Personal Loan Options For COE Renewal In Singapore
Acquiring a new car can be quite expensive, particularly given the soaring COE rates nowadays. However, if your current vehicle's COE is nearing expiration, opting for a COE renewal for either five or ten years could be a more financially prudent choice.
Instead of going through the hassle of bidding for a new COE, you simply need to cover the Prevailing Quota Premium (PQP) for your car's category. You don't have to drain your entire savings to settle the full sum, as there are options available such as paying off most of the full sum with a personal loan or even with COE renewal loans offered through a bank or other MAS-approved financial institutions. Let’s find out more in this quick guide.
Why Choose A Personal Loan For Your COE Renewal?
More flexibility in funds
While personal loans may offer more flexibility as you can often borrow more than the value of the collateral, and you can use it to offset/pay off other car expenses i.e. insurance premiums, unexpected repair costs, parking fees, fuel expenses, alongside COE renewal costs, the interest rates may be higher as the loan is unsecured.
At the moment, car loans offer lower interest rates compared to personal loans, which generally lower than 2.78% p.a. (data is accurate at the time of writing, as per MoneySmart’s car loan listing page, and last updated on 10 May 2024), unlike personal loans which charge interest rates that mostly above 3% p.a. and can go up to more than 5% p.a., making it more practical to fund the expenses of a coe renewal with a car loan instead of a personal loan at times.
No collateral required
Personal loans are typically unsecured, which means no collateral is required. This makes it less risky for you as the borrower and in this context, a personal loan for your COE renewal may be more feasible than funding a purchase of a brand new COE.
As the PQP is determined by a rolling three-month average of current COE prices, this means that the cost of COE renewal tends to be less susceptible to sudden fluctuations compared to obtaining a brand new COE. While COE prices can still vary over time, the averaging mechanism helps to stabilise the cost to some extent.
No need for cash upfront & option of no downpayment
When renewing your COE, you typically don't need to pay a downpayment upfront. While you forfeit your PARF (Preferential Additional Registration Fee) rebates by renewing your COE instead of buying a new car, you also avoid the need to pay a downpayment, which is usually required when purchasing a new car.
Additionally, you have the option to spread out the payments over the loan term instead of paying a lump sum upfront, providing flexibility in managing your finances, and a personal loan can help with that as well.
Longer repayment terms
The maximum repayment term of up to 84 months for a 10-year COE renewal provides borrowers with the flexibility to choose a repayment period that suits their financial situation. Thus, car loans tailored specifically for COE renewal typically offer longer repayment terms compared to personal loans or new car loans.
While they may come with a higher interest rate, the extended repayment period allows for smaller monthly payments, which can be more manageable for some borrowers. However, using a personal loan to pay off part of your car loan may result in paying less interest over the loan term as the loan term is often shorter than those car loans catered especially for COE renewal.
Comparing COE Renewal Loans vs. Personal Loans For Your Car
| COE Renewal Loan | Personal Loans | |
|---|---|---|
| Type of loan | Secured | Unsecured |
| Collaterals | Required | None |
| Interest rates | 2.78% p.a. or lower | Mostly above 3% p.a. |
| Repayment period | Range from 7 to 10 years | Mostly 3 years |
| Available options |
|
|
*All estimated data above is accurate at the time of writing, as per MoneySmart’s car loan listing page, and last updated on 10 May 2024.
Best Personal Loans For COE Renewal
UOB Personal Loan
- Interest Rate*
- From 2.88%
- Total Amount Payable
- S$10,288
- Processing Fee
- 0%
- Per Month
- S$857
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- Interest Rate*
- From 1.99%
- Total Amount Payable
- S$10,199
- Processing Fee
- 1% of Approved Loan Amount
- Per Month
- S$850
HSBC Personal Loan
- Interest Rate*
- From 2.92%
- Total Amount Payable
- S$10,292
- Processing Fee
- S$0
- Per Month
- S$858
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- Interest Rate*
- 5.54%
- Total Amount Payable
- S$10,554
- Processing Fee
- S$100
- Per Month
- S$880
Check out other Personal Loans with Low Interest Rates & Fast Approval
Covering Car-related Costs Alongside COE Renewal
COE renewal in Singapore can be a significant expense. A personal loan can help consolidate this cost along with other car-related expenses that might fall around the same time, simplifying your budgeting and potentially offering a single, lower interest rate compared to financing each expense separately (though this depends on the specific loan terms).
Road tax
Insurance premiums
Maintenance and repairs
Vehicle modifications
Parking fees
Fuel costs
Frequently Asked Questions
Should I use a personal loan for my COE renewal?
- Yes and no. This really depends on your financial situation, risk appetite and several other related factors including preference to have collaterals required in the loan you take on or not, longer or shorter repayment period, just to name a few. For instance, car loans for COE renewal typically offer longer repayment terms compared to personal loans.
While they may come with a higher interest rate, the extended repayment period allows for smaller monthly payments, which can be more manageable for you as a borrower. Where can I get the best personal loans by banks in Singapore?
- Currently, Standard Chartered, UOB, DBS and HSBC are offering some of the more attractive interest rates and personal loan promotions in Singapore. To make a better comparison based on loan repayment tenures, effective interest rates (EIR) and minimum annual income requirements, you may use tools such as MoneySmart's comparison tool to help you out.