How To Calculate Car Depreciation?

How To Calculate Car Depreciation?

At the point when you purchase another or used car, it is essential to think about the yearly depreciation of the vehicle. This depreciation will show you the genuine expense of owning and working the vehicle on a yearly premise, notwithstanding the expenses of gas and maintenance. This idea is essential to comprehend as it impacts the estimation of your car, and eventually the amount you can win by selling your car in the used car market. The equation for calculating depreciation is shown underneath.

Yearly depreciation = (Total Cost of Vehicle – Sale Value of Vehicle)/Number of Years in Service

For instance, a vehicle that is purchased for S$10,000 and sold for S$2,000 in 10 years would have a yearly depreciation of S$800.

(S$ 10,000 – S$ 2,000)/10 years = $800 yearly depreciation.

In Singapore, nonetheless, the procedure of calculating vehicle depreciation is increasingly entangled. There are critical expenses and charges related to owning and working a vehicle on the island. Therefore, there are various other significant expenses to remember for the Total Cost of the Vehicle calculation shown above.

  • Endorsement of Entitlement (COE)
  • Open Market Value (OMV)
  • Enrollment Fee (RF) and Additional Registration Fee (ARF)

Certificate Of Entitlement

As the 29th most thickly populated nation on the planet, stuffing in the avenues is a significant worry for the Singaporean government. With this in mind, the administration of Singapore sanctioned a shared framework in 1990 which manages how many vehicles are in procedure on the island. To sum up, the framework requires car owners to offer on a Certificate of Entitlement (COE) to reserve the privilege to enlist, own, and use their vehicle inside Singapore for a long time.

While most nations have a comparable enlistment framework for vehicles, Singapore is uncommon in that the expense of a Certificate of Entitlement can be gigantic. This is because COE is sold on a closeout premise, and the high demand for car ownership and the resulting rivalry for CEOs have driven up their prices. The diagram beneath shows current prices from July 2020.

Category Vehicle Type Quota Premium
A Car (Below 1,600cc) $32,669
B Car (Over 1,600cc) $35,001
C Goods Vehicle and Bus $23,888
D Motorcycle $6,510
E Open  $35,001

When the COE closes following a 10-year time frame, the owner must choose to restore the COE at the new current prices or scrap the vehicle. This COE has no resale esteem toward the finish of the 10-year time frame, making it a genuine squandering resource. On the off chance that a vehicle is rejected before the 10-year COE period finishing, a credit for any unused time will be paid to the owner of the COE. This credit is star evaluated, implying that a vehicle used for just 50% of the COE time period (5 years) will get a large portion of the COE price back.

Be that as it may, the COE is only one part of car depreciation in Singapore. Follow these means to make sense of how different elements sway the estimation of your vehicle.

Step 1: Know The OMV

The OMV, or Open Market Value, of a vehicle, is surveyed by Singapore Customs as the vehicle enters the nation. This worth incorporates the purchase price of the vehicle, transportation, and some other charges remembered for the conveyance of the vehicle to Singapore. The dealer of the vehicle will know the OMV of the vehicle and ought to have the option to give this data as you consider the purchase.

Step 2: Determine The RF And ARF

RF represents Registration Fee and ARF represents the Additional Registration Fee. Consider these things burdens on enlisting a vehicle in Singapore. While the RF is a level charge of $140, there is currently a layered ARF framework for vehicles enlisted with CEOs, which can be a huge sum. ARF depends on the OMV of the vehicle and extends from 100% to 180% of your car’s worth.

At the point when the car is de-registered and scrapped toward the finish of the multi-year time frame, a Preferential Additional Registration Fee (part) can be gotten from the Land Transport Authority of Singapore. This is a sliding scale that depends on the age of the vehicle when it is de-registered.

Period Of Vehicle PARF Rebate
5 Years or Less 75% of ARF
5 – 6 Years 70% of ARF
6 – 7 Years 65% of ARF
7 – 8 Years 60% of ARF
8 – 9 Years 55% of ARF
9 – 10 Years 50% of ARF
10 Years or Older Not qualified for a rebate

The table shown is from the onemotoring.

As we referenced, car depreciation is calculated with the accompanying equation:

Yearly car depreciation = (Total Cost of Vehicle – Sale Value of Vehicle)/Number of Years in Service

In Singapore, it is basic to incorporate the expense of the COE, RF and ARF in the Total Cost of the Vehicle. Similarly as significant, any PARF installment which is gotten ought to be added to the Sale Value of the Vehicle. By putting these things together, you can make sense of the genuine expense of owning and working a vehicle. To under how car depreciation works, read this article.

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SGCarTrade is a free online platform to source for the highest quote for your used car. Sell your car or scrap your car can never be easier than this through our free service, with no fees and obligations. Our network of dealers will bid for your car within 1 working day! You have the option to watch your car bids LIVE on our website by selling your car through auction. Rest assured and be at ease while we do the job for you. 

More To Explore


Explaining the Fundamentals of COE

Due to its size of approximately 700,000 square meters, Singapore enacted the Certificate of Entitlement (COE) system in 1990 to limit the number of vehicles

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