COE Renewal or Purchasing a New Car?

Man Driving his Car
Singapore’s public commuting system is one of the best in the world, so why is it I’d want to have a vehicle of my own?
 
During some days, you’d find a vehicle convenient because you can take the entire family to Marina Bay Sands or Bugis and lug a huge number of stuff along the way. Furthermore, anyone with disabilities, despite the helpful and disability-friendly facilities of Singapore’s public commuting system, can travel conveniently without spending extra energy in the process.
 
In Singapore, you have two options to buy vehicles: bid for a Certificate of Entitlement to own a vehicle. Second, you can finance your own vehicle by working with a bank. Which should you choose and which is better? Read more about them below.

What is a COE?

A Certificate of Entitlement (COE) is the right issued to any Singaporean to own a vehicle. It is part of the Public Works Department’s (PWD) attempt to limit vehicles and ensure the high quality and capability of public transportation. Without it, there would be so many vehicles running and clogging Singapore’s roads.
It was a rational decision and enforcement for the country because Singapore only has a small land-size. With all citizens owning a vehicle, traffic management will be next to impossible.
A holder can own a vehicle for a limited time – the maximum being 10 years. After 10 years, they will then have to scrap or sell their vehicle. They have the option to bid for another COE during the first and third Monday of every month until Wednesday of the same week. Bidding prices are often lower than new car prices, especially on everyday-vehicle models with an engine power less than 97kW, such as the average sedan.
 

Should You Renew COE or Buy a New Car?

man is handling a new car keyCOEs give you a ready-selection of vehicles you can bid ownership. Furthermore, you won’t need to stick with the vehicle for so long after 10 years. With an affordable selection of vehicles at an affordable price, it seems to be an excellent choice for any Singaporean.
 

However, renew COE and financing a new vehicle both have their respective advantages and disadvantages.

With a New Car You Can:

Enjoy a Flawless Experience for Five Years

Brand-new cars guarantee exceptional quality for less than five years. Usually, you’ll see symptoms and problems with your vehicle after half a decade. But, until then, you can expect it to function and perform at a good level.

Guaranteed Vehicle Quality and Dependability

High-quality vehicle manufacturers distributing their vehicles in Singapore guarantee full warranties and dependability for their vehicles. COE vehicles have limited warranties and car insurance because of its age, which is often more than 5 – 10 years of age.

Faultless Seats and Aesthetics

New vehicles ensure that your stock seats are as beautiful, comfortable, and textured the way manufacturers intended it to be. You enjoy the full, untainted, and unmodified aesthetics of your new car.

A Higher Resale Value in the First Week

If you’re not happy with your vehicle, you can still recoup your losses for at least 80% the original price of the vehicle, but only for the first week. If you compare it with COE vehicles, you can’t recoup your payment because you’re bound by contract to use your vehicle as the government has delivered.

But You’ll Also Contend With:

Higher Initial Prices

New vehicles are sold at global or market prices in Singapore, which make them more expensive.

Lower Resale Value In Less Than a Month

Owning a vehicle and enjoying its full, flawless features for five years is a difficult investment. In addition, you won’t have any recourses and subsidies for repairs and other improvements owning a brand new vehicle.

Use a Loan For Partial Financing

Man with coins and carYou can use a car loan to pay only up to 60% of your vehicle’s total costs. With older vehicles, you can use a COE renewal loan to pay 100% of your financing.


An Example of Vehicle Financing in Singapore

For example, you’d like to purchase a new sedan worth S$106,000. You can only finance 60% of this vehicle’s cost, which is S$63,600. Most of the time, promotions require a 0-30% down payment, an amount you can use money lenders or trade unions to secure. Furthermore, the 60% car loan has different interest rates that increases annually, which can make it more expensive — but its consistency makes it easy to plan for this risk.


When You Renew Your COE, You Can:

Enjoy Cheaper Vehicle Rates

The Preferential Additional Registration Fee (PARF) is a guaranteed sum former vehicle owners use selling their vehicles 10 years of age below. As for secondhand vehicles, these are more affordable yet more reliable (thanks to PWD oversight) than buying from used car owners. You enjoy great financing rates too.

100% Financing of Your COE With a Loan

Unlike new vehicles, you can finance and renew your COE vehicle with a 100% bank loan. In fact, many banks have special COE financial products for the convenience of customers. Now, you won’t need to get additional high interest rates financing for the remaining 40% payment when you buy a brand-new vehicle.

Gain Option to Get Rebates

Rebates are available for car owners who deregister with less than 10 years from their appointed renewal date. The rebate is higher the more years remaining you have.

Lower Depreciation Value

PARF and COE allows car owners to gain better value for their secondhand vehicles than by selling it directly to a customer. They receive higher PARF rebates if their cars are less than a decade old too.


However, It Can Also Be Problematic Because:

It Can Be Expensive As Brand New Cars

If you’re targeting premium cars, you’re going to pay as high as you would for a brand-new sedan. It’s highly likely affordable sedans see scarce vehicle stocks too. However, the price for secondhand premium vehicles are smaller in value if you compare it to a full-priced premium vehicle.

There Is No Limit To The Vehicles One Can Buy

many cars in a garage

Anyone – rich or poor Singaporeans – can purchase as many vehicles as they want with a COE. This activity can decrease the number of vehicles available with a COE on a regular basis. While the lower supply will not affect or increase the prices of the vehicles available with a COE.

People Who Need Vehicles Get Crowded Out

Disabled, elderly, and individuals who direly need vehicles get crowded out due to unregulated market and auction-oriented activities without minimal requirements to customers.

An Example of COE Renewal in Singapore

A COE sedan that costs about S$70,000 is an amount a bank can fully pay. With steady interest rates increase mapped out, the expenses you’ll incur — such as 60% bank loan closing costs you will encounter with new vehicle purchases and the initial loan application costs for the remaining 40% — are smaller in nature.


In fact, you can even use money lenders to help to renew COE loan financing once you’ve won the bidding too.

It’s Never Difficult to Finance Vehicles in Singapore

Purchasing vehicles in Singapore can be quite expensive whether it’s brand-new or a COE-registered vehicle. However, it is never difficult to finance a new vehicle when you need one as long as you have enough cash.

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