There are also many reasons as to why selling the car is the best decision for you at this current point in time. Looking into Singapore’s climate, changing commuting needs and taking advantage of the COE prices through the buying and selling process are two key reasons for car owners to give up the comfort of their car, and to sell at this time.
Change in Commuting Needs:
With lifestyle needs changing overtime, like moving closer to workplace, or having better public transportation options with the development of new MRT lines, selling your car may be an option that simply makes sense. If you are using your car intermittently (i.e. only on the weekends, or for special occasions only), it may be wise to switch to alternative modes of transport like Private Hire, Public Transport or even Car-Sharing options. Since owning a car is an expensive venture, selling your car could perhaps free up some cash to be used for alternative purposes.
Upgrading/Downgrading Your Car:
As we aim to hit our own financial goals, freeing up some cash could benefit individuals in having some leeway for alternative investments and generate better cash flows. A bonus would include capitalizing on sky-rocketing COE prices through this buying and selling process.
Here are some Terms You Need to Know:
Deregistration Value: Amount returned when the vehicle is deregistered.
Deregistration value = COE rebate + PARF rebate
Certificate of Entitlement (COE) Rebate: If a driver deregisters the car before the COE is up, he would get the rebate for the unused duration of the vehicle’s COE.
COE rebate = [Quota Premium Paid x Number of months left] / 120 months
Additional Registration Fee (ARF): A tax that is imposed on a car that is registered, calculated based on a percentage of your vehicle’s Open Market Value (OMV).
First $20,000: 100% of OMV
Next $30,000 (i.e. $20,000 – $50,000): 140% of OMV
Above $50,000: 180% of OMV
Preferential Additional Registration Fee (PARF) Rebate: Percentage of your ARF value if the car is deregistered within 10 years. Generally, it is about a 5% decrease annually after the 5th year.
Scrap Value: Sum of car’s deregistration value (paid by LTA) + car’s body value (amount the dealer is willing to pay).
Things to Consider:
Intending to sell your car and want the best bank for your buck? Here are a few tips to take note when doing so:
Higher Depreciation After the Car Reaches More Than 5 Years
The cost of depreciation is highest in the first 4 years of a car’s lifespan due to less wear and tear. Hence, there are not many cars that are being sold in the first 3 years of their tenure. Moreover, car dealers may offer warranty for maintenance and electrical issues the first 3 to 5 years, thus leaving it unnecessary to sell the car at its ‘best condition’ in the first 3 years. Experts then share that by selling your car that is in its 4 to 8th year would be most optimal in fetching a relatively good price.
Selling when COE prices are high
If the COE prices are high, the valuation for your second-hand car would be higher. Since new cars are expensive, potential car buyers then focus their attention to the second-hand cars as they are relatively cheaper.
Moreover, high COE prices also mean that renewing your COE for a 10 year old car will be also significantly more expensive. Hence, selling it would avoid heavy renewal expense, and it would make more sense to sell and downgrade, or to sell and buy a new car again.
In this case, other options like Car Sharing and/or Car Rental, where the business bears the cost of the high COE prices, could be more economically affordable options for you.
Selling at the 5th year may be optimal as, the PARF rebate will be reduced by 5% annually
|Age of Deregistration
|< 5 years
|75% of ARF paid
|5 <= years < 6
|70% of ARF paid
|6 <= years < 7
|65% of ARF paid
|7 <= years < 8
|60% of ARF paid
|8 <= years < 9
|55% of ARF paid
|9 <= years < 10
|50% of ARF paid
|Above 10 years
Regardless of these considerations, there is no one-size fit all metrics in deciding when is the best time to sell your car. A general rule of thumb would be that if you are certain that selling your car is near horizon, selling it sooner than later would be more ideal as cars are a depreciating asset.
Is Car Rental in Singapore More Suitable For You?
In doing so, commuters would have to figure out alternative commuting arrangements. Car ownership would inevitably have high upfront costs and rolling fees incurred over the course of ownership. Indeed, the sunk cost may be massive for some and thus, taking up car loans to fund the high expenses is a norm for most car owners.
For commuters who are more prudent, renting a car instead could reap greater cost savings in the long run as the car rental companies bear the brunt of the depreciating assets, as well as
Perhaps after selling your car, car rental could be useful for more short term and ad hoc commuting needs. Be it for events, or planned errands to run, a short term car rental package could perhaps allow you to save more in the long run.
Visit our short term car rental catalogue to visit our available cars on rent today!