If you want to buy something cheaper that’ll last for a few years until you upgrade to something better, get a COE Car. If you want something less vintage that’ll let you collect your COE and PARF rebates after de-registration, get a PARF car. But this is only a surface-level difference.
Here’s the main reason why PARF and COE car prices differ:
A PARF car hasn’t been de-registered before its 10-year depreciation period has ended. This makes it eligible for both the COE and PARF Rebate, which ranges from 50% – 75% of the Additional Registration Fee (ARF) paid on the vehicle.
A COE car is not eligible for the PARF Rebate because the owner chose to pay the Prevailing Quota Premium (PQP) for 5 or 10 more years more instead of de-registering the vehicle. This means that upon de-registration, you’ll only receive the COE Rebate.
There are many other differences between PARF and COE cars that contribute to both their upfront and long-term cost, such as:
The Down Payment
The down payment makes up the biggest chunk of your upfront cost when buying a used car. And with the latest MAS car loan restrictions, the amount you can borrow is reduced – meaning you’ll have to pay a larger down payment.
So your down payment will depend on the following:
If the Open Market Value (OMV) of your vehicle is $20,000 or less, your maximum Loan-to-Value is 60% – meaning you’ll have to make a 40% down payment. Almost all COE cars will fit into this category.
If the Open Market Value (OMV) of your vehicle is more than $20,000, your maximum Loan-to-Value is 50% – meaning you’ll have to make a 50% down payment. Most PARF cars will fit into this category.
The rebates associated with both PARF and COE cars is where used cars get much of their value from. COE cars are the cheapest used cars you can buy because you’ll only get the COE rebate. PARF cars on the other hand are much more expensive because upon de-registration, you get both the PARF and COE discounts.