Increase your car’s resale value – expert tips

Wherever in the world you buy a car, one thing is true—the value drops as soon as you drive it out of the dealership. The general expectation is that car depreciation will involve a sudden drop in value from new, followed by a relatively steady decline over the years.

Even in Singapore with its complex rules, the same holds true, though the following decline is also affected by a number of other factors.

How the rules change things in Singapore

One of the things that changes vehicle depreciation in Singapore is the COE system. Theoretically, the COE value should be pro-rated when selling—so a $100,000 COE should be worth $90,000 with nine years left, $80,000 with eight years and so on.

The government does refund the unused portion of the COE if you deregister the vehicle too, up to a limit of 80% of the Quota Premium (QP) paid, as well as refunding a percentage of the PARF, from 75% for cars less than five years old, reducing by 5% per year to 10 years old. ^[1]

By definition, any registered vehicle in Singapore less than 10 years old that meets the requirements has an intrinsic value underwritten by the government. This is something to consider when it comes time to sell.

You may think these rules would smooth the decline in your car’s resale value, but the COE system is not only reflective of limited supply, it also measures demand, and the QP changes accordingly.

If you were trying to sell a one-year-old Cat B car in late January 2009, in the midst of the Global Financial Crisis, you’d have been trying to sell a car with a $12,001 COE Quota Premium to potential new car buyers who could get a COE for only $2,693. ^[2]

That could be a difficult car to sell without offering a bigger discount. Plus, the sentiment suggests there are fewer potential buyers in the market, and those that are may be shopping for bargains, meaning you would have likely been forced to sell at a lower price.

The opposite can also be true. Had you bought a Cat A car in the first bidding in January 2021, your COE Quota Premium was $40,609. That would surely have looked attractive to a buyer in January 2023 who was facing a $80,000 QP. As the seller of a second-hand car your negotiating position was stronger. ^[3]

Unfortunately, there’s little you can do to change the economic sentiment, and the timing of your car sale—and the prevailing COE premiums—are largely down to luck.

What can you do to improve your car’s resale value?

Firstly, think about how you want to sell your car. You can do it privately, or through a dealer, or on consignment.

Selling privately is the most likely way to get more money for your car, but it also represents the most work. You will have to advertise, answer enquiries and be available for potential buyers to view the car, as well as doing the paperwork.

Selling through a dealer is the most convenient, but also the likely route to the lowest amount of money at the end of it all. Dealers make money buying and selling cars, and their margins need to cover salaries and other overheads. Still, selling to a dealer means you get your money, and leave all the work for them.

Splitting the difference is selling on consignment. Consignment agents each have their own way of working, but they’ll generally guide you through the process, do the marketing, and help you get the best possible price. Many are motivated to negotiate a higher price for you too, working for a small percentage of the sale price, while others charge a flat fee.

How to prepare to sell your car

Whichever selling route you choose, shop around and find out what cars similar to yours are selling for, so you know roughly what to expect.

One recent search on SGCarMart.com reveals five equivalent Mazda 3 models from 2018 for sale, with asking prices ranging from $77,800 to $85,800.

You may want $10,000 more for your car than the next seller, but few buyers will want to pay the extra, unless your car stands out from the crowd.

How can you make your used car more attractive to buyers and ask a higher price?

Buyers are generally looking for a vehicle that has been looked-after well, and there are a number of ways you can reassure them:

• Drive carefully. Accident damage is a definite turn-off for potential buyers. Obviously, nobody aims to have a crash, but if your car has sustained damaged, get it properly repaired at a professional shop. Mismatched paintwork is just one tell-tale sign of accident damage.
• From the moment you purchase a car you should follow the recommended servicing schedule to the letter. Service intervals are designed to maximise the longevity of your vehicle, and to minimise the possibility of future problems. Used car buyers want to know they’re not forking-out money for a lemon.
• Keep receipts. It’s one thing to say you’ve serviced your car properly, buy a buyer is more likely to believe you if you have the receipts.
• Fix any issues. Even if you’ve followed the servicing schedule, there may be issues that need fixing. Rattling interior fittings or squeaky brakes are easily and cheaply fixed, and likely to put buyers off.
• Get it back to original. Your hot pink steering wheel cover may not be to all tastes. The closer your car looks to the way it left the showroom, the higher its resale value is likely to be.
• Low mileage wins. While there’s little you can do about it after the fact, low-mileage cars do attract a premium. If your car is approaching 100,000km on the odometer, for instance, you’re likely to get a higher price by keeping it below that number. Some numbers represent psychological barrier to buyers, and while there’s only 5,000km difference, 100,000km seems a lot more than 95,000km.
• Keep it clean. First impressions count, and if your car is spotless inside and out, you already have a potential buyer on side. It may be worth taking your car to a car detailer to get everything just-so, but it is also something you can do at home. Clean carpets and unmarked upholstery—and no bad smells—in the interior are easily-enough achieved with the right treatments. And a shiny, recently-polished exterior is sure to impress. Pay close attention to the wheels and tyres, which often let the whole look down. There are products specially formulated for car interiors and exteriors that should help.

A car is likely to be one of your biggest investments. Maintaining it properly and keeping it looking good are surefire ways of maximizing its resale value, whichever way you choose to sell it.

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Citations:

[1] https://onemotoring.lta.gov.sg/content/onemotoring/home/buying/rebates/parf-coe-rebate.html
[2] https://www.lta.gov.sg/content/dam/ltagov/who_we_are/statistics_and_publications/statistics/pdf/COE_Result_2005_2009.pdf
[3] https://www.lta.gov.sg/content/dam/ltagov/who_we_are/statistics_and_publications/statistics/pdf/M11-COE_Results_2020_2023.pdf