companies, some may require you to obtain comprehensive insurance coverage for your vehicle as part of their terms and conditions. This could prove to be a bit of a road block as they are harder to attain. Insurers are often hesitant to offer more than just third-party coverage as older vehicles are viewed as risky and financially unfeasible. AXA, for one, does not insure vehicles beyond 25 years old. NTUC Income is an option but it comes with a catch; vehicles older than 10 years are assessed on a case-by-case basis. Unfortunately, it is a common practice for these companies to just write off the vehicle if it gets caught in an accident rather than footing for the repairs since its market value might not be worth much more than the remaining COE value.
To summarise, your car’s condition should play a big part in your decision whether to renew its COE. Pay attention to the mileage and consumption. If the figures are far from ideal, your engine could be in need of an overhaul which would easily burn a hole in your wallet. Gearbox issues are common in older cars, and keep an eye out for any odds and ends that may need replacing. While renewing your COE might seem like the most cost-effective strategy in the most expensive city to live in, it is worth taking into account the 8 points we have covered.
|What we like|
| - Luxurious feel |
- Large telematics touchscreen
- Extremely spacious
|What we do not like|
| - Lack of automatic boot for auto close |
- Drive shaft even though it is a front wheel drive
|The Toyota Camry has successfully done a full model change that is significantly sportier and aesthetically better looking compared to its predecessor. It does not feel you are getting a second class car as compared to equivalent continental class cars, yet the cost savings are substantial.|