In Singapore, after getting used to the car which you have been driving for the past 10 years, you will be faced with the option of scrapping your car or to renew it. Every car owner is given a Certificate of Entitlement which is a right of car ownership for 10 years.
When you choose to scrap your car before your COE expires, you will be compensated according to your car PARF value and COE rebate. Otherwise, you can choose to register for a 5-year or a 10-year extension of the COE.
When you choose to extend your COE, you will be forfeiting your PARF rebate. Hence, you need to think through and consider which option will be better for you. Before you make the decision, the following factors can help you to make a more informed decision.
How long will You be Driving?
Will there be a need for you to continue driving for a long time or you will only need to drive for another few years? If you have reached the age of retirement and no longer need to chauffeur your kids around, you can consider renewing your COE to last through another 5 years.
Renewing COE is cheaper than purchasing a new or a second-hand car as you will only need to pay the Prevailing Quota Premiums (PQP), which is the moving average of the COE prices in the last 3 months.
If you decide to renew your COE, remember to purchase car insurance.
You know your car the best! After driving it for 10 years, do you experience a recurring problem that always brings you back to the car repairing shop? If you face a serious mechanical issue that will cost you $1500 each time you send it for repair once a year, these payments will amount to a huge sum.
When it persists for the remaining 10 years, you may need to spend up to $15000 on repair costs. This means the renewing of COE will not help you in any cost-saving. Thus, do a simple cost comparison between purchasing a new car and renewing of COE.
If your car has already renewed its COE before, it may be a better idea to purchase a new car. The old and worn out internal engines may give you a lot of headaches and cause you to spend a lump sum on multiple visits to car repair shops.
However, if your car is still operating well after years of driving it, renewing your COE for another 5 or 10 years will help you to save a lot of money.
Before your COE expires, make sure you do the necessary research to decide on whether you should scrap your car or extend the COE. Failure to do so, you may end up incurring a much higher cost than expected.