When making the decision, make sure you consider more than just the upfront cost. Savings in one area may be neutralized by extra costs in another. It may seem cheaper to renew COE for 5 years, as the upfront payment is much lesser. But do note that road tax will become more expensive, and if your car is in a bad condition, all the repairs and maintenance cost may even become more expensive compared to purchasing a new car.
Here's an article about the top 5 factors to consider on whether to renew COE or to buy a new car: http://www.motorist.sg/article/120/renew-coe-vs-buying-a-car-which-is-really-better-for-you