6 things to note before you renew your COE for 5 or 10 years

It's unsurprising that Certificate of Entitlement (COE) premiums are expected to take a hit (amongst many other things), due to the pandemic.

While it may be exciting to buy a new car, we reckon that it's better to save money and simply renew your COE. But, should you renew your COE for 5 or 10 years?

Price wise, 5 year COE premiums are naturally cheaper than 10 year COE premiums by half.

Do note however, that for the five year COE renewals, your car must be deregistered after five years and cannot be renewed ay further. Whereas for 10 year COE renewals, you can renew your COE an unlimited number of times.

There are other things to factor in and we'll walk you through it.

• What is PQP and why does it matter?
• How is PQP calculated?
• Do I only need to pay for PQP?
• How expensive is road tax after 10 years?
• Can my car last an additional 10 years?
• When is the best time to renew my COE?

What is PQP and why does it matter?

To keep your existing car and drive it on road, you need to pay the Prevailing Quota Premium (PQP).

The PQP is the amount you'll have to pay when you renew your COE.

It makes economical sense to extend the life of your car if you car is still in good condition, accident-free and you have been diligent with its servicing and maintenance.

How is PQP calculated?

To calculate the PQP, you'll have to take the past three-month average of COE premiums.

Here are the rates from April to July 2020 from One.Motoring.

Seeing a five-digit amount you have to pay for can be a little daunting. Great news! There are COE renewal loan options available for you.

For 10-year COE renewals, repayment can span across seven years. For 5-year COE renewals, repayment can span across five years.

Do I only need to pay for PQP?

Yes, when you renew your COE, you will only need to pay the PQP to extend the 'life' of your car.

However, by choosing to renew your COE to extend your car's lifespan after 10 years, you will have to forfeit the Preferential Additional Registration Fee (PARF) rebate which you would otherwise receive should you deregister your car. 

Find out more about PARF rebate and car de-registration here

How expensive is road tax after 10 years?

Annual road tax surcharge rises with the age of your vehicle. That means you're paying more on top of your current road tax.

Cars aged 10 and above will have an additional surcharge levied on the car’s road tax. The amount chargeable is 10 per cent of the car’s regular road tax rate per annum, capped at a maximum of 50 per cent.

The surcharge for cars with larger engines are more significant.

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Take for instance a 2.4-litre car with an engine capacity of 2,362cc. The payable annual road tax before it hits the 10-year mark would be $1,638.

By the 11th year and 12th year, this amount rises to $1,802 and $1,966 respectively. By 15th year, the payable annual road tax hits the maximum chargeable amount of $2,458, which is 150 per cent of $1,632. 

With so much to pay for, it’s no wonder that Singapore has a 'young' vehicle population. Most car owners prefer paying more for a new vehicle instead of paying for additional road taxes.

Plus, your car's value will continue to depreciate even after COE renewal, thus, you'll be losing even more money. 

Can my car last an additional 10 years?

Yes, if your car is in good shape. Such cars are regularly serviced and accident-free.

To determine your car's condition, get a professional opinion from car workshops. They'll tell you which internal parts are likely to pose problems in the long-run.

Alternatively, you can use sgCarMart Connect for COE renewal services. We provide complimentary car checks to help you determine if your car is suitable for COE renewal 

When is the best time to renew my COE?

You'll want to renew your COE when the PQP is low, but don't do it right before your current COE expires – you'll end up forfeiting any unused portion of your current COE!