Yahoo Finance How to Bid for Your Own Certificate of Entitlement (COE)
The Certificate of Entitlement (COE) is a very expensive piece of paper that you must have to own a car in Singapore. It regulates vehicle ownership in our land-scarce country.
Currently, the COE premium (May 2024) for CAT A cars is S$93,604. Not everyone is willing to pay that price on top of the vehicle’s cost just to drive on Singapore’s roads.
But there’s a little hack to potentially pay less for your COE—bid for it yourself instead of just paying for it directly through your car dealer.
Why Should I Bid for My Own COE?
Bidding for your own COE is pretty foreign to most car owners. Typically, when purchasing a car, we let the car dealers do the bidding for us.
But when you let car dealers do the bidding for you, you are essentially agreeing to high markups that include estimates of what they guess the COE would be—since they only bid for the COE after they secure your order.
Another major downside is that if the COE suddenly plunges by over S$10,000 for Cat A cars (which happened on Nov 23), you’re not going to benefit from the savings as you have already agreed to your dealer’s guesstimated price.
Depending on the outcome of the COE bidding exercise, you could save from a few thousand to over S$20,000.
How Do I Bid for a COE Myself?
First, you have to understand the Open Bidding System that regulates COE prices.
ALSO READ: How the (COE) Certificate of Entitlement System Works: Bidding & Process
It is a rather sophisticated auction system through which you bid for the car category you want. Bidding happens twice a month, and each cycle occurs over 3 days in real-time. Everything is computerised to ensure it is automatic and fair.
By splitting into categories, those who need a bread-and-butter Cat A sedan to ferry the kids around don’t have to fight with the ultra-rich who just want another Cat B supercar to add to their collection.
To bid for a COE, you key in the price you want to pay into the COE Open Bidding System. The price you key in is called the reserve price because it’s the price you choped.
You’ll need to have a bank account with the participating banks (currently only DBS or POSB) and pay a deposit of S$10,000 for cars (Cat A, B, C and E). If your bid is successful, what you need to pay for the COE is deducted from that deposit. You top up the rest if the COE price is higher. If you fail, the money will be refunded.
You will also have to pay S$10 per application and S$2 for each revision of your reserve price. You don’t get this back.
The bidding opens at S$1. That’s the lowest you can bid (though no one ever bids S$1, and we’ll explain why later). This is called the Current COE Price (CCP). Bidders need to either match the CCP or go higher. And you need to do this in increments of at least S$1. So, you can’t offer a reserve price of S$1.01. It has to be at least S$2.
Tip: Don’t get bumped off with a low reserve price
There’s a reason no one puts in a reserve price of S$1 or even S$2.
Only a limited number of COEs are released each time, and typically, there will be more bidders than COEs.
So, if you really want that COE, you’d try to bid high because COEs are awarded based on the top reserve prices. If there are 3 COEs and 5 bidders, the COEs are given to the 3 bidders with the highest reserve prices.
For example in the scenario below, if there are only 3 COEs available out of 5, COEs will be given to Bidder 1, 3 and 4, who have bid the highest.
COE Bidders | Reserve Price | Bid Status |
Bidder 1 | $100,000 | Success |
Bidder 2 | $98,000 | Fail |
Bidder 3 | $102,000 | Success |
Bidder 4 | $115,000 | Success |
Bidder 5 | $95,000 | Fail |
The 3 successful bidders don’t pay the reserve prices they offered, though. Instead, the COE is pegged at the reserve price of the highest unsuccessful bid plus S$1:
S$98,000 + S$1 = S$98,001
Given that bidding is a 3-day process, the Current COE Price (CCP) will keep changing as the bids come in. So, if more bidders join the bidding, bids lower than the number of COEs available will not qualify.
As it is an open bidding system, all bidders can see the Current COE Price as it climbs. When you see that your reserve prices are too low, you can revise your bid upwards to match or surpass higher bidders. But remember, every time you raise your bid, you have to pay a S$2 admin fee.
The bidding will continue for 3 days until Wednesday at 4pm. The last CCP is called the Quota Premium (QP). It is the price all successful bidders pay to get a COE.
So, you can see why it pays to bid somewhat higher. It puts you in a much better place to get a COE, even when there are new bidders bumping off the lower bids. It saves you the trouble of having to revise your bid constantly, and you don’t have to pay your sky-high reserve price anyway.
Why Aren’t More Car Buyers Bidding for COE Themselves?
To be honest, bidding for a COE by yourself isn’t a straightforward process where you just click a button and walk away. There’s a lot of hassle involved with the submission, researching past prices, monitoring and adjusting your bid, and so on.
I hate doing that kind of stuff, so I’d probably just pay a premium for the COE and let the dealer do it for me—if I ever buy a car in Singapore, that is.
To bid yourself, you also need to put down a deposit of S$10,000, which is not a small sum. Plus, finding a COE-less car in a market where car dealers are used to factoring in the COE into car prices is not an easy feat.
How To Buy a Car Without COE From the Dealer?
The bidding process is tedious enough, but the next challenge is to find someone willing to sell you a COE-less car.
Go into any car forum, and you’ll find plenty of stories about authorised dealers (ADs) and even parallel importers (Pis) who hem and haw and refuse to sell you a COE-less car or claim they have “no stock”.
That’s because dealers likely make a good profit margin on the COE by charging you a premium for it and then bidding themselves to get a lower price.
Some dealers may agree to sell you a car by subtracting the COE price from their stated price, but you have to be firm and ask multiple dealers.
ALSO READ: Cheap Parking in Orchard 2024—Where to Park for Free, Tips to Save More
Should You Bid for a COE on Your Own?
To answer this, ask yourself:
Do you have the time and inclination to do your own bidding?
Do you have S$10,000 for the cash deposit?
Do you have confidence that you can convince a dealer to sell you a COE-less car?
Are you in a hurry? You may have to shop a bit for that COE-less car, so if you are in a hurry, you might just want to buy from dealers.
Are you fussy about the make and model of your new car? As it’s not that easy to get a COE-less car, you may have to be less fixated on the model and make.
If your answers are mostly “yes”, then you’ll want to monitor the One Motoring website for details on current and future open bidding exercises.
You have two chances to bid for a COE each month. Bidding exercises usually start at 12pm on the first and third Mondays of the month and last three working days. If there is no public holiday in between, they end in the same week at 4pm on Wednesday.
If you answer to those questions is mostly “no”, then just accept that owning a car in Singapore truly a luxury, and pay the dealer the listed “with COE” price.
Would you go through the hassle of bidding for a COE yourself? Let us know in the comments!
The post How to Bid for Your Own Certificate of Entitlement (COE) appeared first on the MoneySmart blog.
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