Buy New Car or Extend 5 More Years Old Car

[Note to Non-Singaporeans]: This problem is applicable only to Singapore car drivers. A COE (Certificate of Entitlement) is a piece of paper, which you openly bids, before you can drive the car on the road. Usually the COE, by demand (car buyers) and supply (limited by the authority for car population growth control), could be more than a medium-size car price ! A COE has a lifespan of 10 years, renewable to another 5 or 10 years.

Assumptions:
1. Class A (< 1600 cc) Old car (10 years expiring soon) is in good condition:
♢ Less than 200,000 KM
♢ Certified safe by qualified workshop

2. Renew COE at last-3-month average price ~$ 60,000 (10 years)
=> $30,000 (5 years)

3. New Car market price of $100,000

4. Parf Rebate $7,000 (forfeited if extend car beyond 10 years)

5. Monthly Car Loan (@2.88% for max. bank loan 60% & max 5 years = $60k) = $1,144 (= interest + capital)
5-year car loan = $1,144 x12x5 = $ 68,640
Downpayment Cash = $40,000 (or $20,000 for 5-year Cost of Ownership )

image
Compare Buy or Extension (Both 5 years)

Description Buy Extension
1. Car Price (down payment) for 5 years $20,000 $ 0
2.COE (5-Yrs) $ 0 $ 30,000
3. Car Loan (5 Yrs) = car price + COE $ 68,640 $ 0
4. Parf rebate $7,000 – $ 7,000
Cost of Ownership (1+2+3-4) $81,640 $ 37,000
Cash Flow (now) $101,640 $ 30,000

Deciding factors:
1. Cost of Ownership doesn’t matter if cash rich => buy new car & enjoy !
2. Cash Flow matters if cannot get bank loan => extension another 5 years ! [Wait in next 5 years for car / COE price to drop, then scrap the old car to buy new cheaper one.]

Note:
COE average price may drop below $30,000, based on 41% increase in COE availability from Feb – April 2015:

  (联合早报网讯)虽然车辆常年增长率将从下月起减半,但由于报销车辆增加,未来三个月的拥车证配额将增加将近两成。其中,中小型汽车的拥车证配额将激增41%。

  陆路交通管理局下午公布今年2月至4月的拥车证供应,中小型汽车(A组)每月可供投标的拥车证共有1973张,比之前三个月增加577张,增幅高达41%。

  大型及豪华车(B组)每月配额则增加306张,增幅为27%,共有1444张。可用于任何车款、但一般用来注册大型豪华车的公开组(E组)则将减少34%,每月只有349张。

  货车和巴士组(C组)配额也增加87张,增幅将近31%。每月共369张。电单车(D组)拥车证将减少10%,共570张。

  总的来说,未来三个月的拥车证配额共计 1万4114张。从今年2月起至2018年1月间,陆交局将把车辆常年增长率从现有0.5%下降到0.25%。各个拥车证组别供给公开组的配额数目,也从目前的15%缩减至10%。(本报记者:李静仪)

今年2月至4月的每月拥车证供应:

中小型汽车(A组):1973 (↑41%)
大型及豪华车(B组):1444 (↑27%)
货车和巴士组(C组):369 (↑31%)
电单车(D组):570 (↓10%)
公开组(E组):349 (↓34%)

  总数:4705 (↑18%)

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