How does COE work?
How to make use of the COE to get your best package
Car packages are often bundled with the COE, and with the COE being one of the main components in the car price, you definitely need to know how the COE works if you want to get the best deal when buying a car in Singapore!
What is COE?
Certificate of Entitlement (COE) is a certificate that gives you the right to own and use a vehicle in Singapore. The number of COEs released is determined by the Land Transport Authority every six months and there are five categories of COEs when registering for your vehicle, as listed below.
|Category A||Cars with engine capacity up to 1600CC & 97KW|
|Category B||Cars with engine capacity above 1600CC OR 97KW|
|Category C||Goods vehicle and bus|
|Category E||Open-all except motorcycle|
(Data extracted from: https://www.mytransport.sg/oneMotoring/coeDetails.html as of 4 April 2019)
How does it affect you as a buyer?
The COE prices change every 2 weeks when the COE bidding exercise is held. Check out the latest COE rates. With such volatility in the COE prices, car dealers have come up with various types of car packages with different effect on buyers. As a buyer, you should familiarise yourself and aim to get the package most fitted for your needs.
A package with guaranteed COE means that the car dealer would definitely need to secure a COE for you. Alongside the guaranteed COE with a cap, you will sometimes see the number of guaranteed bids that car dealers offer. This is the number of times that car dealers will enter the Bidding to secure your COE. The number of bids differ with car dealers and it is often ranged from 1 to 6 times. At MHG Cars where customers always come first, we offer a 4-bid guaranteed COE without top-up and this means that you can possibly drive away with a car sooner! For example, when you buy a Honda Fit with MHG Cars at $66,800 and if the COE bid increases to $31,000, the COE will still be secured within 4 bids.
Guaranteed Bid COE Package
With a guaranteed bid COE, you may not be able to get the COE and car. With non-guaranteed COE, you would need to pay a booking fee after which the dealer would bid for your COE for an agreed time duration, normally 6 bids, and stating the value of COE in which they will use to enter the Bidding. If the COE did not fall to meet the value entered, the COE will not be secured. For example, if you buy a Honda Fit at $62,800 with COE guaranteed bid at $24,000 for 6 bids, the dealer will enter the Bidding 6 times at $24,000. If the COE never falls below $24,000 after 6 bids, your COE is not secured. The dealer would then refund the booking fee you have paid and you will be left without a car. Therefore, this would definitely not be recommended as you may end up without a car after waiting all these while.
Also another component to take note is whether your car package comes with COE rebates. There are some car dealers that offer to give back the difference between the COE rebate value and the prevailing COE rates. For example, if the dealer has stated a COE rebate of $29,000, and your COE is secured at $24,000, the dealer would need to refund you $5,000.
An illustration to better understand how COE Rebates work:
Say that you buy a Honda Fit with MHG Cars at $66,800, the COE price can either rise or drop –
- Scenario 1 where the COE price rises to $31,000: MHG Cars will still secure the COE for you and you will only need to pay $66,800 for the car.
- Scenario 2 where the COE price drops to $24,000: MHG Cars will refund $5,000 ($29,000 – $24,000) to you. Effectively, you will only pay $61,800 for the car.
How you can get the best deal?
Therefore, a guaranteed COE package with COE rebates and without top-ups would mean that you definitely stand to gain whether the COE price increases or decreases. With such a package, you can get a COE by the end of the minimum bidding times and if the COE price increases with this package, the dealer absorbs the difference and better still, you get back rebates if the COE price drops.
At MHG Cars, all our car packages are Guaranteed COE with high COE rebate and without top-ups, and that means that all our customers always get the best deals!
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