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skooch
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All things Cars

Postby skooch » Mon, 25 Oct 2010 4:01 pm

Hi All,
I would appreciate some advice on car ownership in Singapore. I am thinking of buying one but can't decide if I should buy from a dealer ( all the complications of COE etc are taken care of ) or buy privately. If I buy privately do I need to go and bid for a COE ? How would I do this ?

Also, with regards to insurance, I built up a good no claims discount when I was living in the UK, is it possible to transfer it to Singapore as car insurance here seems very expensive.

Sorry, last bit, is it worth leasing a car over buying one ?

Thanks in advance.

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Re: All things Cars

Postby Strong Eagle » Mon, 25 Oct 2010 4:11 pm

skooch wrote:Hi All,
I would appreciate some advice on car ownership in Singapore. I am thinking of buying one but can't decide if I should buy from a dealer ( all the complications of COE etc are taken care of ) or buy privately. If I buy privately do I need to go and bid for a COE ? How would I do this ?


COE is transferred with the car and is part of the selling price. So, otherwise nearly identical cars will vary greatly in price if one has a COE that will expire shortly, whereas the other has a COE that has just been renewed.

Also, with regards to insurance, I built up a good no claims discount when I was living in the UK, is it possible to transfer it to Singapore as car insurance here seems very expensive.


No.

Sorry, last bit, is it worth leasing a car over buying one ?

Thanks in advance.


As with everywhere else, leasing makes sense in only very limited circumstances, such as being here only a very short time. Otherwise, buying is the better way to do. Remember, the lessor has to deal with COE, road tax, and registration fees, just like everyone else.

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Postby skooch » Mon, 25 Oct 2010 4:15 pm

Hi,
Thanks for your help. In practice is there a minimum number of years of COE left that you should look to have when buying a second hand car ?

Thanks

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Postby Strong Eagle » Mon, 25 Oct 2010 5:19 pm

skooch wrote:Hi,
Thanks for your help. In practice is there a minimum number of years of COE left that you should look to have when buying a second hand car ?

Thanks


Actually, there is a market for nearly expired COE cars. I bought 1991 Honda Civic with 18 months of COE left for $3,000. Given COE prices these days, the car was essentially free.

Next October I'll have to decide to renew (and for 5 or 10 years), or go find another cheap car. COE is refundable upon scrapping a car on a pro rata basis, it's just that you have to pay out all the money upfront.

To answer your question more directly, there are a couple of ways at looking at COE when valuing a car. First, what was the cost of the COE when last bought/renewed for the car? Say it was $20,000 for a 10 year COE. Then each year of COE is worth $2,000. So, all other things being equal, a car with 5 years left on the COE should cost $6,000 more than a car with 2 years left.

But, COE prices have been rising, sometimes more than $30,000 for a 10 year COE. So now, you might have to pay a premium above the $2,000 per year because to renew now would cost you $3,000 per year. A short lifetime COE means that you will soon have to renew at that higher rate, a longer term COE means you can put it off but you'll probably pay more per year for the COE than the owner did.

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Postby skooch » Mon, 25 Oct 2010 5:33 pm

I see what you mean about there being a market for nearly expired COE cars. What happens at the end though if you were to sell it ? Do you have to provide a COE with the car or do you just scrap it ?

Whilst I understand the need to limit the numbers of cars in Singapore I am stunned at the mark up of vehicles even without the COE.

I noticed its possible to go and bid for a COE yourself. Can you do this even before you have decided on a car ? Is it likely that you can get a good deal ?

I am about to take my Basic theory test so that I can get a conversion of my UK license. Can I bid for a car or purchase a car prior to getting the Singapore license ?

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Postby Strong Eagle » Mon, 25 Oct 2010 5:54 pm

skooch wrote:I see what you mean about there being a market for nearly expired COE cars. What happens at the end though if you were to sell it ? Do you have to provide a COE with the car or do you just scrap it ?

Whilst I understand the need to limit the numbers of cars in Singapore I am stunned at the mark up of vehicles even without the COE.

I noticed its possible to go and bid for a COE yourself. Can you do this even before you have decided on a car ? Is it likely that you can get a good deal ?

I am about to take my Basic theory test so that I can get a conversion of my UK license. Can I bid for a car or purchase a car prior to getting the Singapore license ?


COE is still a very controversial item in Singapore, as it essentially adds about $2,000 or more tax per year to drive the thing. It's a tax that probably does nothing to keep the cars off the road.

The additional registration fee is 115 percent of the total cost of the car... so cars cost double here. Again, it is still controversial but whether it keeps cars off the street is another question, because...

The number of cars that can be on the road is set by a formula. Each month, a quota of COE's that can be issued is calculated based upon scrapped cars, new roads, etc. This is the number of COE's that will be bid upon, the "quota".

If you bid on a COE, you get exactly the same deal as everyone else who is bidding in a COE auction which happens twice each month.

Let's say that the gahmen allocates a COE quota of 3 cars this month. It receives 5 bids for the quotas:

$85, $77, $70, $70, and $65.

The gahmen takes the highest bids that add up to or are less than the total COE quota. So, in this case, the $85 bidder and the $77 bidder each pay $77 and two COE's are issued. The $70 guys didn't win because that would have meant 4 people in the mix for 3 COE's. Instead, there is one unfilled COE that is carried over to the next auction.

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Postby skooch » Mon, 25 Oct 2010 6:16 pm

So I guess the question is, if the initial outlay for a car is so high, when I come to sell it would I make the vast majority of the money back minus to depreciation. I am trying to work out if it is relative to say buying and selling a car in the UK where you will be able to sell the car and lose just the depreciation.

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Postby Strong Eagle » Mon, 25 Oct 2010 7:03 pm

skooch wrote:So I guess the question is, if the initial outlay for a car is so high, when I come to sell it would I make the vast majority of the money back minus to depreciation. I am trying to work out if it is relative to say buying and selling a car in the UK where you will be able to sell the car and lose just the depreciation.


It is basically the same thing... just somewhat more complicated. If the car is scrapped, you get back the prorated COE plus, if scrapped in the first 10 years, prorated registration fee. So, in this case, depreciation is the main differential, year to year, COE discussions not withstanding.

COE is essentially a year to year road tax, all payable up front, so you don't make any of that back, except prorata unused years.

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Postby skooch » Mon, 25 Oct 2010 8:17 pm

I have learnt more on this post than I have from google so thanks for the help !

One last question, I have been looking at second hand cars and there is a value for price, a value for OMV, a value for depreciation and a value for COE. Does this mean the cost of the second hand car is all these values added together ? Its not very clear. I am looking at sgcarmart.

Thanks again for all the help.

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Postby Strong Eagle » Mon, 25 Oct 2010 9:23 pm

skooch wrote:I have learnt more on this post than I have from google so thanks for the help !

One last question, I have been looking at second hand cars and there is a value for price, a value for OMV, a value for depreciation and a value for COE. Does this mean the cost of the second hand car is all these values added together ? Its not very clear. I am looking at sgcarmart.

Thanks again for all the help.


No, the only thing that matters is the asking purchase price. All the numbers are bullsh*t, except they can be kind of useful in determining how the owner views COE, etc. Let's take an example from the website for the purposes of analysis.

http://www.sgcarmart.com/used_cars/info ... 24&DL=1000

Now, this car has an asking price of $38,000. It was initially registered in Jan, 1996, which means that the COE was renewed 10 years later, and indeed, the COE amount of $13,496 was the quota premium for Dec, 2005.

The OMV of $23, 448 is the 'open market value', the value assessment of the car at the time it was imported. This is the value used to compute the registration fee, so without the COE the car cost about 230 percent of this amount in 1996, or about $54,000, not including other charges like GST, etc.

The depreciation amount is simply a 10 year straight line based upon the total price paid until the COE expires... so it really is a BS number because depreciation is straightline (first year is probably worse here than elsewhere), and most cars go for more than 10 years.

So, what can be said about this car? First, it is an almost 15 year old car. Actual mileage is missing. I bought my 19 year old Civic for $3,000 with 360,000 kliks on the clock. So, besides whatever car value you are getting, you would buy 5 years worth of COE for $38,000 which is $7,600 per year, a lot more over the latest COE numbers which are in the $33K range for 10 years. I'd say this car is overpriced by about $20K.

For fun, look at this one.

http://www.sgcarmart.com/used_cars/info ... 67&DL=1000

Registered in Nov, 2000... the COE is obviously a typo... but the COE renewal for this car will be about $44K... so, best buy? I don't think so, because you'll be out $88K at the end of the year, although maybe not bad for a BMW.

OTOH, check the photo for a current BMW price. This includes COE.



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