We love cars! Or at least, I do. I assume you do too, since you’re on this platform. But as an aspiring car owner, I also grapple with the realities of living in Singapore. We have again been acclaimed as the “World’s Most Expensive City” together with New York City, our inflation is the highest it’s been in 15 years, and our homes start at hundred of thousands of dollars. In the face of such problems, a car seems like the least important of my worries. 

But let’s say in about 10 years time (can you tell I’m a young person yet?) I have enough money to get a car. Nothing special, a Toyota Corolla from Sgcarmart perhaps? How would I get there? And what are the costs that I’ll face afterwards? Join me and let’s see if buying a car is still worth it in Singapore. 

The many hidden costs of owning a car in SG  

To understand what it takes to buy a car I think a good place to start is to see the costs involved. As I’m sure you all know, we need to deal with COE (Certificate of Entitlement). It’s a metaphorical piece of paper that you buy in order to give you the right to own and use a car in the streets of Singapore. The COE lasts for 10 years. After 10 years, you have the option to refresh the COE and continue to use your car, or let it expire and be forced to de-register your car. 

Let’s say I’m a first time buyer, and that I’m getting a brand new Toyota Corolla Altis. The standard variant. This is what you’ll see in the official Toyota website.

Now don’t worry, this is already taking into account COE for this year, as of April 2023. This specific model makes 96 brake horsepower with a 1,598cc engine. Therefore, this model would qualify for a Cat A COE. This category is for cars that have an engine less than or equal to 1600cc & make 130bhp or less. However, let’s take a look at how much this COE costs as of March 2023. 

You have spent almost 2 thirds of the entire car’s cost on the right to have gotten the car in the first place. Now let’s fast forward 10 years. The maths is going to get real complicated real quick. 

10 years later....

I’ve had a wonderful time with my Corolla. It has served me well. It has seen me through so many things. My marriage. My first kids, my divorce, my wallowing loneliness. 

Ok, that got dark but you see what I mean. Some time has passed. I now need to make a decision to renew my COE or let it expire. To renew it, I will need to pay the PQP (Prevailing Quota Premium) of the COE. PQP is the moving average of the COE prices in the past 3 months. To calculate PQP, simply take the existing COE prices of the most recent three months and find its average. We can take the PQP from the above image and see that it is $85,845.

I’ll let you decide whether it’s worth renewing the COE. 

In another scenario, let’s say I let it expire. And there’s actually a proper reason to do this called rebate. For any fellow Gen Z, this is our “cashback”. Upon de-registering a vehicle, we get a certain value by adding up our COE rebate and PARF (Preferential Additional Registration Fee ) rebate.  Our COE rebate is based on the Quota Premium paid and the remaining COE left. 

Here’s a formula:

Your COE rebate = [(Quota Premium Paid x Number of months left)/120 months].

Here’s an example:

It is 2021. Adam has 12 months of COE left on his car. Assuming that his Quota Premium (QP) paid back in 2012 was $40,000, the COE rebate he will receive is ($40,000 x 12) / 120 = $4,000

PARF rebate is based on the Additional Registration Fee (ARF) value. 

Your PARF rebate = [ARF x % based on the age of your car]

ARF is a tax imposed upon the registration of your vehicle, which depends on your car's Open Market Value (OMV). A car's OMV is the original cost of production of the vehicle before surcharges, taxes and the dealer's profit.

Here’s a table to help you visualise the PARF rebate.

According to Budget Direct Insurance, the Toyota’s OMV is $19,436. So the ARF for this car, as it is less than $20,000, will be 100% of its value at $19,436. However, as in this scenario I have spent over 10 years with my car, there will be no PARF rebate. I will also have no COE rebate because I have no months left on that either. I will get a tidy sum of...

So if I'd like to continue using my vehicle after likely having paid for it in full, I'd need to once again pay for a permit worth several times over the actual cost of my car, even after taxes. 

Some people have clearly gotten sick of this, like this biker, who started a discussion on Facebook after showing why he doesn't use his motorycle anymore, calling it a ransom.

It's clear that many people felt the same as him, calling the COE system a con or daylight robbery, that once their COE expires, they will likely stop using their vehicle.

And yet, COE is at a record high this year. So I'd like to ask you all, what does owning a car mean to you?

For more information about renewing COE, do head over to this guide on COE renewal.

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