For many car owners in Singapore, reaching the tenth year of ownership used to present a relatively straightforward choice: replace the car, or renew its Certificate of Entitlement (COE) if it remained in good condition.
That decision is not only harder today, but also a significant financial decision. In the first COE bidding exercise of August 2026, Category A and Category B premiums closed at $123,890 and $129,910 respectively. At these prices, renewing a car for another 10 years could cost more than what some owners originally paid for the vehicle itself.
Existing car owners whose COEs expire within the next 12 months may therefore be wondering what to do next. Should they pay the Prevailing Quota Premium (PQP) to keep their current car on the road?
Read Also: 6 Ways Other Major Cities Around The World Control Car Ownership Without COE
Renewing The COE Means Giving Up The Car’s PARF Rebate
One option is to renew the car’s COE by paying the PQP. However, owners should not look at the PQP in isolation. Renewing the COE also means giving up the car’s Preferential Additional Registration Fee (PARF) rebate.
For most cars whose COEs are expiring within the next 12 months, the PARF rebate is generally 50% of the Additional Registration Fee paid, provided the car is deregistered when it is more than nine but not more than 10 years old. Once the car passes its 10-year mark and its COE is renewed, its PARF rebate becomes zero.
For example, suppose an owner has a car with a PARF rebate of $10,000. If the PQP for a 10-year renewal is $130,000, the cost of keeping the car is effectively $140,000. The owner must pay $130,000 for the new COE while also forgoing the $10,000 that could have been received by deregistering the car.
Road Tax Will Increase As The Car Gets Older
Cars more than 10 years old are subject to an annual road tax surcharge. This starts at 10% and rises by 10 percentage points each year, reaching 50% once the car is more than 14 years old.
Take a 1.8-litre Toyota Wish with an estimated base road tax of about $976 a year. After renewing its COE, the annual road tax would rise from about $1,074 in the first year to $1,464 from the fifth year onwards.
| Year after renewal | Estimated road tax |
| Year 1 | $1,074 |
| Year 2 | $1,171 |
| Year 3 | $1,269 |
| Year 4 | $1,366 |
| Years 5 to 10 | $1,464 a year |
| Total over 10 years | About $13,664, or about $1,366 a year. |
Without the age-related surcharge, the same car would incur about $9,760 in road tax over 10 years. Renewing its COE would therefore add around $3,904 in road tax costs.
Owners should also budget for higher repair and replacement costs as the car ages. Setting aside an additional $10,000 over the next 10 years for items such as suspension parts, air-conditioning components and other wear-and-tear repairs may be reasonable, although the actual amount will depend on the car’s condition and mileage.
Together, the higher road tax and additional repair allowance could add about $14,000 to the cost of keeping an older car. When this is added to a $130,000 COE renewal and a $10,000 PARF rebate forgone, the estimated economic cost of keeping the car for another 10 years rises to about $154,000.
A Brand-New Car May Not Cost Much More
At an estimated economic cost of $154,000, renewing an older car may appear cheaper than buying a new one. However, the difference may be smaller than expected.
For example, a brand-new BYD M6 (also a 7-seater) priced currently at $192,388 would cost about $38,388 more than renewing the existing car under our assumptions.
Spread over 10 years, the difference works out to about $3,839 a year, or $320 a month. In return, the owner gets a brand-new car with a fresh 10-year COE, manufacturer warranty, newer technology and features, and potentially lower repair costs during the initial years.
This is not a direct like-for-like comparison, but it illustrates the financial trade-offs involved. When a 10-year COE renewal costs close to $130,000, the price gap between keeping an ageing car and buying a new one may be smaller than expected. In such cases, replacing the car may actually make more sense.
Read Also: Cost Of Owning A Car In Singapore Over 10 Years
Photo Credit: iStock/bluesky85
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