When it comes to spending a large sum of money on an item which has a fluctuating price, most people get all tense about the right moment and add to that the emotional attachment some have with their cars, it does get rather stressful! I’m gonna have to face that same decision soon and although I can be dispassionate and cool on any other car, its harder when it comes to a car I like.
So what in fact are the factors which should be considered when considering COE renewal?
Business Times reports that there are a rising number of COE renewals, especially for small cars, and touches on some of the considerations individuals have when it comes to paying the PQP (prevailing quota premium – which is the average of the average of the last three months closing prices for the particular category your car belongs in).
I provide our view here at risk of being repetitive, but there are other considerations and also a little bit of misinformation in the Business Times article that should be clarified.
So, if one does intend to renew the COE on a car approaching 10 years, these are some points to think about.
You Can Pick To Renew At A Lower PQP
The PQP can be paid prior to the end date of your current COE, but although that also means the remaining unused portion of the COE is forfeited. This may sound like a bad thing, but if you can know the price of what it costs to renew the next month versus if you renew this month, then you can make a logical deduction if renewing now will in fact be financially more prudent. If the trend is rising COEs, next month’s COE is likely to be higher than this months, making it wiser to renew early.
How can you tell next months PQP? Check it here, LTA shows next months PQP as soon as the tenders for the current month are completed. Find out more info here about renewing at a more optimal time with our PQP monitoring service.
You Can Get Comprehensive Insurance For COE Renewed Cars
Business Times incorrectly stated that you cannot get comprehensive insurance coverage for a car more than 10 years old, but you can! Just ask us. We understand how much this means for customers who may be driving classics where car price may actually be increasing instead of decreasing but many ask us for comprehensive insurance because of the next point…
You Can Get A COE Renewal Loan
Yes you read that right, and that is also the reason why we arrange for comprehensive coverage for cars past 10 years old – the finance institute granting the loan for the PQP requires comprehensive coverage. This is similar for any car on finance or loan – they must be under comprehensive coverage.
The reason why many small cars are being renewed is also because loans are available for their COE renewals, which makes it very affordable compared to forking out a minimum of 40% of a new car (less the PARF of your old car, if you have one).
We can arrange for these loans and you are welcome to contact us for more details using the contact form on the side. (Do leave us your vehicle number for us to assist you).
It Is Cheaper to Renew COE For A Small (Cat A) Car Instead Of A Big (Cat B) Car
Well, if at first you suspect I’m talking about the PQPs of Category A costing less than the equivalent of Category B, yes, generally they are cheaper but that’s not my point exactly.
When renewing COE, you forfeit your PARF value, which can be redeemed from LTA in cash when you scrap your old car. Since it is cash, if you renew, you are also spending this cash to get the renewal. If that is the case, then the total cost of renewing COE should be calculated as:
COST = (PQP payable + PARF of old car)
And since most small cars have OMV that are lower than those of big cars, the PARF is also lower, hence overall lower cost!
This explains why most Cat B cars are renewed 10 years while Cat A cars are sometimes renewed for only 5 years. No mystery there then, why most renewals are Cat A cars.
Parts Cost For Your Old Car
Repair costs vary between different vehicles, with certain makes costing more than others. With age comes necessary replacement parts. You should already have a good idea of what it costs the first 10 years of ownership, but in case you bought a 9 year old with intention to renew the COE, well, watch out for this part.
Usually “continental” makes have high parts prices, and several may not even have parts that are easily available here. Being continental doesn’t mean only the expensive brands but also the initially affordable cars (Ford, Fiat, Peugeot) can have high parts cost when it come replacement time compared to the ubiquitous Japanese saloons here in Singapore.
For this reason, I recommend renewal on a common Japanese brand rather than, say, a Jaguar. I would give an exception to this rule if the car has appreciating value as it becomes a classic car sought after by enthusiasts, like a Porsche 964 911.
If you do intend to renew a continental, I would say Mercedes generally ranks better than a BMW or Audi (Audi the worst of the three) in terms of parts cost.
Road Tax Increases After The 10th Year
Yes, Business Times got it right on this point. Which is why small cars have a high chance of survival here, their road tax increase in absolute terms is lesser than Cat B cars.
You Can Renew COE After Your COE Expires
Well, not recommended, but yes you can. Up to one month after expiry, but you do have to pay a reinstatement fee of $250. Note the car is considered “deregistered” after the COE expires – we do not recommend that it be driven on the roads until the COE renewal is done!
Off Peak Car, But Get A Normal Car After 10th Year
What? Yes, it can be done. Because, guess what, renewing an OPC (Off Peak Car) or WEC (Week End Car) car costs the same as a normal car! Really, check it out here.
And note that whatever scheme the car was in, it will remain in that scheme after the COE renewal. So why would anyone want to renew an OPC car at normal car rates just to drive it during off peak hours?
But think of it the other way, if you converted your OPC at the last minute before renewal to a normal car, then upon renewal, you will have a normal car! The closer you get to 10th year, the cheaper the conversion from a WEC or OPC to a normal car will be. How much does it cost for your car? Check it out here.
So there it is, happy pondering over the points here! You’re welcome to contact us if you have any queries or need help with the COE renewal for your car.