Infographic: Should I Renew My COE or Buy a New Car?

Are you deciding between renewing your COE or buying a new car? In this infographic, we compare the pros and cons of both to help you decide which is the better option.

Pros of COE Renewal

1. Lower Upfront Cost

For COE renewal, the bulk of your cost would be paying for the Prevailing Quota Premium (PQP). The PQP varies monthly depending on the COE prices in the bidding exercises conducted in the last three months.

2. Lesser Depreciation

Vehicle depreciation is the lost value of a car over time. The lower the depreciation, the better it is for you as a car owner. By renewing your COE, you’ll enjoy lesser depreciation.

Vehicle depreciation can be rather difficult to explain; therefore, we’ve put together the following table to help you better visualize it.

3. 100% Bank Loans

Most, if not all, banks in Singapore would only allow loan tenures for up to seven years for COE renewal.

However, the financing rate for a COE renewal loan can be 100%. This is unlike the car financing rules of purchasing a new car; where only a maximum of 70% of the loan is allowed.

4. Ease of Transaction

Although the COE Bidding Exercise is temporarily halted during the COVID-19 pandemic, you can still renew your COE easily through Motorist.

At Motorist, we promise to help you find the lowest COE loan interest rates in Singapore. We will even handle the necessary paperwork and provide you with advice on when is the best time to renew your COE.

Cons of COE Renewal

1. Forfeited COE and PARF Rebate

COE and PARF rebates are forfeited when you renew your COE. For a comprehensive explanation, you can refer to our previous article here. In the article, it will explain what it means to forgo your rebates.

2. Higher Road Tax

When you renew your COE, you will have to pay more for road tax.

Road tax goes up by 10% each year after 10 years of the vehicular life. This continues until it reaches a surcharge of 50% of the road tax.

3. Higher Maintenance Cost

After all, a car is still a machine, and it will experience wear and tear over the years. By extending the lifespan of the vehicle, more effort has to be made to sustain its longevity.

Moreover, some parts of the vehicle may be obsolete, which might increase the cost of vehicle maintenance.

Pros of Buying a New Car

1. COE/PARF Rebates + Body Value

As mentioned, COE and PARF rebates are forfeited when you renew your COE.

By purchasing a new vehicle, you’d be able to receive these rebates to help offset the purchasing a new car.

2. Lower Road Tax

Road tax for new vehicles will be lower compared to COE car. As mentioned, road tax goes up by 10% each year after 10 years of the vehicular life. This will continue until it reaches a surcharge of 50% of the road tax.

3. Zero to Low Maintenance

By purchasing a new car, you’d have more assurance when it comes to the reliability of the vehicle.

Moreover, you’ll be able to enjoy perks such as warranty coverage for servicing and exclusive discounts on vehicular maintenance.

However, similar to many things, the reliability and functionality of the product is a hit-and-miss situation. There have been recalls for brand new vehicles due to malfunctions caused by factory productions.

4. The Satisfaction of Driving a New Car

There’s nothing more invigorating than driving a brand new car and breathing in the smell of new leather seats.

Cons of Buying a New Car

1. Higher Cost

The cost of buying a new car compared to renewing your COE is higher. Not only do you have to go through the entire COE bidding procedure, but you will also have to pay for the body value of the car and the loan interest rate that comes with the purchase.

2. Higher Depreciation

Referring back to the table above, the annual depreciation for a new car is much higher than a COE car. As a car owner, you would want the depreciation to be as low as possible.

3. 60 - 70% Bank Loan

According to the car financing regulations in Singapore, you are only entitled to a maximum of 70% loan of the car’s purchasing price.

The loan is subjected to the car's OMV (Open Market Value). Here's a table to showcase the car financing structure for purchasing a new car.

(Photo Credit: POSB)

4. Time Consuming and Tedious

Buying a new car is a lot of hard work. Apart from comparing between a host of options, you would still have to plan out your budget, consult with your loan provider, sell your previous vehicle and find the time to test drive the new vehicle. There's also the waiting period for your new car to arrive, which could take up to one to three months.

We hope you found our infographic useful. Please do not hesitate to contact us if you have any further questions regarding COE renewal. Fill up your details in the form below, and we'll be in touch with you as soon as possible!

Read More: 6 Reasons to Renew Your COE Now, Otherwise You Might Regret it Later

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