Saving On COE Renewal PQP
Boring to talk about history? But shocking statistics out there is telling us this…
There were a record number of Cat B COE renewed (or revalidated) in the months of April and October of 2021 compared with the other months of the same year!
Why is that strange? Is there something others have realised but you have not yet understood about COE renewal?
COE on new cars expire in exactly 10 years, no more, no less.
If you consider this: the total number of Cat B COEs issued from 2011 ten years ago, issued in the same month of April, are less than the number of renewals in April 2021, what does that tell you?
As there are two bids of COE per month, the total number of COE issued in the month of April 2011 and expiring April 2021 is 948.
So, according to LTA statistics, how did we end up with COE renewal numbers for Cat B at a total of 1620 (1475 number of 10-year renewals + 145 of 5-yr renewals) for April 2021?
And a similar thing also happened for the October month of 2021, where there were more renewals than COE issued.
How can there be more cars renewed than the number of COE registered on those months?
Here is the answer:
The owner’s of those cars are renewing to save money, lots of money, not because that is their month of expiry!
Are you also grabbing what money you can save or just losing out on the opportunity?!
What Many People Do Not Realise About COE Renewal…
Is this: The COE on your existing car can be renewed before it expires.
And you can take advantage of the fact that the going rate for COE renewal, called PQP (or Prevailing Quota Payable – this is the correct term for renewal amount payable for existing registered vehicles because no bidding is required), fluctuates from month to month.
Since there is a fluctuation, that means that in the months approaching your COE expiry, there will be higher and lower PQP. This is where you can choose to renew at a lower month as opposed to the month where your COE expires and paying the unavoidable price, if you leave it till too late.
You have some control over what price to pay.
The Limited Window Period
The PQP of each month is calculated using the average of 6 previous (which is 3 months of) COE bidding prices.
For example, the month of December is made up of the bids from September, October and November. It can be calculated the moment the second COE bid is completed for the month of November.
If you are not keen on using the calculator, you can also use this link here to check the PQP rates, however, the next month’s PQP is not immediately released here once the second bid closes. Our own calculators are faster.
Top Tip: Since the second bid is always on the 3rd week of the month, you have till the end of the month to decide if it is wiser to pay December’s price (if it is lower) instead of January prices.
Other COE PQP Examples From The Past:
Clearly, it would have been wiser to renew a Cat A car expiring in the month of September in the month of July 2016. Same applies for a Cat A car expiring in the month of August, it’s better to renew in the month of July. The same also applies for Cat B Cars during those months.
(Note: It is odd then, according to the statistics, the renewals in July and August were lower compared to preceding months.)
When the difference in pricing is small, then it should be compared to the long term per month COE cost when you should renew in an earlier month or not.
You Lose Something If You Renew Early
Long term per month COE cost we define as: 10-year PQP rate/120 months.
If per month cost is $450, and the price savings between the two months of choice is greater than $450, and you lose exactly 30 days, then it is worth to renew earlier.
Do factor in the fact that if you only lose, say only 14 days, then it is even more beneficial to renew in the earlier month!
This is because the number of days your forfeit and the value that is lost is smaller, and your savings outweigh the loss. We explain more below.
The Renewal Catch
And this is why – you don’t really get your cake and eat it. If you do choose to renew earlier, the new COE period (whether 5 or 10 years) that you paid for will begin counting down on the 1st of the month following the month of payment.
Example using below diagram:
- The car was registered on 6th of August, 10 years ago and it is now 21st June, second COE bid just ended today.
- From the 22nd of June till last day of June, you can choose to renew using either June PQP or July PQP.
- You can also choose July PQP to renew when in month of June, as show in the diagram. (But in practice, that is not a wise move – you may want to check with us on “why?”)
- If COE is much higher in July, it may make sense to renew in June using June PQP, even if your car was registered in August. (You can calculate the loss, if doing a COE renewal loan, feel free to ask us as we do PQP monitoring for you)
- If you renew using June PQP during month of June, your old COE runs to end of June, and your new COE starts on 1st of July.
- If you renewed using July PQP, then your new COE starts on 1st August (as shown in diagram), and you forfeit 5 days of your old COE.
All crystal clear now?
No? You can contact us using the WhatsApp button or contact form and we will assist you together with your COE renewal loan – including doing PQP monitoring for you if you are still months away from COE expiry.
A small quirk of COE…
Because of this, we find that car owners who have had their cars registered in the early part of the month (first week of the month) have more of a benefit of choice of which month they renew, and forsake less of the existing COE when they renew one month prior, since the new COE starts on the 1st of the following month.
Tip: If you buy a new car and your dealer allows a choice in this, try to opt for the beginning of the month.
So What Do I Do If I Want To Renew?
If the intention is to renew and the decision is firm, we would strongly recommend that you standby the funds and be ready for the payment when the PQP is low. This can save you many thousands, same as some of our customers have saved when they entrusted us with their COE renewal monitoring and loan.
For the same reason, I would recommend if you intend to get financing for this, you should apply with us and get approval prior to the most optimal time to pay the PQP – the window to take advantage of the lower price is that small one week period after the second COE bid at the end of each month, before the next month.
Not only that, we will recommend to you, specifically for your situation, which loan to go for. That is why we provide the best COE renewal loan for our customers, because it is not one size fits all! There are a bunch to choose from and each one has varying terms and conditions, with its advantages and disadvantages. Which we will explain to you.
In More Recent COE Renewal Times
You can see that the PQP trend from late 2021 to February of 2022 has mostly been upwards.
There has been an almost $9,966 rise in Cat A and almost $22,459 rise in Cat B during this time period.
We carry out a free PQP price monitoring service for all who have applied and have loans approved with us.
Our admin will call you to inform of the price difference as soon as results are out, so you can renew in the month of your choice for the most savings.
We also provide registered customers first knowledge of our PQP predictions for upcoming months before the PQP is set by the COE bidding. So, of course there is a little more to our secret that we keep, info for our registered customers to allow them the best chance of savings!
Because this is what it looks like when trying to save money without proper method or info.
Check these previous predictions SG Cash N Cars made in the past months, and compare them with the list above of the official results from LTA.
So do apply early to keep on top of the situation, and grab those savings that are yours before your time is up!
Cheers and happy driving!
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