10 important things to note before renewing your COE

PHOTO: Motorist

Do you find Singapore's COE renewal process confusing, troublesome and costly? Here are 10 important things to note before renewing the COE of your car.

Renewing COE is the go-to option in recent years as the prices of cars are surging drastically in lieu of increased import taxes and surcharges.

Here are some knowledgeable tips that can financially assist drivers to make their decision as to whether or not they renew their COE.

1. Utilise COE renewal loan

For those who are not choosing to renew their COE because they can't afford it, loans with low-interest rates are here to assist you.

A COE renewal loan can help finance your full COE renewal amount. Repayments are typically set with tenures of 84 months for a 10-year COE renewal and 60 months for a five-year COE renewal. The interest rates range from 1.88 per cent to 4.75 per cent.

Here at Motorist, we can help you source the lowest loan interest rate from approved banks and financial institutions for your COE renewal.

Find out more here.

2. Renew for 10 years to be eligible for unlimited subsequent COE renewal

A five-year COE renewal restricts you to deregistering your car after five years while a 10-year renewal allows unlimited renewals thereafter.

Therefore, a 10-year renewal is a better choice for drivers whose cars are in great condition and are not planning to purchase another vehicle any time soon.

For some, they will prefer to renew for 10 years but find it unaffordable to pay double the price of a five-year renewal. This is when the aforementioned COE renewal loan steps in to ease your financial burden at a low-interest rate.

3. PQP will be the only thing you are paying for

For those who deem that their cars are in great working condition and plan to renew the COE of their cars, they will just simply have to pay the Prevailing Quota Premiums (PQP) and nothing more!

How to calculate the PQP you ask? It is the average price of COE from the last three months.

Motorist updates COE bidding prices bi-weekly. Stay tuned to our updates if you are planning on renewing your COE, so you can calculate the precise cost of it.

4. Rate of depreciation decreases

Depreciation is the value your car loses each year. The lower the rate of depreciation of your vehicle, the higher its value.

Another reason to renew COE is to exploit the car's decreasing rate of depreciation on renewal. Since you are only paying PQP price, the rate of depreciation is drastically lower than the first 10 years.

It is a viable option to sell your car along with its renewed COE as the rate of depreciation is slower. This can be a viable option if your vehicle is valued or sought after in the used car market.

Motorist helps owners sell their vehicles at the highest possible price in Singapore. We provide a free quotation for your vehicle and you can even sell your car within 24 hours, hassle-free!

5. No retaining of remaining COE balance upon renewal

It is worth noting that any remaining COE balance prior to renewal is not brought over to the next. Let's say you perform a 10-year renewal a year before the expiration date, you will need to renew again exactly 10 years later, not 11. The remaining COE balance is not carried over.

Hence, it is wise if you renew your COE approximately two weeks prior to the expiration date to maximise the value of the COE duration you are given.

ALSO READ: 5 cars in Singapore that are worth renewing COE for

6. Renewing COE after the expiry

To ensure that you complete your COE cycle before renewing for another, you have a generous window of one month, following the expiry date, to renew your COE, albeit incurring a late renewal fee.

Just remember to renew within that one month or you will be enforced to dispose of your vehicle. Not renewing an expired COE in time is not taken lightly by LTA, so remember not to procrastinate the renewal till the last minute.

The online process for COE renewal is quick and easy with LTA's digital service. Just fill up your personal and vehicle details and complete the bank transaction for them to process your COE renewal fee.

Refer to this page on the full guide to renewing your COE online.

7. COE rebate

Renewing COE is an economical choice over investing in a brand new vehicle but not everyone is certain if their vehicle can serve them for at least another 5 to 10 years.

Fortunately, you will be eligible for a COE rebate that refunds a pro-rated amount of the remaining COE if you were to deregister or scrap the vehicle prior to the expiration of the renewal.

The COE rebate formula is as follows:

COE rebate = (Quota Premium paid x number of months left on your COE) / Total number of months bought by COE

8. Comprehensive Insurance Eligibility

Are COE-renewed cars still eligible for comprehensive insurance coverage?

Yes, of course! However, it is simply not practical as the premium to be paid are a lot higher as older cars are naturally more susceptible to faulty damage.

Insurance companies are petty in nature! They will factor in every conceivable risk and charge you for it. Be aware of their terms and conditions when signing up for insurance.

By the way, we can also help you to find the best car insurance coverage in town so you can have an ease of mind.

9. Forfeiting your PARF rebate

downside of renewing COE is the annulation of your Preferential Additional Registration Fee (PARF) rebate. One can only receive the rebate if they deregister their car within the first 10 years.

The total PARF rebate you receive depends on the age of your car and the Additional Registration Fee (ARF). A car with less than 5 years of age receives a 75 per cent ARF rebate while a car that has served 9 to less than 10 years in operation will only receive a 50 per cent ARF rebate.

ARF, on the other hand, is calculated based on the vehicle's Open Market Value (OMV).

If your vehicle is still in great condition after many years, it will make financial sense to renew COE instead and give up on the reduced PARF rebate.

10. Additional road tax

Another con of renewing COE is the additional road tax that one has to pay which increases at a rate of 10 per cent every year, capped at a total of 50 per cent.

The payment sum of the road tax is directly proportionate with the engine capacity. If your car has a modest powerplant under the hood, it is justifiable to pay this instead of investing in the ever-increasing cost of brand new cars in Singapore.

ALSO READ: Cat A COE climbs to 6-year high

This article was first published in Motorist.

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