How Car Depreciation Works in Singapore and Why It Matters for Drivers

Key Takeaways

• Car depreciation is the gradual reduction in a vehicle’s value over time and is one of the most significant costs associated with private car ownership in Singapore.

• A car’s remaining Certificate of Entitlement (COE), its Additional Registration Fee (ARF), eligibility for rebates and market demand can all affect its resale value.

• Car ownership may suit drivers who want full control over their vehicle and are prepared to manage its servicing, resale value, and eventual deregistration.

• Long-term leasing can offer a more predictable alternative for those who prefer a defined commitment, clearer ongoing costs and less exposure to depreciation-related decisions.

Introduction

In Singapore, the cost of car ownership goes far beyond the initial purchase. Road tax, insurance, servicing, fuel and parking all form part of the experience, but depreciation is often another significant cost to consider.

Car depreciation is the value a vehicle loses over time. Essentially, it is the difference between what you pay for a vehicle and what you may eventually recover when you sell, export or deregister it.

Unlike many overseas markets, where depreciation is largely influenced by age, mileage and model popularity, Singapore’s system is more structured. Here, the value of a car is closely connected to its 10-year COE lifespan and the rebates that may apply when it is deregistered. 

Below, we explore how exactly depreciation works, the factors that influence it, and why it plays a key role in the overall cost of owning a car in Singapore.

What Affects Car Depreciation in Singapore?

1. Certificate of Entitlement Lifespan

In Singapore, each car is registered with a Certificate of Entitlement (COE) that is valid for 10 years. The more COE validity a vehicle has left, the longer the next owner can continue using it before another major ownership decision is required.

A car with nine years of COE left gives its next owner a longer usable lifespan than a comparable car with only two years left. With a shorter remaining COE period, the buyer has less time to enjoy the vehicle before deciding whether to renew or deregister it.

This also affects how the cost of ownership is spread out. If a buyer pays for a car with only a few years of remaining COE, the purchase cost, insurance, servicing and other running expenses are spread across a shorter period of use. As a result, a lower upfront price does not always mean the car is more cost-effective overall.

2. PARF Rebate and Residual Value

The Preferential Additional Registration Fee (PARF) rebate is an amount that eligible owners may receive when they deregister a car before it reaches 10 years of age. It is calculated from the Additional Registration Fee (ARF) paid when the vehicle was first registered, together with its age at deregistration. Put simply, a newer eligible vehicle may qualify for a higher rebate than an older one. 

For cars registered with COEs obtained from the second COE bidding exercise in February 2026 onwards, the revised PARF rebate schedule applies. Under this schedule:

• Cars deregistered at not more than five years old may receive a PARF rebate of 30% of the actual ARF paid.

• The applicable rebate percentage decreases as the vehicle gets older.

• Cars deregistered at more than nine years old but not more than 10 years old may receive a PARF rebate of 5% of the actual ARF paid.

• ARF-paid cars are subject to a PARF rebate cap of S$30,000.

The revised PARF rebate schedule and cap apply to cars registered with COEs obtained from the second COE bidding exercise in February 2026 onwards. Cars registered under earlier COE exercises remain subject to the PARF rebate schedule and cap applicable to them.

3. Market Demand and Vehicle Type

The make and model of a vehicle can affect how easily it attracts interest in the resale market. Buyers may have different priorities, from cabin space and fuel efficiency to driving comfort, technology and brand preference.

However, no single vehicle type consistently holds its value better than another. Resale demand can change with buyer preferences, new-vehicle supply, and broader market conditions.

4. Mileage, Condition and Maintenance History

A vehicle that has been carefully maintained tends to inspire greater confidence in its next owner. Lower mileage may suggest less day-to-day wear, while a well-kept cabin and exterior can reflect the level of care given throughout ownership.

A complete servicing record is equally valuable. It gives buyers a clearer view of how the vehicle has been maintained and can provide greater confidence in its condition.

Regular upkeep will not prevent depreciation, but it can help a car retain its appeal and support a more favourable resale value when the time comes to move on.

A Practical Way to Estimate Annual Depreciation

When comparing cars, drivers often look at annual depreciation to get a clearer sense of how much value a vehicle may lose each year.

A common calculation is:

• Annual depreciation = (Purchase price − estimated deregistration value) ÷ remaining COE years

The estimated deregistration value may include the PARF rebate, where applicable. For used cars, advertised annual depreciation figures are often calculated using the list price, the minimum PARF value, and the remaining COE period.

For example, imagine a car is priced at S$120,000, has six years of COE remaining and an estimated deregistration value of S$30,000 at the end of that period.

• (S$120,000 − S$30,000) ÷ 6 = S$15,000 per year

This means the car’s estimated annual depreciation is around S$15,000, before other ownership costs such as insurance, road tax, servicing, fuel, parking and repairs are included.

Leasing: A More Predictable Alternative to Ownership

With car ownership in Singapore shaped by depreciation, COE validity, and ongoing running costs, some drivers may prefer a solution that involves less long-term commitment. This is where car leasing can offer a more straightforward alternative.

Rather than purchasing a vehicle and managing its value over time, leasing allows drivers to use a car for an agreed period while the leasing provider remains responsible for the vehicle’s underlying ownership considerations. This can reduce the need to consider future resale prices, deregistration, PARF rebates, or how changing policies may affect how much the car is worth later on.

Choosing Between Leasing and Car Ownership

Before deciding, it helps to look beyond the purchase price and consider how a vehicle needs to fit into your life over the coming years.

Ask yourself:

• How long do I realistically need a car for?

• Are my work, family or lifestyle needs likely to change soon?

• Do I prefer a fixed monthly arrangement or am I comfortable managing separate ownership costs?

• Would I be comfortable handling servicing, repairs, resale and eventual deregistration myself?

• Am I prepared for the car’s future value to change?

Ownership May Suit You If

Car ownership may be more appropriate if you expect to keep the same vehicle for many years and are comfortable taking responsibility for its full lifecycle. You should also consider the level of involvement you want with your vehicle over time. Some drivers value the ability to make long-term decisions about upgrades, usage and how the car fits into their lifestyle without being tied to a fixed arrangement.

This approach can appeal if you enjoy having full autonomy over your vehicle and are comfortable navigating the decisions that come with it, from when to sell to how to manage its value as circumstances change.

Leasing May Suit You If

Long-term car leasing may be worth considering when you need a vehicle for a defined period, such as a relocation, temporary work assignment or changing family circumstances. It can also suit drivers who prefer not to manage resale value, car depreciation or the practical responsibilities that come with long-term ownership.

For those exploring leasing options, Eurokars Leasing offers a more supported way to access a vehicle for the period you need. Each client is assigned a dedicated Account Manager, who serves as a consistent point of contact for questions, concerns or requests throughout the lease.

Depending on the agreement, leasing packages may also include:

• Vehicle insurance

• Vehicle inspections

• Servicing and maintenance services

• 24/7 roadside assistance across Singapore and West Malaysia

• Convenient collection and delivery services

This can offer greater clarity around the practical details of driving, while allowing you to focus on choosing a vehicle that suits how you move today.

Conclusion

Understanding considerations such as car depreciation, COE, and PARF rebates can help you decide whether ownership suits the way you live and work today, or whether a more flexible arrangement, such as car leasing, may be the better fit.

At Eurokars Leasing, we believe handing over the key is only the beginning. From short-term car rentals for temporary arrangements to long-term leasing solutions for individuals and businesses, we ensure that every client’s journey is shaped around greater ease, flexibility and confidence from the moment they set off.

Enquire about a vehicle for your next chapter today.