COE VS PARF: Which is Cheaper When Buying a Used Car?

Q: What is a PARF Car and a COE Car?

A PARF car is a vehicle that’s less than ten-years-old and enables you to claw back a 50% PARF rebate if scrapped before its tenth year. Conversely, almost all COE cars are COE cars that have already completed one COE or more and are eligible for the COE rebate only.

Whether to buy a COE car or PARF car is a common problem faced by used car buyers in Singapore. PARF or COE car prices differ considerably, but one thing is certain – the average price of a new car in the city-state is much higher than buying a used car, which is why many Singaporeans find themselves looking at used cars instead. There are also all sorts of loans for used cars from car dealers to getting your dream car.

People in this position effectively have two options – PARF and COE. The former enables buyers to access PARF rebates worth a percentage of their car’s Open Market Value, while the latter allows car owners who wish to continue using a vehicle after 10 years to claim a COE rebate instead.

But which is best? In this article, Loan Advisor explores the benefits and disadvantages of both PARF and COE to help you decide which is the best fit for you.

What is a PARF Car and a COE Car?

In simple terms, a PARF car is a vehicle that’s less than 10-years-old and enables you to claw back a 50% PARF rebate if scrapped before its tenth year. Conversely, almost all COE cars are COE cars that have already completed one COE or more and are eligible for only the COE rebate.

With PARF cars, both the Preferential Additional Registration Fee PARF rebate and an additional Certificate of Entitlement or COE rebate can be enjoyed. That said, PARF cars typically cost more up-front, whereas COE cars usually tend to be the cheapest used cars money can buy in Singapore. Nevertheless, COE cars may ultimately need to pay higher road tax and maintenance costs for wear and tear. Let’s explore both PARF and COE cars in a little more detail, helping you to decide which appeals most.

PARF Cars – Best for Lower Long Term Cost

Whether you’re looking at newer PARF cars or an older vehicle, most PARF cars will be less than ten-years-old. Every PARF car comes with an Open Market Value OMV, which is made up of the vehicle’s original cost (or upfront cost), purchase price, car insurance, and delivery charges.

PARF car owners will need to de register their vehicle within 10 years of its first registration date to claim their Preferential Additional Registration Fee or PARF rebate. PARF rebates will amount to a percentage of the original Open Market Value OMV.

Why is it Better Than COE?

PARF cars allow you to collect both PARF and COE rebates, rather than solely a COE rebate. What’s more, you’ll enjoy lower car loan interest rates and a lower chance of maintenance problems and general wear and tear.

PARF Car Pros and Cons

Pros

Claim both the COE and PARF rebate
PARF cars will last longer
Lower long term cost in terms of maintenance costs
Warranty may still be active
Resale value is more likely to remain high

Cons

Higher upfront and down payment costs involved
Monthly repayments are higher
There is always a transfer fee involved

Best For

If you want to save money on road tax, maintenance costs and wear and tear, and also enjoy being able to benefit from both the COE and the PARF rebate, a PARF car is the obvious option for you.

Man buying the car. Businessman in a car salon

COE Cars – Best for Cheapest Used Cars

Almost all COE cars in Singapore are vehicles that car owners wish to continue using after ten years – the point at which COE renewal is typically due.

Once a COE renewal has been processed, the vehicle will become ineligible for a PARF rebate, but car owners can claim a COE rebate instead. COE car owners also benefit from paying lower down payments or monthly repayments, and generally cheaper upfront expenses all-round – though car insurance premiums and maintenance costs could prove pricey in the long run.

Why is it Better Than PARF?

COE cars are usually the cheapest used cars on the market, meaning that if you don’t mind purchasing an older vehicle, you can save a lot of money on the upfront cost of buying your new car.

COE Car Pros and Cons

Pros

Low COE prices compared to PARF
Improvements in technology mean old cars now last longer
Lower down payments and monthly repayments

Cons

Long term cost could be higher
You’ll pay higher road tax and maintenance costs
Car insurance could also prove costly
Warranty is likely to have expired
Resale value may be lower

Best For

Car owners who, above all else, want to pay a lower upfront cost for their vehicle

PARF and COE Compared

So, what are the key similarities and differences between PARF and COE Cars? Let’s look:

	PARF Car	COE Car
Down Payment	Larger down payment required	Lower down payment required
Rebate(s) Available	PARF and COE rebates	COE rebate only
Vehicle Resale Value	Resale value remains high if sold after 2-3 years and the car is in good condition	Resale value will often be lower on older cars with more previous owners due to faster depreciation
Road Tax Costs	Lower road tax	Higher road tax, with additional road tax surcharge on a sliding scale from 10-50% depending on vehicle age
Upfront Expenses / Costs	Generally more costly than COE cars	Generally cheaper than PARF cars
Monthly Repayments	Higher monthly repayments	Lower monthly repayments
Car Insurance Costs	Car insurance costs are dependent on make and model	Age of the vehicle, previous owners and more can result in higher car insurance costs
Vehicle Mileage	Both PARF and COE cars can be found with high and low mileage, but low mileage PARF cars are more common	Generally high mileage vehicles; low mileage cars are rare.
Transfer Fee	Required	Not required

Frequently Asked Questions (FAQs) About PARF Car and COE Cars

1. Does a COE Car Have a PARF Rebate Value?

COE cars are not eligible for a PARF rebate, as car owners would have chosen to pay their Prevailing Quota Premium or “PQP” for an additional 5-10 years at the point of de registration. That said, COE cars are eligible for COE rebates.

2. Is it Better to Buy a COE Car with a High Open Market Value?

If you’re considering buying a COE car, it’s important to consider the impact of depreciation on its potential resale value, as older vehicles typically deteriorate faster. Buying a car with a higher OMV to begin with can potentially help to protect you against depreciation and ensure you pay a lower down payment, but PARF cars still usually work out less expensive in the long run.

3. How Much is the Additional Tax Car Surcharge on COE Cars?

There is an additional road tax surcharge payable on COE cars over a certain age. When purchasing a COE car, you’ll need to pay an additional 10% on a 10-year-old car. If the vehicle is 11-years-old, you’ll need to pay 20%, followed by 30% when the car turns 13, and so on – up to a maximum of 50%.

PARF or COE Car Conclusion – How to Compare PARF and COE For Your Best Benefit

PARF and COE cars both have their upsides and downsides, and which is the best fit for you will ultimately depend on your unique circumstances. So, think carefully about your requirements before buying, and be sure to keep the following in mind:

While PARF cars are eligible for PARF rebates and COE rebates, a COE car will only entitle you to the COE rebate when the time comes.
COE cars might appear to be cheaper up-front, but a PARF car might cost you less in maintenance and wear and tear in the long run – and is likely to retain a higher resale value.
PARF cars incur a transfer fee and may require higher down payments and up-front costs. This might mean you’ll have to take out a car loan to fund their purchase.

Loan Advisor keeps you up to date with the latest news regarding PARF, COE, car financing, loans and more. We also offer a loan comparison service where you can compare moneylender quotes on the loan amount you need in minutes.