If you have had your vehicle for nearly a decade, you would know that its Certificate of Entitlement, or COE, is fast approaching its expiration date. This means that you either need to deregister it for scrapping, or renew the COE to extend it for another 10 years.
Deregistering your vehicle for scrapping
Scrapping your vehicle within 10 years of getting it registered allows you to collect the Preferential Additional Registration Fee, also known as the PARF rebate. This amount is a percentage of your vehicle’s original production cost, which depends on each vehicle. If you are looking to get a new car, then making your current vehicle into a scrap car Singapore will be the better option for you.
Renewing your vehicle’s COE
Alternatively, in the case where you want to continue using your car after the 10-year mark, renewing its COE would be the solution for you. You will need to pay the Prevailing Quota Premiums (PQP), or the cost of renewing your car’s COE. This amount is the average of the previous three months’ COE prices.
If you do decide to renew the COE, it is recommended that you pay the PQP before the vehicle’s expiration date, as there are penalty fees. One thing to take note of if you renew your car’s COE is that you will not be able to get the PARF rebate on it even if you deregister it before the extension period is up.
Here are a few questions that you should ask yourself to make certain that renewing your vehicle’s COE is the most suitable option for you:
1) How long more will you be using your current vehicle?
If you know that you will only really need your car for a few more years, then it would be a more viable option to renew its COE. Rather than paying the cost of getting a new car, the price of renewing a vehicle’s COE is considerably lesser because you are only paying the PQP.
2) Does your current vehicle require regular maintenance?
If you think that your car is still in good condition, well enough to last through the COE extension period, then renewing its COE is a good choice. However, if your car is one that needs annual repairs, then it would be a better option to take it for scrapping and purchase a new car.
3) Is your current vehicle under the Weekend Car or Revised Off-Peak Car schemes?
You are advised not to renew the COE if your car is under these schemes because you would still be paying the same PQP as a regular car. Only renew the COE if you will continue using the car, or you can renew the COE and change it to a regular car.
4) How much is it to pay for a COE renewal as compared to getting a car loan?
Compare the prices of repaying a car loan and repaying the loan for a COE renewal (if you need a loan). The debt ratio (percentage of money that is paying for the monthly loan) should not exceed 40%. Take note that the rates for COE renewal are generally more than car loans.
5) How much of the car’s price includes the COE?
Luxurious cars tend to have lower COE renewal prices (only requiring its owners to pay 15-20% of the car’s total cost), whereas family cars’ COE takes up more than half of the car’s price.