Should You Buy a PARF or COE Car?

The price of used cars can differ greatly. That’s because the value of a used car is partially tied to the rebates that come with de-registering it – the Preferential Additional Registration Fee (PARF) and Certificate of Entitlement (COE) rebates.

If you want to buy something dirt cheap 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

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.

Here’s what you’ll receive from each rebate:


COE Rebate

If you de-register your car before the remaining COE expires, you’re entitled to a rebate for the remainder of COE remaining. Since this rebate is passed onto the buyer, it’ll get factored into the resale value.

For example:

A used car registered in April 2008 has a PQP of $19,001 that’s set to expire in April 2018.

If this car is sold in October 2013, you’d calculate the COE rebate by multiplying the PQP ($19,001) by the number of months remaining on the COE (54 months) and dividing it by 10 years (120 months).

So the COE rebate would be ($19,001 X 54) / 120 = $8,550.45

PARF Rebate

If you de-register your car before the 10-year depreciation period has ended, you’re entitled to rebate based on a percentage of the vehicle’s ARF, which is also factored into the resale value.

The percentage you’ll receive is based on the following:

Number of Years Registered PARF Rebate
5 Years or Less 75% of ARF
5 Years to 6 Years 70% of ARF
6 Years to 7 Years 65% of ARF
7 Years to 8 Years 60% of ARF
8 Years to 9 Years 55% of ARF
9 Years to 10 Years 50% of ARF
10 Years or More Nothing


The Used Car’s Condition

The used car’s condition still plays a huge role its resale value, which is reflected in the vehicle’s OMV, depreciating 10% each year for the first 10 years after registration – for PARF cars only. The value of COE cars on the other hand is more arbitrary because there’s no ARF rebate or “official” OMV remaining, giving you leeway to negotiate price with the owner.

Remember, COE cars may be much cheaper initially, but be prepared to pay higher maintenance costs because they’re 10 years or older – unlike the newer PARF cars.

Whether you’re looking at a PARF or COE car, here are three factors to examine:

  • Mileage: Typically, if a car has a lot of mileage, that can contribute to a reduction in the resale value. That’s because the car’s performance decreases as mileage increases (naturally), meaning certain parts will need to be replaced faster.
  • Periodic Maintenance: A car that hasn’t been properly maintained is a liability (and a waste of money!). Cars need periodic maintenance, such as changing the motor oil, transmission fluid, air filter, etc. Ask to see the car’s maintenance log, and if there isn’t one, it’s a red flag that its maintenance may have been neglected. And of course, always have a mechanic check the car before you buy it!
  • External Condition: Check the car’s exterior for any dents, scratches, lights, power windows, and tires. If there are blemishes, you can at least negotiate some small discount, but if the car has worn-out lights or tires, ask for replacement.


The Road Tax

The road tax is another factor to consider when choosing between a PARF or COE car. That’s because you may need to pay an additional surcharge on top of the road tax. Check out LTA’s website to see the formula for calculating the road tax.

The road tax is determined by the engine size of your car, so the larger the engine, the higher the tax – that goes for both PARF and COE car owners. But COE car owners need to pay an additional surcharge up to 50% because their cars are 10 years or older.

Here’s the breakdown of the surcharge you’ll need to pay if you buy a COE car:

Age of Car

Additional Road Tax Surcharge

10 Years Old

Additional 10%

11 Years Old

Additional 20%

12 Years Old

Additional 30%

13 Years Old

Additional 40%

14+ Years Old

Additional 50%


How Do PARF and COE Cars Compare to Each Other?

COE cars are cheaper than PARF cars. But that cost of a COE car can easily jump if you happen to buy a car with mechanical defects – plus you still need to pay higher road tax as well. PARF cars on the other hand are newer, usually in better mechanical shape, and still retain much of their resale value.

Choosing one is not only a matter of budget, but of knowing the risks that come with buying cheap. If you’re still unsure of whether to choose a PARF or COE car, here are two charts outlining the advantages/disadvantages of each:


Advantages Disadvantages
  • Can collect both PARF and COE Rebates (if de-registered within 10 years)
  • Warranty may still be active
  • Smaller chance of maintenance issues
  • Lower mileage
  • Higher resale value if you choose to sell after 2-3 years


  • More expensive than COE cars
  • Higher monthly repayments
  • Higher down payment
  • Must pay transfer fee
  • Can have higher insurance premiums (depending on make and model)


Advantages Disadvantages
  • Cheapest used car you can buy
  • Can collect COE rebate
  • Lower monthly repayments
  • Lower down payment
  • Higher car insurance premium
  • Higher car loan interest rates
  • Higher maintenance costs
  • Higher road tax
  • Low resale value
  • Higher mileage
  • Expired Warranty