23/03/2022
Are you debating whether to renew your COE or purchase a new vehicle? We weigh the advantages and disadvantages of each to help you decide which is the better option.
Advantages of renewing your COE include:
1. Lower Initial Investment
The Prevailing Quota Premium would make up the majority of your COE renewal costs (PQP). The PQP fluctuates monthly, depending on the COE prices in the previous three months' bidding exercises.
2. A Lower Rate of Depreciation
The loss of a car's value over time is known as depreciation. As a car owner, the lower the depreciation, the better. By renewing your COE, you'll benefit from lower depreciation, which means you'll lose less money on your car each year.
3. Approval for 100% Loan
For COE renewal, most, if not all, banks in Singapore would only grant loan terms of up to seven years. A COE renewal loan, on the other hand, can have a 100% financing rate. This is in contrast to the vehicle financing requirements for buying a new car, which allow only a maximum of 70% of the loan to be financed. Find out more about our $0 down payment and $488 drive-away offer at Alpha Cars SG!
4. Ease of Transaction
There are lots of avenues where you can renew your COE with low interest rates. Talk to us at Alpha Cars SG for more information on COE loans!
Disadvantages of COE Renewal
1. COE and PARF rebates have been forfeited.
When you renew your COE, you lose your COE and PARF rebates. You can read our prior article for a more detailed explanation on PARF rebates.
2. Increased Road Tax
You will have to pay more for road tax when you renew your COE. After ten years of vehicle ownership, the road tax increases by 10% per year. This process repeats until the surcharge reaches 50% of the road tax.
3. Expensive Maintenance
After all, an automobile is still a machine that will go through wear and tear over time. More effort is required to maintain the vehicle's lifetime as its lifespan is extended. Furthermore, some car components may be obsolete, raising the expense of vehicle maintenance.
Advantages of Purchasing a New Vehicle
1. Body Value + COE/PARF Rebates
COE and PARF refunds are forfeited when you renew your COE, as previously stated. You can get these rebates if you buy a new car, which will help offset the cost of buying a new car.
2. No road tax surcharges
In comparison to COE cars, new vehicles will have a cheaper road tax. As previously stated, after ten years of vehicle ownership, the road tax increases by 10% per year. This will continue until a surcharge of 50% of the road tax is imposed.
3. Minimal maintenance
You will have more confidence in the vehicle's reliability if you purchase a new car. You'll also get access to benefits like warranty coverage for servicing and exclusive discounts on vehicle maintenance. However, like many other things, the product's dependability and functionality are hit-or-miss. There have been vehicle recalls for brand new vehicles owing to factory production flaws.
4. The Pleasure of Driving a New Vehicle
There's nothing like driving a brand-new automobile and inhaling the scent of new leather seats to wake you up.
Cons of Purchasing a New Vehicle
1. Expensive
Purchasing a new car is more expensive than renewing your COE. You would not only have to go through the complete COE bidding procedure, but you will also have to pay for the car's body value as well as the loan interest rate.
2. Increased Depreciation
Returning to the table above, a new car's annual depreciation is substantially more than a COE car's. You would want your car's depreciation to be as low as feasible as a car owner.
3. Bank Loan Options are Limited
According to Singaporean vehicle financing legislation, you are only allowed to borrow up to 70% of the car's purchase price. The loan is subject to the OMV of the vehicle (Open Market Value). A table depicting the vehicle financing plan for acquiring a new car is shown below.
4. Expensive and time-consuming
Purchasing a new vehicle necessitates a significant amount of effort. You would still have to prepare your budget, consult with your loan provider, sell your previous vehicle, and find the time to test drive the new vehicle in addition to considering a variety of alternatives. There's also the wait for your new car, which might take anywhere from one to three months.
