Another advice I hear quite often is to scrap the current car, get back whatever money that is supposed to be retrieved doing so and using that money to buy a younger 2nd hand car. By doing so, you do not incur any of the penalties set by the government to encourage car owners to scrap older, less efficient cars.
If you are driving a Japanese car made in the 2000s, you would probably agree with me when I say that cars made during that decade tend to be extremely reliable, designed to be simple and require little maintenance but is still quite economical at the same time. Honestly, the newer cars, are indeed more efficient, meets newer emission standards, while using smaller engines but with COE values sky high, it is difficult to justify the advantages for the price.
Alas, the time has come for the COE to end. Scrapping the car will get you back the following rebates:
Rebate for remaining COE lifespan
The rebate for the remaining lifespan is prorated to the percentage of remaining lifespan from the original COE value. My car's COE was bought at $13,000 and left with 1year 4 months of life. My COE rebate I would get if I de-register the car now is $13,000/120months*16months = $1,733.
Rebate for PARF (Preferential Additional Registration Fee)
To reward those who scrap their car by the end of 10 years, the PARF rebate is 50% of the ARF paid. For mine, its about $10,600. This makes up the bulk of the total rebate when scrapping my car.
Scrap value of a car
Depending on overseas demand for that particular model, you get a scrap value in the range of $500-$10000 with most Japanese cars going around $1000.
In total, my oldie but goodie car would fetch $11,600 at the end of 10 years.
But what, lets not forget that we'll need to buy a 2nd hand car to replace it. For the sake of comparison, lets just say I decide to buy another similar car to serve my needs until, hopefully, the COE crashes. A quick check online shows that someone is trying to sell a Toyota Wish 1.8 for $81,800. Subtracting the rebate I would get from my old scarp, the actual amount spent on it would be $70,200. Again, by the end of the car's lifespan in Dec 2019, I would get back another $10,600. Hence the total depreciation is $59,600 for its remaining 5 years.
This meant that the cost for replacing your car with a newer 5 year old car would set you back $59,600. Sadly, this amount isn't too far off from the current PQP price of $64,584 (2nd bidding of Nov) and you only get 5 years of use.
But wait, would the savings from not having to pay extra road tax for older cars beyond 10 years old (should you choose to renew the COE) be the saving grace for going for a newer car?
