COE down, those bought at high COE how?

[Vinljp]

 

Looks like you like to be tie down with loan.

 

Are you?

 

If not, juz continue to drive.

 

 

In fact I am not trying to get myself tie down with car loan.

 

I am thinking of leveraging on my current car price of 60k and just top up another 60k to drive for another 10 years.

 

Else come 10th year of my car, I will definitely need to take a loan to buy a new car....car loan interest is crazy.

[Vinljp]

This is a divination question not a math question - as in - where is the COE heading?

 

Must also ask yourself if new car is better or renewal is better.

 

In general I would say that you car value is going to move proportionally less than new car values ...

 

But who knows?

 

I am rather pessimistic with COE prices. Gone were the days just like my 4k COE.

 

Reasons is

1) During my time, it was Close Door Bidding, and no one knows who is bidding how much till the 3rd day. Now I can see who is bidding how much and and out bid one another.

2) Singapore population has grown since 2009.

3) Car population has also grown since 2009.

4) What bumper crop?...COE expires also need to either renew or buy new car, hardly anyone I know actually gives up driving after owning a car. Waiting also creates pent up demand...

 

U tell me now COE is going to go down?...

[Notsogoodman]

Primary 3 math question

 

I am driving a honda freed, registered 2009. I bought it for 60k in 2009 with COE at 4k.

Some Dealers are offering about 60k for my car now.

 

Should I let it go and get a new car at 120K ( topping up another 60k for a new car) at current COE price of 62k?

or should I drive till the end and hope that COE will drop in the future?

 

How to do this math question as I am in a dilemma now !!! Pls help.

Ur car won't be worth 60k when coe drops significantly

 

Can you get newer car at similar depreciation (to ur current selling price) with much higher paper value?

Edited May 26, 2015 by Notsogoodman

[Heman75]

assuming a $90K coe ... after 3 years ... COE alone can take back $63K

when you say COE crash ... means COE $30K?

if COE $30K ... a new car probably less than $100k

so, trade in a 3 years old $90K coe probably can get a new car with no or little top up

can drive a brand NEW car again for the next 10 years ... worth it or not?

if continue to drive the 3 years old $90K coe car ... COE alone 1 year depreciation is $9K !

depends on how 1 see worth it or not ...

if you talk to car agent ... the answer is sibei worth it ... buy buy buy

then the tsunami of scrapping and buying ...

 

 

But when COE crash, do you think you still can trade in at 90k for the 3years old car? dealer will benchmark the car price at the current market price when COE is 30k. Otherwise how they sell. If you said more worth to deregister than sell that I can agree. deregister can get more money then u sell.

[RH1667]

Primary 3 math question

 

I am driving a honda freed, registered 2009. I bought it for 60k in 2009 with COE at 4k.

Some Dealers are offering about 60k for my car now.

 

Should I let it go and get a new car at 120K ( topping up another 60k for a new car) at current COE price of 62k?

or should I drive till the end and hope that COE will drop in the future?

 

How to do this math question as I am in a dilemma now !!! Pls help.

 

Do you really like the new $120k car?

If yes, than read on .....

 

Your 2009 car is worth 60k now, with about 4 more years to go before COE end, means about 15k per year depreciation ( based on simple calculation, excluding your scrap amount etc ). Plus it would means you have almost zero depreciation for your current car!

 

The new car you are eyeing, cost $120k, meaning 12k per year for depreciation, and will provide you with another 3 years ( assuming 3 years warranty ) of trouble-free drive.

 

Go for it!!

 

But, if the $120k car is only so-so to you, than other bros have provided their views.

 

Unless buying it for business use, else, I think usually heart will win the head

[Detach8]

 

Do you really like the new $120k car?

If yes, than read on .....

 

Your 2009 car is worth 60k now, with about 4 more years to go before COE end, means about 15k per year depreciation ( based on simple calculation, excluding your scrap amount etc ). Plus it would means you have almost zero depreciation for your current car!

 

The new car you are eyeing, cost $120k, meaning 12k per year for depreciation, and will provide you with another 3 years ( assuming 3 years warranty ) of trouble-free drive.

 

Go for it!!

 

But, if the $120k car is only so-so to you, than other bros have provided their views.

 

Unless buying it for business use, else, I think usually heart will win the head

 

I think the math is flawed. The old car has a useable lifespan with a depreciation of only $5K+/yr. The correct thing to ask the owner is that if he/she is OK with paying that extra $6K+/ year depreciation for a new car.

[Nissan833]

Primary 3 math question

 

I am driving a honda freed, registered 2009. I bought it for 60k in 2009 with COE at 4k.

Some Dealers are offering about 60k for my car now.

 

Should I let it go and get a new car at 120K ( topping up another 60k for a new car) at current COE price of 62k?

or should I drive till the end and hope that COE will drop in the future?

 

How to do this math question as I am in a dilemma now !!! Pls help.

 

If can top up 60k easily for new car, just go for it lor.

 

If COE crash, you won't get 60k offers for your car anymore. When you wait longer, this offer will only drop as it continue to depreciate.

 

Assuming your current ride is 0% downpayment 10 yr loan, instalment is $600+.. if you downpay 60k for a 120k new car, your instalment will be $1100. But you only pay 5 years.

 

At 5th year mark, you pay off, if itchy again, just sell and put the original 50% downpayment on another new car.. top up a bit for a better one.

[Tua]

 

I think the math is flawed. The old car has a useable lifespan with a depreciation of only $5K+/yr. The correct thing to ask the owner is that if he/she is OK with paying that extra $6K+/ year depreciation for a new car.

Look in another perspective... at 60K with 4 years, the worth of the car is 15K per year, if he chose to do nothing, he will only managed 5K+ per year. and he lost that "opportunity" for the extra 10K.

[Porche]

Primary 3 math question

 

I am driving a honda freed, registered 2009. I bought it for 60k in 2009 with COE at 4k.

Some Dealers are offering about 60k for my car now.

 

Should I let it go and get a new car at 120K ( topping up another 60k for a new car) at current COE price of 62k?

or should I drive till the end and hope that COE will drop in the future?

 

How to do this math question as I am in a dilemma now !!! Pls help.

Same situation as you, im driving a 09 Sienta with 3k Coe. 2019 may be a drought year for 09 owners, but current COe price translate to higher depreciation. Im holding on to see, as my car is fine only with high mileage

[Detach8]

Look in another perspective... at 60K with 4 years, the worth of the car is 15K per year, if he chose to do nothing, he will only managed 5K+ per year. and he lost that "opportunity" for the extra 10K.

 

Huh?? He's losing opportunity for the future money instead by buying a new car if he has a loan, etc. to pay off and top up cash for downpayment.

[Vinljp]

 

Huh?? He's losing opportunity for the future money instead by buying a new car if he has a loan, etc. to pay off and top up cash for downpayment.

 

I see it in terms of depreciation based on 2 scenarios based on 15 years period, ie either I sell my car now (5 years old) and buy new car (drive for 10 years), or I drive till 10th year (10 year old) and buy new car later (drive 5 years for apple apple comparison of 15 years period).

 

Scenario 1 (Sell now and buy new car)

Current car depreciation per year = $0

New Car depreciation per year = $120k/10years = $12k/yr

Interest incurred = $0 (Top up $60k cash)

Total Depreciation over 15 years = {($0 x 5 years + $12k x 10 years)}/15years = $8k/ year for 15 years

 

Scenario 2 (Drive till end and buy new car )

Current car depreciation per year = {$60k - ($20136 ARF X 0.5)}/10 years = $4.9k / year

New Car depreciation per year = $120k/ 10 years = $12k/ year (assuming car still cost around $120k in 5 years time)

Interest incurred = 2.28% = approx S$7k for 5 years loan = $1.4k / year (No $$, need to take loan)

Total Depreciation over 15 years = {($4.9k x 10 years) + ($12k x 5 years)}/15 + $1.4k = $8.6k per year for 15 years

 

Seems like its more worthwhile to change car now and perhaps sell it when the COE crash in later years as what we are discussing in this topic

 

Let me know whether is there any flaw in my calculations.

[Detach8]

 

I see it in terms of depreciation based on 2 scenarios based on 15 years period, ie either I sell my car now (5 years old) and buy new car (drive for 10 years), or I drive till 10th year (10 year old) and buy new car later (drive 5 years for apple apple comparison of 15 years period).

 

Scenario 1 (Sell now and buy new car)

Current car depreciation per year = $0

New Car depreciation per year = $120k/10years = $12k/yr

Interest incurred = $0 (Top up $60k cash)

Total Depreciation over 15 years = {($0 x 5 years + $12k x 10 years)}/15years = $8k/ year for 15 years

 

Scenario 2 (Drive till end and buy new car )

Current car depreciation per year = {$60k - ($20136 ARF X 0.5)}/10 years = $4.9k / year

New Car depreciation per year = $120k/ 10 years = $12k/ year (assuming car still cost around $120k in 5 years time)

Interest incurred = 2.28% = approx S$7k for 5 years loan = $1.4k / year (No $$, need to take loan)

Total Depreciation over 15 years = {($4.9k x 10 years) + ($12k x 5 years)}/15 + $1.4k = $8.6k per year for 15 years

 

Seems like its more worthwhile to change car now and perhaps sell it when the COE crash in later years as what we are discussing in this topic

 

Let me know whether is there any flaw in my calculations.

 

Interesting viewpoint / calculation. I don't think there's anything wrong to see it this way, except that in proper financial terms I would consider the future value of that $60K cash that I plonked in now vs. 5 years later (when the current car expires). Also in your second example you actually get 20 years of useable life.

 

Assuming you are not an investor and simply dump your $60K into something like the OCBC 360 plan with ~3% interest and apply that on your $60K, the future value (FV) of your $60K is going to be around $70K.

 

I would say it depends: Your situation is unique in that you are selling a car that is of high value, and buying one that's likely of lower value, i.e. it seems like a downgrade based on OMV. It only makes sense that a downgrade is cheaper, but if you do an upgrade or to remain status-quo, switching early will always likely be more expensive irregardless of COE situation.

 

I think the right way to do this is to draw a chart like how I have done in earlier post(s) and you will be able to see if it makes sense. It would also show you your breakeven point. If I have time later I can quickly churn one out for you.

[Yeobt]

maybe why we cannot see many 99', 00' EK and EP civic around becos these germs were exported when the COE crashed in mid 2000s.

 

 

[Heman75]

 

I see it in terms of depreciation based on 2 scenarios based on 15 years period, ie either I sell my car now (5 years old) and buy new car (drive for 10 years), or I drive till 10th year (10 year old) and buy new car later (drive 5 years for apple apple comparison of 15 years period).

 

Scenario 1 (Sell now and buy new car)

Current car depreciation per year = $0

New Car depreciation per year = $120k/10years = $12k/yr

Interest incurred = $0 (Top up $60k cash)

Total Depreciation over 15 years = {($0 x 5 years + $12k x 10 years)}/15years = $8k/ year for 15 years

 

Scenario 2 (Drive till end and buy new car )

Current car depreciation per year = {$60k - ($20136 ARF X 0.5)}/10 years = $4.9k / year

New Car depreciation per year = $120k/ 10 years = $12k/ year (assuming car still cost around $120k in 5 years time)

Interest incurred = 2.28% = approx S$7k for 5 years loan = $1.4k / year (No $$, need to take loan)

Total Depreciation over 15 years = {($4.9k x 10 years) + ($12k x 5 years)}/15 + $1.4k = $8.6k per year for 15 years

 

Seems like its more worthwhile to change car now and perhaps sell it when the COE crash in later years as what we are discussing in this topic

 

Let me know whether is there any flaw in my calculations.

First of all I think there are a few facts we need to list down

example: altis bought 3years ago when COE is 90k @ 150k, now assuming COE drop to 40k new car @100k

assuming fully paid case, current depreciation should @ 14k , new depreciation with COE drop should be @ 9k

scenario 1. trade in, maybe only 50k reference to new car price level, lost 100k meaning actual depreciation is 33k/yr over the 3 years wonership , meaning u have 3yrs of 33k/yr depreciation and 10yr @ 9k/yr . avg out is 14.5k/yr over 13 years

scenario 2, deregister maybe 70k, lost 80k meaning actual depreciation is 26k/yr over 3 years of ownership , meaning u have 3yrs of 26k/yr depreciation and 10yr @ 9k/yr . avg out is 13k/yr over 13 years

 

so actually u don't stand to gain much.... right?

the rule is simple for me buy cheap mean you sell cheap..

[Vinljp]

 

Interesting viewpoint / calculation. I don't think there's anything wrong to see it this way, except that in proper financial terms I would consider the future value of that $60K cash that I plonked in now vs. 5 years later (when the current car expires). Also in your second example you actually get 20 years of useable life.

 

Assuming you are not an investor and simply dump your $60K into something like the OCBC 360 plan with ~3% interest and apply that on your $60K, the future value (FV) of your $60K is going to be around $70K.

 

I would say it depends: Your situation is unique in that you are selling a car that is of high value, and buying one that's likely of lower value, i.e. it seems like a downgrade based on OMV. It only makes sense that a downgrade is cheaper, but if you do an upgrade or to remain status-quo, switching early will always likely be more expensive irregardless of COE situation.

 

I think the right way to do this is to draw a chart like how I have done in earlier post(s) and you will be able to see if it makes sense. It would also show you your breakeven point. If I have time later I can quickly churn one out for you.

Thanks bro for your comments. Will definitely love to see your chart.

 

I think you are referring to this right?

 

PV = FV/(1+i)^n

 

PV - Present Vaue

FV - Future Value

i - Interest Rate

n - period

 

 

Value of money is always higher in the present as compared with that same value in the future.

 

My concept is more of leveraging my current car value for the future, in a way you might also call it hedging for the future as I am rather pessimistic of the COE in the future based on the country's population, car population & being an Open Bidding concept.

First of all I think there are a few facts we need to list down

example: altis bought 3years ago when COE is 90k @ 150k, now assuming COE drop to 40k new car @100k

assuming fully paid case, current depreciation should @ 14k , new depreciation with COE drop should be @ 9k

scenario 1. trade in, maybe only 50k reference to new car price level, lost 100k meaning actual depreciation is 33k/yr over the 3 years wonership , meaning u have 3yrs of 33k/yr depreciation and 10yr @ 9k/yr . avg out is 14.5k/yr over 13 years

scenario 2, deregister maybe 70k, lost 80k meaning actual depreciation is 26k/yr over 3 years of ownership , meaning u have 3yrs of 26k/yr depreciation and 10yr @ 9k/yr . avg out is 13k/yr over 13 years

 

so actually u don't stand to gain much.... right?

the rule is simple for me buy cheap mean you sell cheap..

 

Yup I totally agree with you that there not much gain, as you pointed out that correctly, now my car fetches so high is becoz of the high COE. Therefore my new ride will also cost more....and vice versa.

 

The only thing that is gained is perhaps a new car with warranty and lower maintenance cost.

[Shimada]

It doesn't make sense to keep a high COE car when the depreciation is higher.

 

What are the options for recent car buyers with high COE?

 

Or even 2nd hand car buyers with high price but low COE? I feel this group is the worst. As they don't even have high paper value.

 

 

1) wait for 5th year scrap as it is at its highest paper value

 

2) trade in a conti car at AD for high over trade

 

3)...

[t0y0ta]

Suck thumb lah. Then how?

[Mrmilktooth]

Drive finish ten years lo. Over trade also need to spend more on a depreciating asset. Might as well buy property