Should I scrap my 3 year old Cat A car?

[Jayzz9]

hi guys,

 

with the recent lower COEs, I have read on the news that more people are considering scrapping their cars(with high COEs) early to take advantage of the lower COEs.

 

This, I believe, is with regards to the supposed lower average depreciation for the duration of the 2 cars' lifespan.

 

am quite keen on this idea, but....

 

Somehow I am unable to work out why.

 

 

Take this example:

 

2015 car purchased new at  = 115k

downpayment 60k, loan 55k,

interest paid over 5yrs = 7k

COE = 59k

 

If I use the current 2015 car for the full 10yrs, depreciation = (115 + 7) / 10yrs = 12.2k per year.

 

------------------------------------------------------------------------------------

 

If I decide to buy a new car now to take advantage of lower COEs,

 

according to onemotoring,

COE rebate amount = 39k

PARF rebate amount = 6k

Therefore if I scrap the car, I get back 45k

 

If I sell to dealer, quoted 52k

If sell privately, maybe 55k

 

-------------------------------------------------------------------------------------

 

Using best case scenario of getting back 55k by selling my car privately..

 

I will have spent a total of:

(cost of car + interest paid & owed to bank) - (amount from sale of car)

= 122k - 55k

= 67k

 

-------------------------------------------------------------------------------------

 

I was quoted 90k for the same model car, albeit a new 2018 version with a low COE.

 

let's not include the new bank loan + interest accrued to keep things even simpler (or to tilt things in favour of buying a new car).

 

depreciation of this new 2018 car: 90k / 10yrs = 9k per year.

 

 

However we need to look at the combined depreciation of both the 2015 and 2018 cars.

 

Combined depreciation:

 

(90k + 67k) / (10yrs + 3yrs) = 12.07k per year

 

???!!!???!!!

 

---------------------------------------------------------------------------------------

 

 

am I missing out anything?

mathematically, the average depreciation is about the same..

 

how can it be that people will save $$ by getting rid of their high COE cars and buying a new car now??

 

I must have missed out some factors/components...

 

kindly enlighten me pls!!

 

Hi, thanks for the detailed calculation. I'm in a similar situation. Bought my current toyota in mid 2015 at 115k but with slightly higher coe and parf rebate. Using the same method, my depreciation for old car is 12.2k and combined depreciation is 11k, meaning savings of 1.2k if i change? However, I do not want to extend the loan tenure (currently left 1.5 years) and come up with extra cash, hence i'm still with my old car.. . 

 

I was also randomly browsing sgcarmart for used cars like mazda 6, considered an upgrade from my current car. Selling price is around 64k registered in end 2014 to early 2015, which is quite similar to the trade-in value for my current car (60k-ish range). Is it dumb to change from a new car to an used but better car? I dont mind driving about 6 months lesser due to reg date of the used car.

Edited October 22, 2018 by Jayzz9

[Sktan10]

hi guys,

 

with the recent lower COEs, I have read on the news that more people are considering scrapping their cars(with high COEs) early to take advantage of the lower COEs.

 

This, I believe, is with regards to the supposed lower average depreciation for the duration of the 2 cars' lifespan.

 

am quite keen on this idea, but....

 

Somehow I am unable to work out why.

 

 

Take this example:

 

2015 car purchased new at  = 115k

downpayment 60k, loan 55k,

interest paid over 5yrs = 7k

COE = 59k

 

If I use the current 2015 car for the full 10yrs, depreciation = (115 + 7) / 10yrs = 12.2k per year.

 

------------------------------------------------------------------------------------

 

If I decide to buy a new car now to take advantage of lower COEs,

 

according to onemotoring,

COE rebate amount = 39k

PARF rebate amount = 6k

Therefore if I scrap the car, I get back 45k

 

If I sell to dealer, quoted 52k

If sell privately, maybe 55k

 

-------------------------------------------------------------------------------------

 

Using best case scenario of getting back 55k by selling my car privately..

 

I will have spent a total of:

(cost of car + interest paid & owed to bank) - (amount from sale of car)

= 122k - 55k

= 67k

 

-------------------------------------------------------------------------------------

 

I was quoted 90k for the same model car, albeit a new 2018 version with a low COE.

 

let's not include the new bank loan + interest accrued to keep things even simpler (or to tilt things in favour of buying a new car).

 

depreciation of this new 2018 car: 90k / 10yrs = 9k per year.

 

 

However we need to look at the combined depreciation of both the 2015 and 2018 cars.

 

Combined depreciation:

 

(90k + 67k) / (10yrs + 3yrs) = 12.07k per year

 

???!!!???!!!

 

---------------------------------------------------------------------------------------

 

 

am I missing out anything?

mathematically, the average depreciation is about the same..

 

how can it be that people will save $$ by getting rid of their high COE cars and buying a new car now??

 

I must have missed out some factors/components...

 

kindly enlighten me pls!!

After your full settlement with bank,how much cash you can take back?

I believe you still got 2 more yrs loan?

If your take back cash is enough to down 30% for your new car without the need of taking cash again from your bank then you can buy your new car.

 

Take a new 5yrs loan and extend another 3yrs coe life for your car usage.

Old car 2015 to 2025.

New car 2018 to 2028.

But your loan also extend another 3yrs.

Old car loan 2015 to 2010.

New car loan 2018 to 2023.

Actually is quite LPPL.

[chinpokomon]

you haven't missed anything. That's why I'm still driving my 75k COE (registered Jan '15) car. 

U do get a new car though.

 

I just wonder, if this is indeed the case, why does the newspaper report that people can save $$ by doing so?!

Hi, thanks for the detailed calculation. I'm in a similar situation. Bought my current toyota in mid 2015 at 115k but with slightly higher coe and parf rebate. Using the same method, my depreciation for old car is 12.2k and combined depreciation is 11k, meaning savings of 1.2k if i change? However, I do not want to extend the loan tenure (currently left 1.5 years) and come up with extra cash, hence i'm still with my old car.. . 

 

I was also randomly browsing sgcarmart for used cars like mazda 6, considered an upgrade from my current car. Selling price is around 64k registered in end 2014 to early 2015, which is quite similar to the trade-in value for my current car (60k-ish range). Is it dumb to change from a new car to an used but better car? I dont mind driving about 6 months lesser due to reg date of the used car.

 

my personal opinion is, though the MZ6 is similar value to ur current car's trade in value... meaning no need to top up cash for a "upgrade"..

 

u are taking on the risk of a 2nd hand car turning out to be a lemon.

[chinpokomon]

After your full settlement with bank,how much cash you can take back?

I believe you still got 2 more yrs loan?

If your take back cash is enough to down 30% for your new car without the need of taking cash again from your bank then you can buy your new car.

 

Take a new 5yrs loan and extend another 3yrs coe life for your car usage.

Old car 2015 to 2025.

New car 2018 to 2028.

But your loan also extend another 3yrs.

Old car loan 2015 to 2010.

New car loan 2018 to 2023.

Actually is quite LPPL.

 

after full settlement with bank, I will have paid out of pocket a total of $122k.

(downpayment + monthly instalments thus far + loan redemption of remaining 2yrs)

 

the supposed cash that I "take back" from selling my car for a best case scenario is 55k.

 

this 55k defrays the 122k cost that I have paid up, meaning for the 3yrs of ownership so far, I have paid 67k.

 

this 67k is what is making the combined depreciation high I guess..

 

as what lala81 said, the only benefit is driving a new car for another 10yrs.

[Enye]

after full settlement with bank, I will have paid out of pocket a total of $122k.

(downpayment + monthly instalments thus far + loan redemption of remaining 2yrs)

 

the supposed cash that I "take back" from selling my car for a best case scenario is 55k.

 

this 55k defrays the 122k cost that I have paid up, meaning for the 3yrs of ownership so far, I have paid 67k.

 

this 67k is what is making the combined depreciation high I guess..

 

as what lala81 said, the only benefit is driving a new car for another 10yrs.

believe in your own calculations than others words

 

itchy backsides come with a cost

 

 

[chinpokomon]

believe in your own calculations than others words

 

itchy backsides come with a cost

 

 

[Matrix0405]

So much calculation shows that with COE at around $25K it is still not an obvious choice. Those with 5 yr cars may be easier because many maintenance coming. 

[Blueray]

My personal gut feel, currently, 3yo car not worth scrapping.

 

5yo car, the numbers will probably make a more compelling argument. 

 

Also, when one prepays the car loan, interest rebate is based on Rule of 78, which is not a pro-rated computation.

 

If I were shopping for a car, I would be more inclined towards pre-owned or management units. 

 

 

[Jamesc]

Hi, thanks for the detailed calculation. I'm in a similar situation. Bought my current toyota in mid 2015 at 115k but with slightly higher coe and parf rebate. Using the same method, my depreciation for old car is 12.2k and combined depreciation is 11k, meaning savings of 1.2k if i change? However, I do not want to extend the loan tenure (currently left 1.5 years) and come up with extra cash, hence i'm still with my old car.. .

 

I was also randomly browsing sgcarmart for used cars like mazda 6, considered an upgrade from my current car. Selling price is around 64k registered in end 2014 to early 2015, which is quite similar to the trade-in value for my current car (60k-ish range). Is it dumb to change from a new car to an used but better car? I dont mind driving about 6 months lesser due to reg date of the used car.

What new car are you talking about?

 

It's like saying when I married my wife she was a virgin so after 3 kids she is still a virgin today because she was a virgin when she got married?

 

Your car was new in 2015 it's not new today.

 

One thing I don't understand is when COE is very high people buy new car.

 

Now COE is low people are thinking of buying a second hand car?

 

COE high buy a second hand car with 2 or 3 years left.

 

COE low is the best time to buy a brand new car not second hand.

 

Edited October 22, 2018 by Jamesc

[Jamesc]

 

 

For people that bought a car new when COE was high and now thinking about changing car to save money the formular is very simple.

 

If you want to save money. If this is important to you then you should buy a new car when COE is low and change it when COE is low by buying another new car.

 

You cannot save money by buying a new car when COE is high whether you drive it for 10 years or change to another when COE is low.

 

Keep 10 years suffer high depreciation. Change to a new car now suffer big loss selling used or scrapping.

 

[Jamesc]

I wonder if the people that bought when COE was high and now trying to calculate how much savings by buying a new car now

 

are you all big fund managers that buy high and sell low I keep reading about in the newspapers?

 

Edited October 22, 2018 by Jamesc

[RogerNg_185295]

I wonder if the people that bought when COE was high and now trying to calculate how much savings by buying a new car now

 

are you all big fund managers that buy high and sell low I keep reading about in the newspapers?

 

Many are just calculating. They cannot stomach the loss. In that end just keep on driving current car

[chinpokomon]

For people that bought a car new when COE was high and now thinking about changing car to save money the formular is very simple.

 

If you want to save money. If this is important to you then you should buy a new car when COE is low and change it when COE is low by buying another new car.

 

You cannot save money by buying a new car when COE is high whether you drive it for 10 years or change to another when COE is low.

 

Keep 10 years suffer high depreciation. Change to a new car now suffer big loss selling used or scrapping.

 

 

I agree that one cant save money if the car was bought when COE was high.

 

once the high COE is bought, one is committed to the high depreciation. no choice.

 

its just about exploring options now.

 

if there may be any option available to cut losses, why not?

[Jamesc]

I agree that one cant save money if the car was bought when COE was high.

 

once the high COE is bought, one is committed to the high depreciation. no choice.

 

its just about exploring options now.

 

if there may be any option available to cut losses, why not?

Actually there is one option.

 

Pray COE gets cut and goes very high even higher than when you bought the car.

 

Then you can sell the car for a very good price. You might even break even or make a small profit.

 

[Lava]

my tot is to buy a car that you really like and drive it till end of coe, don't border about coe up or down along the way.

[Jayzz9]

What new car are you talking about?

 

It's like saying when I married my wife she was a virgin so after 3 kids she is still a virgin today because she was a virgin when she got married?

 

Your car was new in 2015 it's not new today.

 

One thing I don't understand is when COE is very high people buy new car.

 

Now COE is low people are thinking of buying a second hand car?

 

COE high buy a second hand car with 2 or 3 years left.

 

COE low is the best time to buy a brand new car not second hand.

 

Sorry lemme edit my post to: "Is it dumb to change from my current car to an used but better car?"

 

Haha yes its a three-year- OLD car!   

 

Some people have no choice but to buy a car during high COE period cuz their COE expired. 

 

 

[Jamesc]

Sorry lemme edit my post to: "Is it dumb to change from my current car to an used but better car?"

 

Haha yes its a three-year- OLD car!

 

Some people have no choice but to buy a car during high COE period cuz their COE expired.

Yes they have a choice.

 

They could have bought a car with 2 or 3 years COE left.

 

Unless you are saying the people that must only buy brand new type.

 

Then yes you are right really no choice.

 

[Lala81]

What new car are you talking about?

 

It's like saying when I married my wife she was a virgin so after 3 kids she is still a virgin today because she was a virgin when she got married?

 

Your car was new in 2015 it's not new today.

 

One thing I don't understand is when COE is very high people buy new car.

 

Now COE is low people are thinking of buying a second hand car?

 

COE high buy a second hand car with 2 or 3 years left.

 

COE low is the best time to buy a brand new car not second hand.

 

 

 

yeah it's very clear to only buy 1st hand now.