We published an article on Monday 6 June about whether car owners in Singapore should buy a new car or renew their COE once it has expired.
A couple of our readers wrote in to share their thoughts on some areas we missed out, or was not well elaborated. Having gone through these comments, we decided to write a sequel to our original article.
We recommend for you to read the original article first.
Read Also: Should You Renew Your COE Or Buy A New Car
#1 PARF Rebate “Double Effect”
In our previous article, we mentioned that owners who buy a new car will receive the PARF rebate from the deregistration of their existing vehicle. This PARF rebate can then be used to offset the purchase of a new car.
For example, a car owner who deregisters his or her Mazda 3 may get back about $8,400. The money can then be used to offset the price of the new car ($95,000 – $8,400 = $86,600).
Our initial calculation did not take into consideration the future PARF value car owners would receive back if they bought a new car, and then deregister it 10 years later.
Having illustrated that an owner would pay about $84,600 for a new Mazda 3 after the PARF rebate, the actual cost would further reduce to $78,000 once we take into account the next PARF rebate.
From the earlier article, the comparison would be between buying a new car for $78,000 against paying $46,000 for a new COE plus higher cost for future repair of vehicle.
#2 Higher Maintenance & Road Tax Cost
Paying more to repair an old car is expected. Aside from the wear and tear for older parts that need to be replaced, it is also possible that older car models may not have spare parts for repair. It has to be imported from overseas, adding to the cost.
Road tax also increases for vehicles that are older than 10 years. According to a LTA document, “the surcharges increases at a rate of 10% per annum of the basic road tax amount payable, up to a maximum of 50% per annum.”
#3 5-Year COE
Another option is the 5-year COE for car owners who desire a shorter extension period. It’s a straightforward computation. Pay 50% of the Prevailing Quota Premium (PQP) for 5 years. On a per year basis, there is no difference in cost.
However, it is worth noting that once you extend your COE, be it for 10 or 5 years, you no longer enjoy any PARF rebate, even if you were to deregister the vehicle once the extended COE period is up.
For example, if you deregister your Audi A6 after 10 years, you can get a PARF rebate of about $27,000. If you were to extend your COE for another 10 years, but decide after 1 year that you want to deregister the car, the only value you would receive is the pro-rated amount from your COE. The PARF value will be gone.
Also, once you take up the 5-year option for COE extension, you can no longer renew your COE once the 5 years is up.
#4 Luxury Cars Vs Affordable Model
In our first article, we mentioned that more expensive models are better candidates for COE renewal. We reasoned that these more expensive cars are perceived to be better.
However, we’d like to clarify that just because a model is expensive does not always mean it is better, or cheaper to maintain. Expensive car models usually cost more to repair. Mileage is also a better gauge on how old a car truly is. All this should ultimately factor in to whether a car owner should extend his COE, or buy a new car.
Assuming, of course, he can afford it.
What are your thoughts about extending COE vs. buying a new car? Share with us your comment on Facebook.
Top Image Credit: DollarsAndSense.sg
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