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What You Need To Know Before Renewing Your COE

Owning a vehicle is important for many people in Singapore for mobility purposes. However, the ownership process can be quite expensive due to the taxes involved as well as the 10-year Certificate of Entitlement (COE). The latter provides vehicle owners with the right to own a vehicle and also use it in Singapore.

The CEO has a 10-year life period but can be renewed once it expires as long as various conditions are met. However, there are a few things that you need to understand and consider before you renew your COE.

Renewing the COE After it Expires

If your COE expires, then you should consider renewing it as quickly as possible. The good news is that the Land Transport Authority (LTA) allows a 30-day grace period after the COE expires.

Once the grace period expires, then you can be charged a late payment fine. It is also considered an offence to have your vehicle on the roads without any car insurance or road tax. Your vehicle might be categorised as a scrapped car if you fail to renew after the grace period.

The Difference Between a 5-year & 10-year COE

Singapore motorists also need to understand the difference between a 5-year COE and a 10-year COE. The former allows vehicle owners to pay 50 percent of the Prevailing Quota Premium (PQP) which means the vehicle will be scrapped once the 5-year term is over.

Keep in mind that the PQP is determined as a moving average for the COE’s Quota Premium prices every three months.

The PQP is paid when vehicle owners decide to renew their COE so that they can extend ownership. Vehicle owners have to bid for a COE when the vehicle is new but they do not need to bid again after the 10-year duration is over.

They instead pay the PQP when renewing the COE. The 10-year COE means vehicle owners have to pay the full PQP for the entire duration and can choose to renew upon expiry.

Financing a COE Renewal

Paying for the COE renewal might be as easy as a walk in the park if you have the money in the bank. All you need to do is apply for a COE renewal and then proceed to pay the PQP. If you do not have that kind of money laying around, then consider a bank loan.

Singapore banks may offer a loan facility that can help you finance the COE renewal. Banks can only give a 7-years maximum repayment period for a 10-year CEO according to regulatory guidelines set by the Monetary Authority of Singapore (MAS). The maximum repayment period for a 5-year COE is 5 years.

The Best Time to Renew COE

It is always a good idea to plan ahead if you want to renew your COE. This is because planning will allow you to make the best decision. For example, scrapping the vehicle might be the best way forward as far as your finances are concerned or in the interest of getting another vehicle.

You might want to think about whether to renew or scrap the vehicle about two or three months before the COE expires. Considering the way forward early in advance will allow you to avoid making rushed decisions that might not be good for you.It will also allow you to get COE updates.

You might also want to make the decisions a few months before expiry if you are interested in getting a PARF rebate. You cannot get the PARF rebate if you choose to renew the COE.

Adrian Teo

Financial Services Director

Adrian Teo has over 16 years' experience in the Wealth Management & Financial Services. He has been in Pana Harrison since 2008 and is a seasoned Financial Services Director.

He is well versed in the areas of Investments & Retirement Planning and is well known for helping his clients achieve their Financial Freedom through various solutions and products.

He is also passionate in grooming new consultants who wish to embark a career in the Financial Services Industry.