Understanding how the Certificate of Entitlement (COE) system works is the first hurdle you'll have to clear before you even consider buying a car.  Purchasing your first car in Singapore is not cheap and you will not want to blindly throw money away just because 'Your friend is buying one'. 

Once you've grasped the idea of how it works, you'll be able to break down the listed price of cars based on their individual plus points and make an educated and most importantly sound decision on whether you should buy or wait it out.

Here's a simple guide crafted for you to understanding COE without overclocking your biological CPU.


Certificate of Entitlement (COE)

If you want to register a vehicle in Singapore, you'll have to have a COE. The prices of COEs are driven by supply and demand. Meaning if there's a high demand for vehicles, COEs will cost much more and vice versa.

COEs allows you to drive the vehicle on the roads for a period of 10 years. At the end of the 10 years, you can opt to renew your COE for another five or 10 years by paying the Prevailing Quota Premium (PQP).

PQP is calculated based on the moving average of the COE in the last three months. COEs which have been renewed for a period of five years are not eligible for another renewal and will have to be de-registered after they expire. Otherwise, there is no limit to the number of times for renewal. 

How do you get one?

To get a COE, you'll have to bid for it like in a digital art gallery auction. Bidding exercises occur twice a month, so you don't have to worry about missing out. Keep a close eye on the Land Transport Authority's (LTA) website as they will announce the vehicle quotas (the maximum number of vehicles that can be registered) prior to every bidding exercise.


Things to take note of when you bid

1. Make sure you have at least $10,000 in your bank account. Once you place your bid, it gets siphoned off immediately. However, if your bid is eventually unsuccessful, it'll be credited back into your account

2. Set a reasonable reserve price (the maximum amount you're willing to pay for your COE). If the then COE price exceeds your reserve price, you must alter your reserve price or you're out

3. Every time you revise or alter your reserve price, there are administrative charges to be accounted for (ranges from $2 to $10)

4. The bidding period lasts for three days and generally people become more aggressive with their bids toward the end of the bidding window

Leave the bidding to the dealer and their COE packages

You could also save the hassle and let the dealer do all the leg work for you, and they are usually glad to do so due to the higher profit margins. If you choose to leave the bidding to the dealer, there are different COE 'packages' for you to select from.


1. Non-guaranteed COE

Like its name suggests, you are not guaranteed a COE. Meaning, after doing all the paperwork and going through the whole process, you might not even get your car! Although it's the cheapest COE package, it comes with a high amount of risk and we wouldn't recommend this. Imagine waiting for up to 3 months for your car just to be informed by your dealer that he did not manage to get the COE for you.

2. Guaranteed COE @ $X

The dealer will quote you an amount of $X of which he will help bid for the COE. If the COE price falls below $X, you will be able to get your COE.

However, if it's higher than $X, better luck next time buddy! If your dealer is nice, he can tell you to make additional payments to secure your COE.


3. Guaranteed COE without top-up

With this package, the dealer will promise you that you are guaranteed to get your COE within a stipulated amount of time (usually up to 3 months).

This means you'll get your car within or up to 3 months!

4. Guaranteed COE with COE rebate at $X

This package is similar to the above mentioned 'Guaranteed COE without top-up'. However, in this package, there's a rebate element that favors the buyer more than the dealer.

The dealer will promise you a COE rebate of $X. If he secures the COE for you at a price lower than $X, he will rebate you the difference.


5. Immediate delivery 

This is the most expensive package that a buyer can opt for, but you are guaranteed a COE (From the most expensive COE Category - Category E) and your car will be delivered to you within 2 weeks!

The downside though is that when you decide to sell your car, the COE value will be that of it's corresponding COE Category. Meaning, if you get a Honda Vezel (engine capacity of 1496cc) it will be sold under as a Category A COE car. 
COE trends

The cost of COEs has generally gone down (and stayed down) with prices hitting an eight-year low earlier this July (2018). If you're looking to buy a car, there will probably be no better time than now. The average price for a COE for cars (Cat A & B) is around $30,000 as of November 2018. Find out the latest COE prices here.

Take advantage of the low COE prices and head over to sgCarMart's New Car listings for all the latest updates on new car prices, and find out what models are within your reach.

Here are some related articles that might interest you

COE renewal: What costs can you expect?

COE renewal - should you choose a bank loan or in-house loan

Should I renew my car COE in 2020?

A simple guide to COE renewal: How & when should you renew

5 cars in Singapore that are worth renewing COE for (2020 Edition)