How Much Does It Cost to Renew Your Car in Singapore?

Car prices in Singapore seem to be heading in just one direction these days — upwards. Therefore, car owners will need to seek alternative ways to moderate the cost of owning a car in Singapore. This is especially important because the cost of living has been skyrocketing across 2022 and 2023.

One option to optimise your budget is to continue driving your car for as long as it is safe to do so. However, in order to do that, you’ll have to renew your car’s Certificate of Entitlement (COE). Read on to find out how you can do this, and what the cost is like.

Understanding COE Renewal

Why Do You Need to Renew Your COE?

Private cars in Singapore are only allowed to be legally driven on the roads for a maximum of 10 years — that’s the validity period of the Certificate of Entitlement (COE). Therefore, if you wish to continue driving that same car after the 10-year limit is up, you will need to renew your COE.

COE renewals come in two versions: either five years or 10 years. Apart from the duration, there are also two important differences which are applicable to private cars in Categories A and B:

• Five-year COE renewals can only be done once, after which no further renewals are permitted. Your car will have to be de-registered upon expiry of the renewed COE.
• 10-year COE renewals may be renewed as many times as you like. However, each renewal must only be done in blocks of 10 years. This means that you cannot switch to a five-year renewal, no matter how many 10-year renewals you’ve made.

Related: Average Cost of Cars in Singapore 2024

How Much Do You Need to Pay to Renew Your COE?

When renewing your COE, you’ll be required to pay what’s known as the Prevailing Quota Premium (PQP) instead of buying a new certificate. Singapore’s Land Transport Authority (LTA) defines the PQP as “the moving average of COE prices in the last three months”.

As such, the PQP varies from month to month as it closely tracks COE prices in Singapore. When you’re renewing your COE, here’s the PQP you need to pay:

• Five-year renewal: 50% of PQP
• 10-year renewal: 100% of PQP

Up-to-date PQP figures are always available on the LTA website. As of February 2024, these are the PQP figures per vehicle category. Although they change every month, just like COE prices, the latest figures are still good estimates to keep in mind when you’re budgeting for your vehicle renewal:

• Category A (Cars up to 1,600CC and 97W): S$83,385
• Category B (Cars above 1,600CC or 97W): S$113,742
• Category C (Goods Vehicles and Buses): S$71,319
• Category D (Motorcycles): S$9,696

In comparison, February 2024’s COE prices are as follows:

• Category A (Cars up to 1,600CC and 97W): S$79,000
• Category B (Cars above 1,600CC or 97W): S$102,338
• Category C (Goods Vehicles and Buses): S$72,001
• Category D (Motorcycles): S$9,290

As you can see, the PQPs across the four categories aren’t too far off from current COE prices, with the price difference ranging from S$406 (Category D) to S$11,404 (Category B). If your current vehicle is in a condition you deem excellent or even satisfactory, the premium you pay might just be worth every penny compared to spending on a brand new car and fresh COE.

Cost Comparison: Honda City (1.5L Sedan)

For a more concrete example of how much renewing your COE for your current vehicle costs compared to a brand new one bearing a fresh COE, we’ll be using a mid-size 1.5L Honda City sedan as a basis of comparison. This car falls under Category A for COEs.

Here’s the price difference between buying it brand new, secondhand, and renewing your COE if you already own this automobile.

Most Expensive: Buying a Brand New Car

A brand new Honda City and COE costs S$140,399, according to the official Honda price guide for Singapore. Perhaps it isn’t surprising that this would be the most expensive option out of the three listed here.

COE prices may have been dropping, but they’re still relatively high. Further compounding matters would be the high interest rates that banks have been implementing for all types of loans ever since 2022.

And with car loans lasting up to seven years, buying a brand new car isn’t a decision that anyone should take lightly.

Middle of the Road: Buying a Secondhand Car

A secondhand Honda City with five years left on its COE costs between S$70,000 to S$80,000 in the open market. When you buy a used car, you will also inherit the remaining COE tenure on the vehicle. You usually don’t need to pay any additional fees, apart from the usual road tax charges and car insurance premiums.

Another benefit is that secondhand cars come in a wide range of COE tenures, allowing you to choose a vehicle with a COE expiry date that closely fits your personal plans.

Additionally, secondhand cars tend to offer a lower depreciation rate. That’s because most cars see the highest depreciation rates in the initial years of their lifespan.

Cheapest: Renewing Your COE

If you own a Honda City whose COE is about to expire, here’s how much renewing it will cost:

• S$83,385 for 10 years
• S$41,692.50 for five years

Even if you opt for a full 10-year renewal right now, it still costs only slightly more than buying a five-year-old Honda City. Although the common practice in Singapore is indeed to to scrap a car every 10 years and purchase a new one with a fresh COE, you might want to reconsider that the next time your automobile’s is reaching its 10th birthday.

Factors to Consider When Renewing Your COE

The numbers don’t lie. Renewing your COE much more affordable as compared to buying a new car or secondhand one.

However, the most obvious downside is the advanced age of your current vehicle.

After a decade of driving around, there’s bound to be some wear and tear even if you’re diligent in the upkeep of your vehicle. Also, you’ll be missing out on features and improvements in new models, although some drivers may not mind this as much. These include the latest advanced driver assistance systems and biometric locks.

Secondly, do note that car loan interest rates for COE vehicles (the term assigned to automobiles no longer using their original COEs) are likely to be higher than those for new cars. However, given the much lower principal loan amount, you may not feel the sting.

Lastly, even if you love your car to the extent that you have no qualms renewing its COE, you might have to invest in repairs and replacements. A full engine overhaul might be necessary if you’ve been pushing your vehicle hard, and given Singapore’s climate, you might just need new upholstery and seats.

All in all, renewing your COE in Singapore is indeed affordable. To be exact, a new car purchase with COE included can be equivalent to the cost of renewing your current car for a whopping 20 years. However, you’ll need to factor in the extra costs of maintaining an aging car. This complicates matters slightly, which is why it’s important for you to thoroughly plan your expenses once your car starts its final year countdown.

Whether it’s better to scrap it and head to the showrooms for a new automobile or renew your COE and save it requires careful financial planning.

Read More:

• What’s the Average Cost of COE in Singapore?
• What is a Car Insurance Excess?
• Why the Cheapest Car Insurance Plan Isn’t Always the Best
• Cost Comparison: Regular-Use vs Off-Peak Cars – How Much Can You Save with the Latter?
• Best Car Loans in Singapore 2024

Cover image source: Unsplash