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Scrap Car or COE renewal? What to do when your car’s COE expires.

10 years is all you get when you register your car. At the end of the 10 years, you have to make an important decision, scrap it or renew its COE.


In recent years, prices of COE fluctuate drastically, along with stricter LTA inspections and zero vehicle growth rates, this decision is getting increasingly difficult to make. In this post, there are some factors to consider.


Scrap and buy a new car? Or renew COE?


Scraping your car and buying a new car is an option for many. After 10 years using the same car, a new ride will definitely provide some freshness and excitement for you.


Do you want to scrap your car and get a brand new car?


If so, do you have enough cash on hand? Indeed, even with the least expensive vehicles under $90,000, you will in any case need to fork out essentially $27,000 to buy another vehicle to make up for your present ride.


For vehicles’ OMV value $20,000 and below, you’ll be able to borrow up to a maximum of 70% of the price of the car but then when OMV value is more than $20,000, the loan diminish to only 60%.


Indeed, despite the fact that your PARF refund can assist with counterbalancing a portion of those upfornt costs, getting a NEW ride would imply that you still have to fork out a large sum of $20,000 plus.


What about used cars then?


How about scrapping your car and getting a used car instead? A pre-owned vehicle for the most part costs less than a NEW car and you will actually be able to get a car loan of up to 70 percent of the cost of the vehicle, up to a limit of seven years. The upfront cost of getting a used car is much lower than getting a NEW car. However, in a number of years down the road, the same decision will have to be made again. Additionally, used cars are unpredictable, its condition is largely dependent on its previous owners.


So what about COE renewal?


Renewing your COE forgoes your opportunity to get back your PARF rebate. The PARF rebate is an amount of money that the government gives you when you deregister your car, like a “thank you for having less cars on the road”. It is calculated based on your leftover COE and ARF. Do note that PARF is higher for continental cars and lower for asian cars, which is a useful tip in deciding whether to get the PARF rebate or not.


Road Tax Surcharge


If you’re choosing to renew your COE, your road tax will actually increase by 10% every year from the 10th year to the 14th year, to a 50% increase on the 15th year.


Car maintenance


A 10 year old car means old car parts, means more car inspection and check up and maintenance fee. When a car is old, its car parts don’t function as well as it used to. This translates to more frequent check ups. Additionally, under new stricter LTA inspections of older cars, cars older than 10 years old will have to go through annual car inspections and pass the LTA standard. This in turn translates to more money spent also. Old car parts may also need replacements, and again, more cost.


Car Insurance


Many car insurance companies may not provide comprehensive coverage for cars that are older than 10 years. This may result in harder search for car insurance as well as a higher cost of insurance.


All in all, is it worth renewing your car’s COE? If you really love your car and it’s your “ride-or-die” then yes maybe it’s worth it. If not, you’re better off just getting a new ride.


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