A common dilemma for car owners is the nearing expiry date; the predicament of renewing your car or letting the LTA deregister it.
Renewing your COE (Certificate of Entitlement) seems tedious with the continuous price fluctuations and the complex bidding procedures. But if you don’t have cash ready, a COE renewal loan can save the day, and save your car from getting deregistered.
A bank loan and an in-house car loan are the usual options, but a personal loan is also viable.
This article shall give you a verdict on which is the best loan to take for a COE renewal loan.
Should You Renew Your COE After 5 or 10 Years?
Below is the table of vehicle categories, an important consideration when choosing your COE renewal plan:
Category A: Car up to 1600cc and 97kW (130bhp)
Category B: Car over 1600cc or 97kW (130bhp)
Category C: Goods vehicle and buses
Category D: Motorcycle
Category E: Open- all but motorcycles
5-Year COE Renewal
You need to clear 50% of the PQP to get the 5-year plan as well as know your car’s category to understand how you will be renewing your COE.
Categories A, B, and D
You only have one 5-year renewal term. You will have to deregister your car once the term ends.
You can renew your car for subsequent 5-year plans as long as your car’s statutory lifespan is valid. However, once you choose a plan of 5 years, you can only use the 5-year plan upon renewal until your car gets to the end of its lifespan.
10-Year COE Renewal
You need to clear the PQP to unlock the COE renewal plan of 10 years for your car’s category.
Vehicles that fall under categories A, B, and D have no statutory lifespan here. It means you can opt for COE renewal for 10 years every time as long as the Pre-COE Inspection shows that your car is in good condition.
How Do You Renew Your COE?
You must clear the Prevailing Quota Premium (PQP) for your car category to complete the process as stated earlier.
Simply put, the PQP is a 3-month average of Quota Premium (QP). Remember, the PQP for every month is different and is calculated from the QP in the bidding exercises in the last three months.
You can check your PQP when the second bidding in the previous month has been processed. Two factors determine the PQP rate: the day you choose to renew your car’s COE and the COE expiry day.
There are also penalty fees for late renewals, but if you take a COE renewal loan, you can avoid parting with your car or incurring late fees.
Bank COE Renewal Loans
Most car owners prefer a bank COE renewal loan because banks have lower interest rates and are more forthcoming about their fees. The rates often dance around the 3% mark.
A 5-year COE renewal loan has a repayment window of 5 years, while a ten-year plan has 7 years.
Financing from banks has merit due to security, transparency, and they might charge less administrative fees, unlike an in-house car loan.
Banks, however, base loan approval on your credit score, and don’t allow you to directly apply for a COE renewal loan for your car. You need to use an agent that offers similar rates to those of the banks.
In-House COE Renewal Loan
For in-house car loan financing, the interest rates are higher due to the lenient credit score checking and may range from 3% to 4%, depending on the company or the ‘middlemen’ you use.
An in-house car loan can sometimes go as low as 1.80% to bring in more clients, but administrative fees may be higher.
It is generally easier to get an in-house car loan as credit checks rarely affect their decision to offer you a COE loan.
Is There Another Way to Finance Your COE Renewal?
Apart from a bank car loan and an in-house car loan, you can use a personal loan to pay the COE renewal for your car. Because it doesn’t require collateral, it is also known as an unsecured or signature loan.
Most lending services in Singapore may offer that you pay a fixed number with fixed payment period and interest rate. This will be based on the contract’s terms and conditions, your salary, processing fees, and repayment capabilities.
Understanding Personal/Unsecured Loans
This is the principal loan amount that credit institutions can offer you, and is usually a lower amount from a secured loan because much of the risk is on the lender.
There is also a maximum credit limit for borrowers set by the Monetary Authority of Singapore (MAS) of 12 times your salary per month.
You might pay a higher interest rate for a personal loan, but this is understandable given the lack of collateral.
Bank Loans, In-House Loans, Personal Loans Comparisons
You can apply for a personal loan in Singapore for your car with an income as low as $1,500, and above as this is much better due to lack of restrictions.
However, an in-house car loan may be much better if banks and credit institutions are likely to reject your credit score.
Interest rates for personal loans differ from one credit institution to another, the former ranging from around 3.68% to 5.24% interest rates. Moneylenders interest, on the other hand, is up to 4% per month
Moneylenders’ personal loan has a repayment period of 6 months to 1 year. A bank loan can take 5 years for the 5-year plan and 7 years for a plan for 10 years.
Make a Difference With Burgis Credit
Burgis Credit is an institution in Singapore that strives to provide the best lending services during trying times.
We are a certified lender with several years of customer service experience. We can help you take a personal loan if you earn as low as $1,500, offering up to 6 times your income.
Making the decision between numerous COE renewable loans out there might make saving your car confusing, but we at Burgis Credit offer the best tailored personal loans to help you keep your car on the road.