Blog / Car Insurance
How much is your car really worth?
Owning a car is exciting. If you are Singaporean, acquiring one would mean you have achieved one of the 5 coveted Cs. But don’t forget while a car is an asset; it is also a depreciating one.
The value of cars decreases over time. This means every time you drive it, its value drops. The depreciation value is calculated the following way:
Annual Car Value Depreciation = (Total cost of vehicle – sale value of vehicle)/Number of Years in Service.
So, if you bought your car for $80,000 and sold it for $40,000 in 10 years, it would have an annual depreciation value of $4,000.
There are several factors that have an impact on the total cost of your vehicle.
*Certificate of Entitlement
When calculating your car value depreciation, there are several things you need to take into consideration. One of them is the Certificate of Entitlement (COE).
The COE are taxes imposed on car owners by the government to control the number of cars in our densely populated city. Car owners are required to bid on a COE for the right to register, use and own their vehicles within Singapore for 10 years. At the end of 10 years, they must decide whether to renew the COE at the new current prices or scrap the vehicle.
*Open Market Value (OMV)
The OMV of a vehicle includes the purchase price of the car, shipping and other charges included in the delivery of the car to Singapore.
*RF and ARF
The Registration Fee (RF) and Additional Registration Fee (ARF) are additional taxes on registering a vehicle in Singapore. The RF is a flat fee of $140 while the ARF is based on the OMV of the vehicle and ranges from 100% to 180% of the car’s value.
If the car is de-registered and scrapped at the end of the 10-year period, a Preferential Additional Registration Fee (PARF) can be received from the Land Transport Authority Singapore. This is a sliding scale which is based on the age of the vehicle when it is de-registered and scrapped.
Adding all these up will enable you to figure out the true cost of owning and operating a car and also whether you can afford to finance your car loan.
Tips on how to minimize your car depreciation
Keep the car well maintained – regular checks and servicing.
Keep the mileage down
Renew before a replacement model is released onto the market
Consider buying a used or nearly new car