Buying a used car - PARF car vs COE car?

Michelle Lim
4 May 2018
 

Buying a used car – PARF car vs COE car?

If this is your first time buying a car, you must be wondering… What are these acronyms? And which type of car should you get? Here, we’ll go through the advantages and disadvantages of both categories of cars so that you can make an informed judgment.

In general, the Preferential Additional Registration Fee (PARF) cars are cars that are still using their first 10 years of original Certification of Entitlement (COE) while COE cars are those that are above 10 years of age and have renewed their COE.

PARF car (< 10 years old)

The PARF rebate is given to owners who de-register their cars within 10 years of its first registration date. This rebate is given to help you recoup the Additional Registration Fee (ARF) that you paid when you first purchase the car. The quantum of the rebate is based on the age of your car when you deregister it. 

Deregistration Age

PARF rebate

< 5 years

75% of ARF paid

5 – 6 years

70% of ARF paid

6 – 7 years

65% of ARF paid

7 – 8 years

60% of ARF paid

8 – 9 years

55% of ARF paid

9 – 10 years

50% of ARF paid

> 10 years

-


Since the ARF is a portion of the Open Market Value (OMV) of the car, the higher the OMV, the higher your PARF rebate will be when you de-register your car. The remaining COE will also be returned to you. The PARF rebate and remaining COE is valid for 12 months from your deregistration date.

COE car (> 10 years old)

Unlike PARF cars, these cars will no longer enjoy the PARF rebate. Only the COE rebate will be available should you de-register the car before the end of your COE term (5 or 10 years), as such these cars are termed ‘COE car’.

To continue using the car after the first 10 years, you will need to renew the COE of the car. The amount paid for the COE renewal then depends on the Prevailing Quota Premium (PQP).

You may also be interested in: 8 things you need to know before renewing your COE.

Advantages and Disadvantages

1.    Costs

Excluding the PARF rebate in the cost, COE cars cost less than a PARF car. Buyers with lower budgets may want to consider COE cars.

✔ COE cars

2.    Road Tax

That being said, COE cars will need to pay more road tax. For cars over 10 years old, there will be a road tax surcharge that increases by 10 per cent each year after your first 10-year period up to your 14th year of having the vehicle. Subsequently, you will have to pay a 50 per cent surcharge every year up till the end of your COE term.

✔ PARF cars

3.    Warranty

If you purchase newer PARF cars (< 3 years old), they will still be under warranty by the authorised agents and their resale value will be higher than those of COE cars.

✔ PARF cars

4.    Wear and Tear

Because COE cars are older than PARF cars, they may be more prone to wear and tear and more money will need to be spent on them. The cheaper costs of COE cars will then be nullified by the hefty service and maintenance costs.

That being said, not all cars over the age of 10 years would necessarily require more service and maintenance. Reliable vehicles may last over 10 years while problematic ones will definitely give you a whole load of headaches even before the first 10 years is up.

Also, lots of the wear and tear of the car is also dependent on its previous owners. You may also wish to check the number of previous owners and do a thorough check on the actual condition of the car (e.g. interior finishing, dashboard, exterior paint coat, et cetera). You may also wish to bring the car to external evaluation providers to ensure that your car is in good working condition (STA/VIACOM/AAS). As such, a PARF car with 4 owners may not necessarily be in better condition than a COE car with only 1 owner.

✔ PARF/COE cars

5.    Technology

Car technology improves rapidly over a short span in time - from a vehicle’s performance, to its safety features, to increase use of AI, and to better engines. An older car, however, will not be able to enjoy nor keep up with these features.

✔ PARF cars

6.    Car Insurance

A common misconception of many car owners is that car insurance premiums are a lot higher than that of new cars. However, this is not necessarily the case. In fact, car insurers often charge higher premiums for new cars for their comprehensive plans. But, do also note that there will be fewer car insurers for cars that are past 10 years. 

To help you save the time taken for extensive research in getting the best quotes, Oneshift works with various car insurers and offers free non-obligatory car insurance quotes.

✔ PARF/COE cars

7.    Depreciation

Aside from the upfront costs, one should definitely also look at the depreciation of the cars. This is where the mathematics comes in.

You may also be interested in: When is the best time to sell my car? -Understanding the depreciation of cars in Singapore.

✔ PARF/COE cars 

8.    Loans

Some people may think that purchasing a COE car would mean that they will have to pay for the full sum of the car upfront. However, there are actually a variety of COE renewal loans that you can take should you wish to purchase a COE car to renew its COE. 

Oneshift works with MAS regulated banks to offer you the best COE renewal loans in Singapore.

✔ PARF/COE cars

Ultimately, the decision to purchase a PARF or COE car is dependent on that exact model and make that you are looking at. Do ensure that you do your mathematics and proper checks before you put in that deposit to purchase your “new” ride! Newer does not necessarily mean better, ultimately, you will need to first consider your needs and comfort levels.

Start here, by looking through Oneshift’s Used Car Listings!


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