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Wednesday, December 5, 2018

Renew your COE?

If you have bought your current ride at low COE quota premium about 10 years ago and the COE expiry is approaching soon, I guess that you may be toying with the idea of COE renewal.   It is the lowest financial commitment option to sustain a car.  However, you should carefully consider these following three aspects.

1. Road worthiness of your joyful ride - is your ride in a good shape to last another 5 or 10 years?  Most cars should last long if they are maintained reasonably well.  You can check with your regular mechanic on the cost of preventive maintenance and replacing worn parts.  

Do you still feel the joy of your ride?  If you dread driving your ride, then you need not read further.  The reliability of a new ride will definitely give you little or no headache for the first few years.  Moreover, some dealers bundle service credits into the purchase. 

2. Increased operating cost - you have to factor in the higher road tax (surcharge of 10-50% for vehicles aged more than 10 years), higher fuel consumption and higher maintenance cost when compared to a new ride of similar capacity.  Newer technology tends to produce better fuel efficiency. 

The upfront capital cost is your biggest consideration as the good feeling and smell of a new ride probably last only the first few weeks.  For your current ride,  the Preferential Additional Registration Fees (PARF) rebate will also be forgone in the COE renewal if it is less than 10 years old. 

3. Renew for 5 or 10 years - pay the half the Prevailing Quota Premium or the full sum?  Do note that the 5-year COE is non-renewable and your ride will be de-registered when it expires.  Go for the 10-year COE if you can afford it since you can get back the balance for early de-registration.  You can also continually renew more 10-year COEs if so desired; especially for vintage quality cars.

The final decision is the timing of when you should renew the COE. The Prevailing Quota Premium (PQP) has been falling steadily since the Vehicular Emissions Scheme (VES) is fully enforced from July 2018.  

You should receive the LTA letter about 6 weeks before the expiry of your COE.  If you renew your COE in the month of expiry, the new COE starts on the day after the current COE expires.  If you renew your COE a month or even several months before your current COE expires, the new COE starts on the first day of the PQP month.  The balance of the current COE will be written off since this period is overlapped by the new COE.

Why renew earlier before your COE expires?  PQP for month M+1 is computed based on the average of QP for 3 months ie. M-2, M-1 and M.  The lowest PQP in the history are $3,004 Category B COE for March 2009 and $3,864 Category A COE for April 2009.  These are the only instances when the PQP fell below 5 digits ever since the PQP rose above $10,000 from May 1992.  The highest ever was the $93,497 Category B COE for March 2013.  Thus, you know your COE cost per month (just divide by 120) and should proceed to renew if there is high likelihood that PQP is going to raise rapidly in the next few months.  However, the recent PQPs are listed below and today's 1st bidding exercise for December 2018 indicates that the downtrend is persisting.  Hang on if you can ...

Gee ... I had just noted that my last post was more than 3 years ago!  COE Quota Premium have been very well supported over the 3 years so it was not until the upcoming expiry of my ride's COE that I re-started to monitor the COE bidding exercises.

1 comment:

Unknown said...

Basically, to renew COE, the cost for the new COE depends on the market rate and not the amt of the exist COE right?