You will be able to explain what a COE is and how it affects what you pay for a car.
Arjun is 32, lives in Tampines and works in the CBD. His parents in Jurong are getting older, and he spends most Sundays crossing the island to see them. A car would cut that trip in half. When he walked into a showroom to ask about a mid-sized sedan, he was quoted a price, and the salesperson added, "That's with COE, but COE might change." He nodded as if he understood, and then went home and realised he didn't.
In Singapore, much of what you pay for a car is the right to own it at all. This lesson explains that right, the COE, and why it makes car prices move in ways other prices don't.
A Certificate of Entitlement, or COE, is the right to register and use a vehicle in Singapore for ten years. You can't register a new car without one. The number of COEs available is limited by the government to control how many vehicles are on the roads.
COEs are allocated through open bidding exercises run by LTA, with separate bidding in each category. There are categories for smaller cars and larger cars, based on engine capacity and power, as well as categories for goods vehicles and buses, motorcycles, and an open category that can be used for most vehicle types. Check the current category definitions on the LTA website, because the thresholds have been revised before.
At the end of each exercise, the successful bidders in a category all pay the same price: the lowest successful bid in that category, called the quota premium. That figure is the "COE price" you see reported in the news after each exercise.
Because the price comes from bidding, it depends on how many COEs are available in that round and how many people want them. The supply changes from one period to the next, partly with the number of vehicles being deregistered. Demand changes with the economy, with interest rates, and with how many buyers and dealers decide to bid in that round.
The result is a price that can swing widely from year to year, and sometimes between exercises a few weeks apart. Over the years, the COE for a car has at times cost much less than the car itself and at other times more.
For a goal on your sheet, that makes the car one of the clearest moving targets in this course. Lesson 1.2, Set targets for goals whose price keeps moving, applies here more than anywhere: record the COE figure you use, where it came from and the date, and recheck it every six months.
Most new cars are sold at a package price that includes the COE. The dealer bids for the COE on your behalf, and the package has a COE figure built into it.
Ask what happens if the COE comes in higher than that figure. Some packages promise to get you a COE within a set number of exercises at no extra cost. Others pass any increase on to you as a top-up, or put your car back into the next round. Some refund the difference if the COE comes in lower, and many don't. The terms vary by dealer and by package, and they decide who carries the risk of a price change between signing and delivery. The sales agreement is where the terms are binding, so read them there.
For used cars, the COE is already attached. A used car's price reflects how many years of its COE are left, which lesson 5.2 comes back to.
When a COE reaches the end of its ten years, the owner must either deregister the car or renew the COE by paying the prevailing quota premium, a figure based on recent COE prices, for a further period. LTA publishes the rules and the current figures. For planning, it means the cost of a car doesn't stop after ten years. You either replace it, renew it, or stop driving.
COE prices are reported widely, and everyone seems to remember a figure. The trouble is that a figure remembered from a news headline months ago may be badly out of date, and it may not even be for the category you would buy in.
Use the LTA website instead. It publishes the results of each bidding exercise by category, and the quota premium is among them. Look at the last several exercises for your category, not just the most recent one, so you see how much the price has moved.
As an example with made-up figures, Arjun looks up the last six results for the category his sedan would fall into and finds a low of S$95,200 and a high of S$107,800, a range of S$12,600 in a few months. He writes down both ends with the date he checked, and plans on the high end.
For the activity, you'll need the LTA results page for the category you would buy in.
Look up the last few COE results for the category you would buy in and note the range.
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