By Admin
Owning a Car in Singapore: Understanding COE and Other Expenses
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Owning a car in Singapore isn’t just about getting from point A to point B—it’s a financial commitment that can feel overwhelming. Many aspiring car owners find themselves frustrated by sky-high prices, unpredictable COE fluctuations, and the long list of taxes and fees that keep adding up. Even after paying a hefty sum, there’s still road tax, insurance, maintenance, servicing, ERP (Electronic Road Pricing) charges, and expensive parking fees to consider.
To put things into perspective, the cost of a mid-range car in Singapore can easily exceed SGD 100,000* to 150,000* (inclusive of COE), while the same car in other countries might only cost a fraction of that. This makes owning a car here not just a convenience—it’s practically a luxury.
*Disclaimer: These figures are for illustrative purposes only and do not reflect the actual market prices. Final car prices depend on factors like COE bidding results, tax tiers, and dealer pricing.
But what exactly makes car ownership so expensive? In this guide, we’ll break down the real costs behind it, starting with the Certificate of Entitlement (COE), followed by hidden fees and taxes that inflate prices even further. But don’t worry, it’s not all bad news! We’ll also explore why leasing might be a smarter alternative, offering a way to drive without burning a hole in your wallet. Whether you’re considering buying or leasing, this guide will help you navigate the road ahead.
COE: The Certificate That Costs as Much as a Car
Let’s start the ball rolling with the infamous Certificate of Entitlement (COE)—the one thing standing between you and your dream of owning a car in Singapore. Unlike most countries where you simply pay for the vehicle and drive off, here, you need to bid for the right to even own one. That’s right—before you even think about which car to buy, you have to secure a COE, which can sometimes cost more than the car itself!
1. So, what is COE?
At its core, the COE is a government-issued certificate that allows you to own a car for 10 years. Once that period is up, you either renew the COE (by paying a hefty sum again) or deregister your vehicle. This system was introduced to control traffic congestion by limiting the number of cars on the road. While the intention is good, the reality is that it has turned owning a car into an expensive affair.
2. The Bidding Process – A Supply and Demand Game
Getting a COE isn’t as simple as paying a fixed price—it’s a competitive bidding system where demand determines the cost. Think of it like an auction where aspiring car owners place their bids in hopes of securing one of the limited COEs available. If demand is high, prices skyrocket. If demand drops (which rarely happens), you might get a slightly better deal. However, due to Singapore’s small land size and the government’s strict vehicle quotas, the supply of COEs remains low, ensuring that prices remain high.
3. How COE Impacts Car Prices
Here’s where things get wild. In some cases, the COE can cost more than the actual car itself. Let’s say you’re eyeing a Toyota Corolla that costs around SGD 30,000* before taxes. If COE prices shoot up to SGD 100,000*, that means you’re paying over SGD 130,000 just to own a car that, in another country, might only cost a fraction of that! This is why car ownership in Singapore is considered a luxury rather than a necessity.
*Disclaimer: These figures are for illustrative purposes only and do not reflect the actual market prices. Final car prices depend on factors like COE bidding results, tax tiers, and dealer pricing.
4. Types of COE – Not All Are Created Equal
Also, not all COEs are priced the same. There are different categories based on vehicle type and engine capacity:
Category A: Cars with engine capacity up to 1,600cc and power not exceeding 130bhp.
Category B: Cars with engine capacity above 1,600cc or power exceeding 130bhp.
Category C: Goods vehicles and buses.
Category D: Motorcycles.
Category E: Open category (can be used for any vehicle type but usually goes to premium cars).
If you're planning on owning a car, be prepared to fork out a significant amount just for this permit alone.
In short, COE is what makes owning a car in Singapore so expensive. But wait, because this is just the beginning. Next, we’ll explore other costs that drive up car prices even further!
Taxes and Hidden Fees: The Real Price You Pay
If you thought the COE was the only thing making owning a car in Singapore expensive, think again. Buying and owning a car here is cleverly structured in multiple layers of taxes and fees, ensuring that every car owner pays a hefty sum. These taxes and fees include:
1. Additional Registration Fee (ARF)
The Additional Registration Fee (ARF) is a tax that’s calculated based on your car’s Open Market Value (OMV). Basically, how much your car is worth before all the extra fees pile on. But here’s the kicker: it’s a progressive tax, meaning the more expensive your car, the higher the tax percentage you pay.
Vehicle Open Market Value (OMV) | ARF Rate (% of OMV to pay) |
First $20,000 | 100% |
Next $30,000 | 140% |
Next $30,000 | 180% |
Above $80,000 | 220% |
So, if you’re eyeing a budget-friendly car with an OMV of SGD 18,000, your ARF is SGD 18,000. But if you want a high-end luxury car with an OMV of SGD 80,000, your ARF alone could be over SGD 130,000 and that’s before you even consider COE! It’s the government’s way of discouraging excessive luxury spending on cars, but for those dreaming of a BMW or a Mercedes, it’s a major cost factor.
2. Excise Duties & GST
Singapore also imposes excise duties on all imported cars, usually 20% of the OMV. Apart from that, there’s the Goods and Services Tax (GST), which is currently 9% and is applied to the total price of the car, including COE and other taxes. Yes, you read that right—you’re paying tax on a tax!
For example, if your car’s OMV is SGD 30,000:
Excise duty (20%) = SGD 6,000
GST (9% on total price after excise duty) = SGD 3,240
Final taxed OMV before COE = SGD 39,240
By now, you can see how quickly the cost of owning a car snowballs in Singapore!
3. Road Tax
Unlike COE and ARF, which are one-time payments, road tax is a yearly fee based on your engine size. Smaller, fuel-efficient cars have lower road taxes, while larger, high-powered engines will cost you a lot more. It’s another way the government encourages people to choose environmentally friendly cars over gas-guzzlers.
1,000cc engine → Approx SGD 400 per year
2,000cc engine → Approx SGD 800 per year
3,000cc engine → Approx SGD 1,000 per year
If you’re planning on owning a car, this is a recurring cost that you need to budget for, along with insurance, petrol, and maintenance.
4. Other Hidden Fees
On top of everything, there are plenty of other costs that come with owning a car:
Car insurance – Premiums depend on your age, driving experience, and type of car.
Parking fees – Whether it’s HDB season parking or CBD office parking, expect to pay a hefty sum.
Maintenance & repairs – Servicing, tyre changes, and unexpected breakdowns all add up.
By the time you calculate everything, you’ll realise that owning a car in Singapore isn’t just about buying a vehicle—it’s about keeping up with all the costs that come with it. So, is it worth it? That’s a question only your wallet can answer!
How Leasing Helps You Beat the System
By now, you’re probably wondering: Is owning a car in Singapore really worth it? With COE prices skyrocketing and taxes stacking up faster than your morning coffee orders, it’s no surprise that more people are turning to leasing as a smarter alternative. If you want the perks of having a car without the financial headache, leasing might just be the ultimate hack.
1. No COE Costs
The biggest advantage of leasing? You don’t need to worry about COE. When you lease, the leasing company has already taken care of that expensive bidding war for you. That means no sky-high upfront costs, no stress over fluctuating COE prices, and no ten-year commitment to a depreciating asset. You simply pay a monthly fee and drive off—it’s that simple.
2. Depreciation-Free Driving
One of the worst parts of owning a car is watching its value drop faster than your excitement for a Monday morning meeting. The moment you drive a brand-new car off the lot, it starts losing value. But with leasing, that’s not your problem! Since you don’t own the car, depreciation is the leasing company’s concern—not yours. You’re paying for the use of the car, not its long-term worth.
3. Fixed Monthly Payments
Unlike owning a car, where unexpected maintenance and repair bills can suddenly appear, leasing keeps things predictable. You get a fixed monthly car leasing fee that covers everything from servicing to insurance, so you’ll never have to deal with surprise expenses. It’s a hassle-free way to manage your finances while still enjoying the convenience of a car.
4. Ultimate Flexibility & Convenience
Committing to owning a car for ten years isn’t for everyone. Leasing gives you the flexibility to switch cars every few years, try different models, or even stop driving altogether without worrying about selling a depreciated vehicle. Plus, lease terms can be as short as a year, making it a great option if you’re in Singapore for only a few years or just want to test the waters before taking the plunge into full car ownership. Another key advantage? If your leased car runs into issues or you get into an accident, you’ll usually be provided with a replacement vehicle, so there’s no downtime or disruption to your daily routine.
At the end of the day, leasing offers a way to enjoy driving without the financial weight of owning a car. It’s the perfect middle ground for those who want the convenience of a car, minus the stress of COEs, depreciation, and endless hidden costs.
Is Leasing Right for You?
Now that leasing seems like a beacon of hope, the big question is—is it right for you? While leasing isn’t for everyone, it’s an excellent choice for those who want the convenience of a car without the heavy financial burden of ownership. It works particularly well for those in need of a vehicle for a short time or anyone who prefers to avoid the long-term costs and responsibilities associated with owning a car.
Who Benefits? Expats, business owners, for corporations, and anyone who doesn’t plan on staying in Singapore long-term are prime candidates for leasing. You get a car without committing to a long-term ownership deal, which can be a godsend for those on temporary assignments or looking for a temporary solution.
Short-term vs. Long-term Leasing: Short-term car rental can be ideal for those who need a car for a few days to a few weeks or want to “test-drive” different models before committing to one. Long-term lease, on the other hand, can offer savings over ownership, making it a cost-effective alternative for those who need a car but don’t want the hassle of owning one.
Financial Benefits: Leasing generally requires a smaller monthly payment than purchasing, and with no COE to worry about, you can avoid the heavy financial burden. In the long run, leasing might save you money, especially if you prefer changing cars every few years.
What’s Included? Many leases come with the extras you’d typically have to pay for as an owner—such as maintenance, insurance, and road tax—making leasing a more cost-efficient and convenient choice.
Leasing isn’t just about saving money; it’s also about convenience. For those who crave simplicity and flexibility, leasing could be the perfect fit.
Here's a table that summarises the comparison between owning and leasing a car in Singapore.
Aspect | Owning a Car | Leasing a Car |
COE (Certificate of Entitlement) | Must be paid upfront, often exceeds $100,000 | Included in the lease, no bidding required |
Upfront Cost | Very high due to COE, ARF, taxes, and registration | Low to zero upfront cost |
Depreciation | Car value drops significantly over time | Not your concern; leasing company absorbs depreciation |
Road Tax | Paid yearly, amount depends on engine capacity | Usually covered by the leasing company |
Insurance | Must purchase and renew yearly | Often included in the lease package |
Maintenance & Servicing | Owner’s responsibility and cost | Covered by leasing company, often bundled into monthly fee |
Flexibility | Committed for 10 years unless you sell or deregister early | Flexible lease terms (e.g., 1-5 years), easier to switch or stop |
Vehicle Downtime | You manage repairs and downtime | Leasing company provides replacement car during servicing or breakdown |
Monthly Expenses | Unpredictable due to insurance, servicing, and repair costs | Fixed monthly payments, easier to budget |
Long-term Cost | Generally higher due to taxes, fees, and depreciation | Can be more cost-effective over the short-to medium-term |
Ideal For | Long-term residents who want full control and plan to keep the car 10+ years | Expats, Corporate customers, family and others |
Frequently Asked Questions
1. Is leasing really cheaper than buying a car in Singapore?
Car leasing can be cheaper than buying a car, especially when you factor in the high COE prices and ongoing maintenance costs associated with ownership. With leasing, you pay a fixed monthly fee, avoid the long-term depreciation hit, and often get insurance and maintenance included in the package.
2. What happens if the COE price drops after I lease a car?
Unlike car owners who are directly affected by fluctuating COE prices, leasing shields you from such price changes. Leasing companies factor in the COE costs when setting lease prices. However, if you’re in the middle of a lease, it won’t impact your current payment.
3. Can I lease a car if I’m an expat in Singapore?
Absolutely! Leasing is an ideal option for expats who are temporarily living in Singapore. It offers the flexibility of having a car without the long-term commitment or hassle of ownership. As long as you meet the necessary requirements (such as having a valid local driving license), you can enjoy the benefits of leasing during your stay.
Ditch the Hassle of Ownership with Eurokars Leasing
Owning a car in Singapore comes with a hefty price tag, with the COE system, taxes, levies, and hidden costs all stacking up to make it a major financial commitment. While it’s clear that car ownership in Singapore isn’t for the faint of heart, leasing offers a refreshing alternative that can save you from the steep upfront costs, long-term depreciation, and unpredictable expenses. Leasing allows you to enjoy the convenience of a car without the financial strain, making it an ideal choice for expats, business owners, or anyone looking for a more flexible solution to get around Singapore.
If you’re looking for an easier, more affordable way to drive, leasing could be the key. With no COE bidding wars, fixed monthly payments, and included perks like insurance and maintenance, leasing gives you the freedom to focus on the road ahead, not your wallet.
Ready to drive without the heavy commitment? Eurokars Leasing offers a variety of leasing options to fit your needs and budget. Whether you need a car for a short-term stay or a long-term solution, Eurokars Leasing makes it easy to get behind the wheel. Contact us today to learn more about how leasing can work for you!