English5b Neutral Newbie December 11, 2006 Share December 11, 2006 I did a calculation for the following scenarios, and found there is a difference: - Buy a new OPC car - Buy a new normal car, and convert it to OPC on the first day Assume: - Car price = 70k - OMV = 20k - COE = 14k Case 1: Buy a new OPC car Price = 70k - 17k = 53k COE = 14k - 14k = 0 OMV = 20k ARF = 22k - 3k = 19k PARF at year 10 = 50% ARF = 9.5k Hence, 10 years depreciation = 53k - 9.5k = 43.5k Case 2: Buy a new normal car, and convert it to OPC on the first day Price = 70k COE = 14k OMV = 20k ARF = 22k Additional PARF = Lifespan of car as a converted OPC x ($2,200/12) = 120 months x ($2,200/12) = 22k PARF at year 10 = (50% ARF) + Additional PARF = 11k + 22k = 33k Hence, 10 years depreciation = 70k - 33k = 37k <---- Lower depreciation Depreciation is lower in case 2. Did I make any mistake in the calculation? Did I understand the rule correctly? Can anyone advise? Thanks. Info of OPC on LTA web site: http://www.lta.gov.sg/motoring_matters/mot...mes_offpeak.htm ↡ Advertisement Link to post Share on other sites More sharing options...
Chan0004 Neutral Newbie December 11, 2006 Share December 11, 2006 interesting arguement......not sure on the rules and regulations...but i think ot makes sense Link to post Share on other sites More sharing options...
Landex Clutched December 11, 2006 Share December 11, 2006 But theory n truth r not always the same.. esp for cars in sinkapor. Link to post Share on other sites More sharing options...
Pippo20 Neutral Newbie December 12, 2006 Share December 12, 2006 For Case 2: PARF at year 10 = 33k??! u think lky is your father? plsssssss read up lta rules.. Link to post Share on other sites More sharing options...
Sporadic 1st Gear December 12, 2006 Share December 12, 2006 Calculating this way, yes, it appears that it's better to convert after day 1 than buy an OPC right at the start. However, note that you are incurring more interest since you'll take a loan of $17,000 more:=. Assuming interest of 3.5% for a 10-year loan => 0.035 X 17,000 X 10= $5,950. Add this to the total depre, and you're worse off converting. Even if you choose to pay the 17.000 in cash, you are incurring opportunity cost. Finally, the PARF you get back at the end is not cold, hard cash, unlike the $17,000 you save. Just my thoughts. Link to post Share on other sites More sharing options...
English5b Neutral Newbie December 12, 2006 Author Share December 12, 2006 For Case 2: PARF at year 10 = 33k??! u think lky is your father? plsssssss read up lta rules.. This is what I understand for "Additional PARF", could you point out where is the mistake? The rule is stated in http://www.lta.gov.sg/motoring_matters/mot...mes_offpeak.htm Link to post Share on other sites More sharing options...
English5b Neutral Newbie December 12, 2006 Author Share December 12, 2006 Ya, you are right about the interest of 17k, and also the 17k is locked with the car. It is really a disadvantage for case 2. Link to post Share on other sites More sharing options...
Mok_ Neutral Newbie December 12, 2006 Share December 12, 2006 Basically, either you save 17k upfront or pay full and get back 22k more in paper after 10 years. It's like putting a 17k fixed deposit and earning an interest of 5k over 10 years at a flat rate of about 3%. If you are taking a loan, you'll end up square one. Link to post Share on other sites More sharing options...
Stig Neutral Newbie December 15, 2006 Share December 15, 2006 Quote I did a calculation for the following scenarios, and found there is a difference:- Buy a new OPC car - Buy a new normal car, and convert it to OPC on the first day Assume: - Car price = 70k - OMV = 20k - COE = 14k Case 1: Buy a new OPC car Price = 70k - 17k = 53k COE = 14k - 14k = 0 OMV = 20k ARF = 22k - 3k = 19k PARF at year 10 = 50% ARF = 9.5k Hence, 10 years depreciation = 53k - 9.5k = 43.5k Case 2: Buy a new normal car, and convert it to OPC on the first day Price = 70k COE = 14k OMV = 20k ARF = 22k Additional PARF = Lifespan of car as a converted OPC x ($2,200/12) = 120 months x ($2,200/12) = 22k PARF at year 10 = (50% ARF) + Additional PARF = 11k + 22k = 33k Hence, 10 years depreciation = 70k - 33k = 37k <---- Lower depreciation Depreciation is lower in case 2. Did I make any mistake in the calculation? Did I understand the rule correctly? Can anyone advise? Thanks. Info of OPC on LTA web site: http://www.lta.gov.sg/motoring_matters/mot...mes_offpeak.htm Hmmm IMHO, you get better value if you buy an OPC. But the downside is, you dont get to drive you car often. If you love driving and enjoy the freedom it bring, buy a non-OPC car. Link to post Share on other sites More sharing options...
Ahyoo2002 2nd Gear December 15, 2006 Share December 15, 2006 Is there something wrong with the actual PARF that can get back? $33K is a lot leh. Also, Additional PARF = Lifespan of car as a converted OPC x ($2,200/12) Is this fixed formula??? ↡ Advertisement Link to post Share on other sites More sharing options...
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