COE down, those bought at high COE how?

[Andyngps]

Before 2005.. the ARF tax rate is at 140% and the PARF rebate is much higher then current scheme. in 2005, it is certainly cheaper to buy new car and scrap the 3yr old car. 

 

Even now, my friend latio bought about 50+ K in 2008m was offers 30+K as trade in for new car.. if you have the money now, it could be worth it to buy new car. 

 

 

 

I concur. One of the missing factors in the calculation is the trade in price of the old ride. Though one may argue that the old ride trade in price even if it's high, it will never be as significant as the drop in COE (which is true also), but overall the luginess will diminish by bits.

 

I would say for those who does not have any car to trade in, then it's better to wait.

 

An example say for when Cat B COE was 90K range in 2012 (I may be wrong, cannot remember which year was that but just assuming):

 

New car price - $180K

COE - $90K

OMV - $30K

Trade in 7-yr old car price - 60K

Total payment layout after trade in - $120K

Assuming 50% loan over 5 years at 1.88% - $65640

 

At 2016 (assuming 4 yrs exact have passed):

COE - $54K

PARF rebate - $22.5K

Car body value - $5K

Remaining loan to repay - $13K (round off)

Total amount of money redeemed - $68.5K

 

Assuming COE has dropped by 90K to 30K, but car prices will not be 1-1 drop, hence assuming the exact same car (new) is now at $130K.

 

50% downpayment for the new car - $65K

 

The buyer will still have 3.5K leftover. Even if the car body is nullified, the buyer will still get back an amount which may enable him to downpay for a new ride.

 

Henceforth with the above scenario, the buyer may scrap off their 4 year old ride to change to a new one and extend the driving for another 4 years in a new ride. No doubt depreciation is not taken into full consideration above (as the new ride will have lower depreciation but given that the buyer has already depreciate from the beginning at 90K COE, the depreciation will be averaged out), and the psychological mindset of "I just need to pay off one more year of the car loan and I don't need to pay anymore, instead of having to start all over again to pay another 5 years if I change my ride", but given we always want new ride and more years of driving etc, it's a mental hurdle. Furthermore, we have not taken into consideration that the owner initially has a high trade in of 60K to begin with, hence his depreciation is not exactly the full price of ($180K - PARF) over ten years.

 

Below is another assumption say at 2016.

 

Current new car price - S130K

COE - 30K

OMV - 30K

Trade in of 7 years old ride - 30K

Total payment layout after trade in - $100K (which is not too far off from that 4 yrs back as opposed to the drop in COE)

 

Henceforth, if there is a ride to trade in and the value for trade in is worthy, then I would say enter when the price is right for you. I may be wrong in my above assumptions though. But I have two friends, one who bought a new car back in 2014 at $120k. His COE then was 68K then. Hence his car value is about 52K. Another friend who just bought the same ride but waiting for his ride to arrive, He bought it at 99K. His COE was targeted at 45K. His car base value is 54K based on 45K COE. But their trade in was quite different. Coincidentally both has the same old car and same age as well at the point of trade in. The former traded in at 40K at 2014. The latter at 30K currently. Henceforth the former total cash layout was 80K after trade in, while the latter is 69K after trade in. A difference of 11K but yet with a COE difference of 23K, not to mention the car basic cost is higher for the latter. Of course if assuming both will ride their car till end of 10 years, then it seems more worthy to be the latter. But say if assuming both changes their ride before maturity of COE, the difference may not e significant though the COE price was significant. Again, this are my thoughts only and assuming fair overtrade if any.

Edited February 13, 2016 by Andyngps

[Cat]

I concur. One of the missing factors in the calculation is the trade in price of the old ride. Though one may argue that the old ride trade in price even if it's high, it will never be as significant as the drop in COE (which is true also), but overall the luginess will diminish by bits.

 

I would say for those who does not have any car to trade in, then it's better to wait.

 

An example say for when Cat B COE was 90K range in 2012 (I may be wrong, cannot remember which year was that but just assuming):

 

New car price - $180K

COE - $90K

OMV - $30K

Trade in 7-yr old car price - 60K

Total payment layout after trade in - $120K

Assuming 50% loan over 5 years at 1.88% - $65640

 

At 2016 (assuming 4 yrs exact have passed):

COE - $54K

PARF rebate - $22.5K

Car body value - $5K

Remaining loan to repay - $13K (round off)

Total amount of money redeemed - $68.5K

 

Assuming COE has dropped by 90K to 30K, but car prices will not be 1-1 drop, hence assuming the exact same car (new) is now at $130K.

 

50% downpayment for the new car - $65K

 

The buyer will still have 3.5K leftover. Even if the car body is nullified, the buyer will still get back an amount which may enable him to downpay for a new ride.

 

Henceforth with the above scenario, the buyer may scrap off their 4 year old ride to change to a new one and extend the driving for another 4 years in a new ride. No doubt depreciation is not taken into full consideration above (as the new ride will have lower depreciation but given that the buyer has already depreciate from the beginning at 90K COE, the depreciation will be averaged out), and the psychological mindset of "I just need to pay off one more year of the car loan and I don't need to pay anymore, instead of having to start all over again to pay another 5 years if I change my ride", but given we always want new ride and more years of driving etc, it's a mental hurdle. Furthermore, we have not taken into consideration that the owner initially has a high trade in of 60K to begin with, hence his depreciation is not exactly the full price of ($180K - PARF) over ten years.

 

Below is another assumption say at 2016.

 

Current new car price - S130K

COE - 30K

OMV - 30K

Trade in of 7 years old ride - 30K

Total payment layout after trade in - $100K (which is not too far off from that 4 yrs back as opposed to the drop in COE)

 

Henceforth, if there is a ride to trade in and the value for trade in is worthy, then I would say enter when the price is right for you. I may be wrong in my above assumptions though. But I have two friends, one who bought a new car back in 2014 at $120k. His COE then was 68K then. Hence his car value is about 52K. Another friend who just bought the same ride but waiting for his ride to arrive, He bought it at 99K. His COE was targeted at 45K. His car base value is 54K based on 45K COE. But their trade in was quite different. Coincidentally both has the same old car and same age as well at the point of trade in. The former traded in at 40K at 2014. The latter at 30K currently. Henceforth the former total cash layout was 80K after trade in, while the latter is 69K after trade in. A difference of 11K but yet with a COE difference of 23K, not to mention the car basic cost is higher for the latter. Of course if assuming both will ride their car till end of 10 years, then it seems more worthy to be the latter. But say if assuming both changes their ride before maturity of COE, the difference may not e significant though the COE price was significant. Again, this are my thoughts only and assuming fair overtrade if any.

 

 

You are great, Bro. good afford, much appreciated.

[Andyngps]

I concur. One of the missing factors in the calculation is the trade in price of the old ride. Though one may argue that the old ride trade in price even if it's high, it will never be as significant as the drop in COE (which is true also), but overall the luginess will diminish by bits.

 

I would say for those who does not have any car to trade in, then it's better to wait.

 

An example say for when Cat B COE was 90K range in 2012 (I may be wrong, cannot remember which year was that but just assuming):

 

New car price - $180K

COE - $90K

OMV - $30K

Trade in 7-yr old car price - 60K

Total payment layout after trade in - $120K

Assuming 50% loan over 5 years at 1.88% - $65640

 

At 2016 (assuming 4 yrs exact have passed):

COE - $54K

PARF rebate - $22.5K

Car body value - $5K

Remaining loan to repay - $13K (round off)

Total amount of money redeemed - $68.5K

 

Assuming COE has dropped by 90K to 30K, but car prices will not be 1-1 drop, hence assuming the exact same car (new) is now at $130K.

 

50% downpayment for the new car - $65K

 

The buyer will still have 3.5K leftover. Even if the car body is nullified, the buyer will still get back an amount which may enable him to downpay for a new ride.

 

Henceforth with the above scenario, the buyer may scrap off their 4 year old ride to change to a new one and extend the driving for another 4 years in a new ride. No doubt depreciation is not taken into full consideration above (as the new ride will have lower depreciation but given that the buyer has already depreciate from the beginning at 90K COE, the depreciation will be averaged out), and the psychological mindset of "I just need to pay off one more year of the car loan and I don't need to pay anymore, instead of having to start all over again to pay another 5 years if I change my ride", but given we always want new ride and more years of driving etc, it's a mental hurdle. Furthermore, we have not taken into consideration that the owner initially has a high trade in of 60K to begin with, hence his depreciation is not exactly the full price of ($180K - PARF) over ten years.

 

Below is another assumption say at 2016.

 

Current new car price - S130K

COE - 30K

OMV - 30K

Trade in of 7 years old ride - 30K

Total payment layout after trade in - $100K (which is not too far off from that 4 yrs back as opposed to the drop in COE)

 

Henceforth, if there is a ride to trade in and the value for trade in is worthy, then I would say enter when the price is right for you. I may be wrong in my above assumptions though. But I have two friends, one who bought a new car back in 2014 at $120k. His COE then was 68K then. Hence his car value is about 52K. Another friend who just bought the same ride but waiting for his ride to arrive, He bought it at 99K. His COE was targeted at 45K. His car base value is 54K based on 45K COE. But their trade in was quite different. Coincidentally both has the same old car and same age as well at the point of trade in. The former traded in at 40K at 2014. The latter at 30K currently. Henceforth the former total cash layout was 80K after trade in, while the latter is 69K after trade in. A difference of 11K but yet with a COE difference of 23K, not to mention the car basic cost is higher for the latter. Of course if assuming both will ride their car till end of 10 years, then it seems more worthy to be the latter. But say if assuming both changes their ride before maturity of COE, the difference may not e significant though the COE price was significant. Again, this are my thoughts only and assuming fair overtrade if any.

A typo to the above post. My friend bought the ride at 116k and not 120k. Henceforth the second friend who bought at 99k is actually paying 6k more for the car basic cost without coe. With the trade in amount of 10k more for the former, the difference is only 1k despite a 23k coe drop. So if you have a trade in ride and has a good trade in, the tine to enter may be right for you as conpared to others. Edited February 13, 2016 by Andyngps

[Ct3833]

A typo to the above post. My friend bought the ride at 116k and not 120k. Henceforth the second friend who bought at 99k is actually paying 6k more for the car basic cost without coe. With the trade in amount of 10k more for the former, the difference is only 1k despite a 23k coe drop. So if you have a trade in ride and has a good trade in, the tine to enter may be right for you as conpared to others.

in case anyone  has forgotten, when COE was at its peak, the best selling cars were BMW, Mercedes and the rest of very expensive cars. Even the eye popping selling price S class was one of the top 10 best sellers. We hardly see any new toyota or honda on the road then, if any, they are exceptions. These expensive cars have 2 things in common, 1. high OMV , 2. high dealer margin.  Lets not forget also the associated cost like excise tax and GST which is 27% of OMV. These are the cost that would be a complete write off is a car is scrapped. Lets take at a common e200 that was bought in 2012 for example :

 

COE 75k OMV 43k ARF(20K +23k*140%) 52k GST and excise tax 11k dealer margin 60k Total price payable  241k

 

If the owner will to scrap his car now, he will get back 1. 75% of ARF, 2. 60% of COE, 3. body value assuming the car can be exported.

 

Scrap value 39k COE 45k Body value 8k Total 92k

 

that means over a period of ownership from 2012 to 2016, he has to write off 241k-92k =149K. This translates into nearly 38k depreciation per year for 4 years . Clearly , no matter what cheap car he would buy next, it just does not make sense. 

 

but it does not really matter COE up or down, remember only the rich had bought car during the COE peak, they would continue to change car a couple of years when it is time for them to change.

[hsl118]

Theres a restriction (penalty imposed) to sell car that is below 2yo?

 

What amount is this penalty?

Bro looking to tai chia liao?

[Penknife]

lets take an easier example.

 

bought car at 100k. this means each year depre is 10k.

 

if at year 5 sold car for 50k, this means each year depre 10k. if sold for more than 50k, means less than 10k depre per year.

 

if buy another car to replace at 90k, this means 9k depre per year. it means its better to sell old car and change to new car if we are concern about depre.

 

 

 

using the same example above, would you continue to drive for the next 5 years paying nothing, or take another loan of 40k for the next 5 years? (90k new car - 50k trade in old car)

 

 

end of day, to change or not to change?

 

 

PS: assume max loan of 5 years

 

Edited February 13, 2016 by Penknife

[Ct3833]

lets take an easier example.

 

bought car at 100k. this means each year depre is 10k.

 

if at year 5 sold car for 50k, this means each year depre 10k. if sold for more than 50k, means less than 10k depre per year.

 

if buy another car to replace at 90k, this means 9k depre per year. it means its better to sell old car and change to new car if we are concern about depre.

 

 

 

using the same example above, would you continue to drive for the next 5 years paying nothing, or take another loan of 40k for the next 5 years? (90k new car - 50k trade in old car)

 

 

end of day, to change or not to change?

 

 

PS: assume max loan of 5 years

You missed out a key element of this thread - high "COE". COE during its peak was 80k to 90k, there is no such 100k car or 10k depr during that period, not even Cherry QQ.

[Andyngps]

lets take an easier example.

 

bought car at 100k. this means each year depre is 10k.

 

if at year 5 sold car for 50k, this means each year depre 10k. if sold for more than 50k, means less than 10k depre per year.

 

if buy another car to replace at 90k, this means 9k depre per year. it means its better to sell old car and change to new car if we are concern about depre.

 

 

 

using the same example above, would you continue to drive for the next 5 years paying nothing, or take another loan of 40k for the next 5 years? (90k new car - 50k trade in old car)

 

 

end of day, to change or not to change?

 

 

PS: assume max loan of 5 years

Lol. I would change...

in case anyone has forgotten, when COE was at its peak, the best selling cars were BMW, Mercedes and the rest of very expensive cars. Even the eye popping selling price S class was one of the top 10 best sellers. We hardly see any new toyota or honda on the road then, if any, they are exceptions. These expensive cars have 2 things in common, 1. high OMV , 2. high dealer margin. Lets not forget also the associated cost like excise tax and GST which is 27% of OMV. These are the cost that would be a complete write off is a car is scrapped. Lets take at a common e200 that was bought in 2012 for example :

COE 75k OMV 43k ARF(20K +23k*140%) 52k GST and excise tax 11k dealer margin 60k Total price payable 241k

 

If the owner will to scrap his car now, he will get back 1. 75% of ARF, 2. 60% of COE, 3. body value assuming the car can be exported.

Scrap value 39k COE 45k Body value 8k Total 92k

 

that means over a period of ownership from 2012 to 2016, he has to write off 241k-92k =149K. This translates into nearly 38k depreciation per year for 4 years . Clearly , no matter what cheap car he would buy next, it just does not make sense.

 

but it does not really matter COE up or down, remember only the rich had bought car during the COE peak, they would continue to change car a couple of years when it is time for them to change.

I agreed bro. To the rich..they already heck care about depreciation. Whether keep or change they will going to write off the car be it now or ten years down the road. So i will see most of those who bought at 90k coe changing their rides when coe crashes.

[Vratenza]

Lol. I would change...

I agreed bro. To the rich..they already heck care about depreciation. Whether keep or change they will going to write off the car be it now or ten years down the road. So i will see most of those who bought at 90k coe changing their rides when coe crashes.

By your rationale, the rich just change as and when they like. Money no issue.

Since already prepare to write off, why change ride when the COE crashes? Only practical reason is to reduce their depreciation.... Then we go back to the original statement that money is no issue to them....

 

If we assume ur rationale stands correct, the only impetus to change car for the rich are newer better models being launched. Nothing to do with cheap COEs.

[Andyngps]

By your rationale, the rich just change as and when they like. Money no issue.

Since already prepare to write off, why change ride when the COE crashes? Only practical reason is to reduce their depreciation.... Then we go back to the original statement that money is no issue to them....

 

If we assume ur rationale stands correct, the only impetus to change car for the rich are newer better models being launched. Nothing to do with cheap COEs.

Yes bro. Newer cars and models. I may be wrong too, but when coe crashes, they don't just change their ride only. I know some renewed some of their loved cars and also buy a few more cars.

[Char]

No worries for them, they will continue to make profit. Buy cheaper from sellers, sell higher to buyers

That's why actually we ourself look like an idiot rights? Car still with good condition and drive another 2-3 years shouldn't be any problem ...why Kang Chiong go to change car ? Trade in your current ride under value yet buy new over value ? This look like buy high sell low ! Sound familiar right in stocks and properties ? Why not wait a little bit more to see whether COE prices coming or not ? Remember buy with those AD and PI which adjusted prices accordance with the COE prices . Don't be Kenal chop carrot in buyer market as well ....

[Matrix0405]

By your rationale, the rich just change as and when they like. Money no issue.

Since already prepare to write off, why change ride when the COE crashes? Only practical reason is to reduce their depreciation.... Then we go back to the original statement that money is no issue to them....

 

If we assume ur rationale stands correct, the only impetus to change car for the rich are newer better models being launched. Nothing to do with cheap COEs.

 

Why the timing for the rich always swee swee? When Altis start to sell at $90K, those car with $90K COE are about 3 - 4 yo. 'Old' car + new model out + high depre = so many reasons to get a new one. Life is beautiful. 

 

oth, those poor got are stuck, struggling with Uber to buy 9 yo car at sky high depre. 

[Vratenza]

Why the timing for the rich always swee swee? When Altis start to sell at $90K, those car with $90K COE are about 3 - 4 yo. 'Old' car + new model out + high depre = so many reasons to get a new one. Life is beautiful. 

 

oth, those poor got are stuck, struggling with Uber to buy 9 yo car at sky high depre. 

 

Same reasoning why the Rich gets richer in property cycle.  All the TDSR and cooling measures, does it affect the rich who buys with hard cash?

All those cooling measure is just a means for the people in power to reward their staunch rich supporters.

Cooling measures to bring down the prices for the rich to pick up bargains.

[flashbang]

Why the timing for the rich always swee swee? When Altis start to sell at $90K, those car with $90K COE are about 3 - 4 yo. 'Old' car + new model out + high depre = so many reasons to get a new one. Life is beautiful. 

 

oth, those poor got are stuck, struggling with Uber to buy 9 yo car at sky high depre. 

 

Because rich people don't need timing. When they want, they buy.

 

Car COE dropping now? Sell old car and buy a new one, for the same price they paid last time, now can get upgraded model, from BMW 3 to BMW 5, C180 to E200.

 

Property price dropping? Buy another one, anyway in the last few years they already made enough for downpayment again.

[Piyopico]

in case anyone has forgotten, when COE was at its peak, the best selling cars were BMW, Mercedes and the rest of very expensive cars. Even the eye popping selling price S class was one of the top 10 best sellers. We hardly see any new toyota or honda on the road then, if any, they are exceptions. These expensive cars have 2 things in common, 1. high OMV , 2. high dealer margin. Lets not forget also the associated cost like excise tax and GST which is 27% of OMV. These are the cost that would be a complete write off is a car is scrapped. Lets take at a common e200 that was bought in 2012 for example :

COE 75k OMV 43k ARF(20K +23k*140%) 52k GST and excise tax 11k dealer margin 60k Total price payable 241k

 

If the owner will to scrap his car now, he will get back 1. 75% of ARF, 2. 60% of COE, 3. body value assuming the car can be exported.

Scrap value 39k COE 45k Body value 8k Total 92k

 

that means over a period of ownership from 2012 to 2016, he has to write off 241k-92k =149K. This translates into nearly 38k depreciation per year for 4 years . Clearly , no matter what cheap car he would buy next, it just does not make sense.

 

but it does not really matter COE up or down, remember only the rich had bought car during the COE peak, they would continue to change car a couple of years when it is time for them to change.

Not entirely correct about the body value.

 

To move new cars, the dealer will offer at least 20-30k in over trade. So the yearly depreciation is closer to 30k for 4 years.

 

Had the driver continue to hold onto the cars, his depreciation would have been about 23k a year. A new ride with 30k COE will probably depreciate at 18K.

 

Given that 4 years down the road, there will be new models, plus this person will see it as losing 40k extra over the 4 years. No doubt he lost 40k in 4 years but he will save 5k in depreciation over the 6 years by buying new. That's 30k. When you do the sums, it's only 10-20k difference. These people dun even need a loan.

 

Trust me, many will change especially in this category.

[Fuelsaver]

Be careful......when you sell you car....you must calculate the original bought price minus the selling price divided over the few years of ownership to get the actual depreciation!

It might end up to be 21k if you dare to do the sums.

 

So you might have lost 'extra' depreciation that was conveniently ignored...and thinking your new car with a lower $10kdepreciation(over 10years) is a smart choice vs the $13k depreciation(if you hold it for full ten years).

 

The additional $8k + $8k + $8k ($21k - $13k) depreciation, assuming your old car is only three years old, is actually $24k worth of depreciations that you MUST add to the new car depreciation of $10k to get $12.4k ($10k + $24/10).

 

This is just an example....many car buyers forgot the prepaid depreciation they have incurred when they seold the old cars to buy a newer car with supposedly low COE.

Thinking they are smart to be owning a much lower depreciation car!!

 

 

 

 

 

 

 

Have to agree w this. Money will go / come from somewhere. Depre of old + Depre of new must b tabulated so u can obtain mean Depre pre year over period of owning old n new ride.

 

If choose to ignore or too rich to be bothered, this thread is wasting / killing ur time.

[Miles]

how about this. 

 

Bought car 'A' 2 years ago at $180k with COE at $70k.

 

Now interested in car 'B' priced at $120k @ COE $40k 

 

Practically, can change cars without topping up as trade in price for car 'A' is about the same as price of car 'B', assuming car 'A' fully paid. 

 

Difference of OMV for both cars is about $5k (car 'B' has lower OMV).

 

Technically, projected annual depreciation based on straight line for the life of both car 'A' + 'B' (assuming use car 'B' for 10 years) will be $180k - PARF of car 'B' (let's say at about 6k after CEV rebate deduction) / 12 years = 14.5k/year.

 

If keep car 'A' for 10 years, annual depreciation on similar assumption will be $180k - PARF of car 'A' (lets say about 13k after CEV rebate deduction) / 10 years = 16.6k/year

 

worth it? 

[Runforyourlife]

how about this.

 

Bought car 'A' 2 years ago at $180k with COE at $70k.

 

Now interested in car 'B' priced at $120k @ COE $40k

 

Practically, can change cars without topping up as trade in price for car 'A' is about the same as price of car 'B', assuming car 'A' fully paid.

 

Difference of OMV for both cars is about $5k (car 'B' has lower OMV).

 

Technically, projected annual depreciation based on straight line for the life of both car 'A' + 'B' (assuming use car 'B' for 10 years) will be $180k - PARF of car 'B' (let's say at about 6k after CEV rebate deduction) / 12 years = 14.5k/year.

 

If keep car 'A' for 10 years, annual depreciation on similar assumption will be $180k - PARF of car 'A' (lets say about 13k after CEV rebate deduction) / 10 years = 16.6k/year

 

worth it?

Car A fully paid? Whether it's fully paid or still under loan, why issit worth it? Fully paid means an expense and under loan means whatever require to pay as loan is the 'loss' or expense.