Should I get a new car or renew COE?

[Ct3833]

https://www.straitstimes.com/singapore/transport/should-i-get-a-new-car-or-revalidate-the-coe-on-my-existing-one

Saw this title but I have no subscriptions to read the article. 

It is interesting to revisit this topic now that COE prices is at 10 year high. 

If one has  a lots of spare cash,  then this discussion is irrelevant, please skip and go straight to sgcarmrt new car section.😄

I will stick to two distinctive categories, that is buying a new car vs renewing COE, the comparison will  purely base on economy sense, not taking into considerations about new leather smell, flashy look, newer technology of a new car. Buying a new car now will tie one down with a 10 years of high COE, if he sells his car along the way when COE is lower, he will lose  extremely high depre of his car. If he scraps it, he will get back paper value, lossing half the ARF or more depending on the emission rebate of his car, huge dealer margin and excise tax etc which will be a huge sum. Not to forget, dealer margin in SGP is based on total sales price, higher COE price  will attract higher dealer margin. 

Conversely, if one will to renew COE assuming his car condition is decent,  then he will just have to write off his PARF, no dealer margin, ARF to pay for, so the cost is relatively cheaper. Assuming 3 years down the road when COE drops,, he can scrap his car and get back his remaining  unused COE and go buy a new car.  If his car is a B& B car like Altis  or Elantra, then his financial PARF write off will be limited to that $10k there about over the number of years,  which is quite manageable.  If one has a higher PARF car, then he may have to do his sum carefully.

Next let's look at another  alternative, that is buying a used car. If given myself this situation, my thought would be to buy a used car that is about 7 years old, allow me to ride through the high  COE period and see how it goes, if COE drops by then, I will just scrap my car  and buy a new one, or even renew its COE when PQP is lower. 

Considering the straining economy outlook now, better be more prudence in spending. 

[inlinesix]

Currently, COE price $80.5k.

To be really financially prudent, neither option.

[therock]

Quote

SINGAPORE - Data from the Land Transport Authority shows that there are 11,143 cars in August 2022 that are within 12 months of the end of the 10-year lifespan of their certificates of entitlement (COEs).

If the drivers want to continue owning a vehicle, they can either revalidate the COE or buy another car.

COE prices have been rising in 2022 and this is pushing up car prices.

After the latest tender exercise, one of the cheapest new cars available today, the Mitsubishi Space Star, is at $114,999 after discounts. This is $31,000 up from $83,999 in October 2021.

Rising interest rates for car loans further drive up costs.

To revalidate the COE or buy a car, which is the preferred road to take?

Replacing with a new car

This is clearly the more expensive option, but rising COE premiums have also pushed up the market value of existing cars. This can help offset the amount needed to buy a new model.

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Dealers hungry for a sale are known to offer higher-than-market prices to owners trading in their old cars.

The maximum loan amount and tenure are governed by the Monetary Authority of Singapore. Depending on the import value of the car, it is possible to borrow up to either 60 per cent or 70 per cent of the purchase price for up to seven years.

Overall, a new car will normally have lower running costs than an older one.

It should not need repairs and if it does break down, the warranty would take care of the bills while the service package that is usually included with the purchase will cover the major maintenance costs for the first few years.

It should also be more fuel efficient than a comparable car that is older.

Revalidating the COE

On registration, the COE for a private car is valid for 10 years. This permit can be revalidated at a premium, which is the moving average of the COE premium for the last three months.

The renewal price has been going up with the rising COE premium.

In the category for cars with smaller engines, the premium in October to revalidate the COE for 10 years is $82,465, up from $56,560 in January.

This is also higher than the COE price from the most recent tender exercise that closed on Wednesday, which was $80,501, but using a new COE is not an option for an existing car.

 

 

A more wallet-friendly solution is to revalidate the COE for only five years and pay half the amount. However, it will not be possible to renew the COE again at the end of the five-year extension.

Loans for COE renewal are available, but usually come with higher interest rates than loans for new or used cars.

Using a car beyond 10 years also means forfeiting the rebate on the amount of taxes paid. For a larger car like a Honda Odyssey, for example, the amount is around $5,000.

The annual road tax increases after the car passes the 10-year mark at the rate of 10 per cent per year, topping out at 150 per cent of the original amount.

As the car ages, fuel consumption and repair and maintenance costs are likely to go up as well.

Replace with a used car

Car prices will likely come down in two to three years' time as more COEs - whose supply is mainly linked to the number of car deregistrations - become available.

For those who cannot wait until 2024 or so, a used car that is seven or eight years old can be a viable interim option.

An interesting topic... I'm not due yet, but I enjoy my current car.

The OMV is not bad, but if I do renew, I'll do it for 10 years. I'll need to replace some wear and tear parts too.

I was told that turbos have a definite lifespan, even in a low mileage car? that worries me. 

[Inlinefour]

new tech car lifespan definitely shorter 

 

thus go 

 

bus

mrt 

walk

 

best

 

save money 🤑

[ER-3682]

The Most important,can  you get a good Used 7 Years old Car,that no need Repairs.?

[inlinesix]

5 minutes ago, ER-3682 said:

The Most important,can  you get a good Used 7 Years old Car,that no need Repairs.?

Even your own car also needs repair at 7 years old.

Most importantly how much is the repair?

[Mkl22]

@Ct3833 I would do the same a get used car to tide over till 2028/9. 
The quantum for a used car will still be less even if the depreciation is the same. The next decision is a 3/4year old car or a 13/14year old coe car to hit 2029. 

[ER-3682]

6 minutes ago, inlinesix said:

Even your own car also needs repair at 7 years old.

Most importantly how much is the repair?

At least if the Car followed us 7 Years,We know is our own Driving,anything wrong,ownself to blame.

[inlinesix]

4 minutes ago, ER-3682 said:

At least if the Car followed us 7 Years,We know is our own Driving,anything wrong,ownself to blame.

You are right.

That's why you only buy new

🤭

[mersaylee]

Very simple...no need to read long article...

In current climate...

1) hold on to your bmw 

2) sell your bmw and take the other b.m.w.

3) hold out on the purchase of new bmw 

4) if die die cannot wait must live with one, go buy used from the one and only honest resident used car dealer @Jamesc

5) buy your bmw new or used, with or without the signal stalk, if money is a non issue

😁

[Jamesc]

28 minutes ago, ER-3682 said:

The Most important,can  you get a good Used 7 Years old Car,that no need Repairs.?

I can tell you its not easy.

So far I only know one honest used car dealer

that sells good quality cars at affordable prices.

So its really not easy.

[Jamesc]

Best is no money

So no need to think about changing car.

Same with wife.

I no money to find new one

so just live with the same one lah.

[Jamesc]

I think people are getting more stupid.

They keep asking really stupid questions like

What should I eat today?

What should I go holiday?

What car should I buy?

Should I move house or not?

The more money people have the more stupid they become.

People with no money like me we don't ask stupid questions like this.

If people donate money to me I know what car, what holiday, what home, what food to buy.

[D3badge]

1 hour ago, Ct3833 said:

https://www.straitstimes.com/singapore/transport/should-i-get-a-new-car-or-revalidate-the-coe-on-my-existing-one

Saw this title but I have no subscriptions to read the article. 

It is interesting to revisit this topic now that COE prices is at 10 year high. 

If one has  a lots of spare cash,  then this discussion is irrelevant, please skip and go straight to sgcarmrt new car section.😄

I will stick to two distinctive categories, that is buying a new car vs renewing COE, the comparison will  purely base on economy sense, not taking into considerations about new leather smell, flashy look, newer technology of a new car. Buying a new car now will tie one down with a 10 years of high COE, if he sells his car along the way when COE is lower, he will lose  extremely high depre of his car. If he scraps it, he will get back paper value, lossing half the ARF or more depending on the emission rebate of his car, huge dealer margin and excise tax etc which will be a huge sum. Not to forget, dealer margin in SGP is based on total sales price, higher COE price  will attract higher dealer margin. 

Conversely, if one will to renew COE assuming his car condition is decent,  then he will just have to write off his PARF, no dealer margin, ARF to pay for, so the cost is relatively cheaper. Assuming 3 years down the road when COE drops,, he can scrap his car and get back his remaining  unused COE and go buy a new car.  If his car is a B& B car like Altis  or Elantra, then his financial PARF write off will be limited to that $10k there about over the number of years,  which is quite manageable.  If one has a higher PARF car, then he may have to do his sum carefully.

Next let's look at another  alternative, that is buying a used car. If given myself this situation, my thought would be to buy a used car that is about 7 years old, allow me to ride through the high  COE period and see how it goes, if COE drops by then, I will just scrap my car  and buy a new one, or even renew its COE when PQP is lower. 

Considering the straining economy outlook now, better be more prudence in spending. 

There will still be cost savings but won’t be as much as you imagine.

1st COE car pay higher road taxes.

breakdown wear and tear no 5 years warranty. 
 

this one I am not too sure but can you get comprehensive insurance? Then if yes cost higher? If not accident mean surprises you got to fixed repair a COE car yourself. 

Old engine technology drink more petrol and when an engine is after 10 years old normally will naturally drink more petrol too.

but new car not only engine efficiency but also have hybrid option since COE car sure petrol so we just compare with the need for petrol 
 

I am sure depre still lower than a new car but the gap won’t be as huge as mention above.

[Jamesc]

[shrjun]

45 minutes ago, ER-3682 said:

The Most important,can  you get a good Used 7 Years old Car,that no need Repairs.?

It is possible . But most people will stop repairing as soon as they are know they are selling . 

[Ct3833]

9 minutes ago, Jamesc said:

I can tell you its not easy.

So far I only know one honest used car dealer

that sells good quality cars at affordable prices.

So its really not easy.

I approached many dealers, almost all of them told me they were honest, the rest told me they were more honest then honest .

51 minutes ago, ER-3682 said:

The Most important,can  you get a good Used 7 Years old Car,that no need Repairs.?

This is a real challenge. So far both my cars have no problem except driving till further wear and tear surfaced. But to buy used car, one must be prepared not to be chosy about color , trim and options, buy what is in good condition. Don't go for the cheapest with a lot of promise. One might have to be prepared to pay a bit more, key is keeping his eyes opened.   Both my cars were one owner when I took over, one from my friend, one from a dealer and the car has been serviced by agent all they way . 

45 minutes ago, inlinesix said:

Even your own car also needs repair at 7 years old.

Most importantly how much is the repair?

some  cars may have to spend a little bit more while some just wear and tear , but usually repair cost should not be ridiculous. Of course if one choose to drive a more exotic brand like an alfa or a rare brands,  then the spare parts cost, repair cost and reliability  can be a challenge.  It is also why I chose to drive proven no frills models. 

[Jamesc]

1 minute ago, Ct3833 said:

I approached many dealers, almost all of them told me they were honest, the rest told me they were more honest then honest .

Did they also tell you their cars very goot too?