Certificate of Entitlement (COE): A Crash Course

This was originally posted on Planner Bee.

Despite the fact that Singapore is consistently recognised as having one of the best public transport systems, many locals still opt to have a car. Some would even say they can’t go without one.

It is a well-known fact that Singapore is one of the most expensive cities in the world to buy a car. These days, it usually means forking out six-figure sums for a vehicle.

A large component of this comes in the form of bidding for a Certificate of Entitlement, or COE as it’s commonly known.

Understanding how the COE system works and getting one is the biggest hurdle you’ll have to clear before you can enjoy your own ride.

What’s a COE?

Introduced in 1990, the COE acts as a permit that grants you the right to own and operate a vehicle in Singapore for a period of 10 years. This system aims to regulate the number of cars on the roads and control congestion, as well as encourage the use of public transportation.

There are five different categories:

• Category A: Cars with engine capacity of 1,600cc and below
• Category B: Cars with engine capacity exceeding 1,600cc
• Category C: Goods-carrying vehicles and buses
• Category D: Motorcycles
• Category E: This is an “open category” COE, which can be used for any of the above

COE prices are driven by supply and demand. If demand for vehicles is high, COEs will cost more, and vice-versa. As a gauge of how high this figure can go, the premium for the Open Category hit S$125,000 in May 2023.

The supply, on the other hand, is regulated by the Vehicle Quota System (VQS). It is calculated every three months based on the number of vehicles taken off the roads, adjustments based on temporary COEs that expired or were cancelled, and allowed growth in vehicle numbers.

This culminates in the COE open bidding system, in which potential car buyers bid against each other to win COEs.

Bidding for a COE

There are two COE open bidding exercises every month, beginning at noon on the first and third Monday, and closing at 4pm on the Wednesday, provided there is no public holiday in between.

People attempt to outbid each other to secure one of a limited number of COEs available. Before each exercise, the bidding period and the number of COEs available in each category are announced.

Bidders submit their reserve price, which is the maximum amount that they are willing to pay for the COE. The system automatically revises the bid upwards in increments of S$1, until the reserve price is reached. A bid stands for as long as the reserve price is higher than or equal to the Current COE Price (CCP). The CCP is the price of the highest unsuccessful bid plus S$1.

The CCP stops increasing when the number of bidders whose reserve prices match or are higher than the CCP equals the quota. At the close of the exercise, bidders whose bids are equal to or higher than the CCP secure a COE.

The CCP at the close of bidding forms the Quota Premium for that exercise. All successful bidders in the vehicle category will pay the same Quota Premium. If the bidder’s reserve price is higher than the Quota Premium, the difference will be refunded.

How do I bid for a COE, and do I have to do it myself?

You can choose to bid for a COE on your own, or leave it to your dealer, but you should know that there’s a limit to the number of bids you can place in each exercise. Individual bidders can make only one bid, while non-individual bidders can place multiple bids in one exercise.

Bidding on your own:

First things first: you must be at least 18 years old. As an individual, you can submit only one bid in each exercise using your name, NRIC and bank account.

You can bid for a COE at a DBS, POSB or Maybank ATM. Make sure you have enough money (ideally at least S$10,000) for the fixed-sum deposit in a bank account with any of these three banks, along with a valid ID or ACRA number/Unique Entity Number (UEN). Once you place your bid, it will be debited immediately. However, if your bid is eventually unsuccessful, it will be credited back into your account.

A non-refundable administration fee of between S$2 and S$10 will also be charged for every bid application and revision, so keep that in mind and make sure you have enough to account for that.

Here’s a tip: the bidding period lasts for three days. People usually become more aggressive with their bids toward the end of the window!

Leaving it to your dealer:

If you find the process too confusing, it’s much simpler to let car dealerships take care of it. If you choose to leave bidding to a dealer, there are different COE “packages” to choose from.

1. Non-guaranteed COE

As the name suggests, you’re not guaranteed a COE. It’s the cheapest COE package, but comes with a high amount of risk. Imagine doing all the paperwork and going through so much trouble, only to miss out on a car!

2. Guaranteed COE without top-up

This package promises to get you your COE within a set amount of time, usually up to three months. This means you may have to wait up to three months before obtaining the necessary COE to get your car.

3. Immediate delivery

If you need your car urgently (or if you’re impatient), you can buy one that comes with a ready COE. This is the most expensive package you can opt for, but you’re guaranteed a COE (from the most expensive category, Category E) and your car will be delivered within two weeks!

How do I know if my bid is successful?

Individuals can check the Land Transport Authority’s Open Bidding website. You’ll need to enter your bank account ID and the latest acknowledgement code.

You’ll need to look for two vital pieces of information — the current bid price and your bid status.

“’Out-bid” means your current bid is no longer in the running.

“Accepted” means that you are still in with a shot at the COE.

Non-individuals can check through the LTA Open Bidding website or on the internet banking platform of their corresponding bank.

Of course, if you’ve gone through a dealer, you can approach them for updates.

What’s next?

If your bid is successful:

Congratulations! You’ll receive a Temporary COE (TCOE), which is valid for either three months (Categories C and E) or six (Categories A, B and D).

You must then register your vehicle before the TCOE expires, or your full bid deposit will be forfeited.

If your bid is unsuccessful:

The deposit will be automatically refunded to your bank account one working day after the results are announced. Don’t give up — you can try bidding in the next exercise.

Read more: More information on one motoring

Anything else I need to know?

Since a COE typically lasts 10 years, if you decide to de-register your vehicle early, you can apply for a rebate based on the amount of “unused time” left on your COE.

On the flipside, when your COE expires, you can choose either to scrap your vehicle, or renew your COE for another five or 10 years by paying the Prevailing Quota Premium (PQP).

The PQP is calculated based on the moving average of COE prices in the previous three months. You can renew a COE for five years only once, but there’s no limit to renewing one for 10 years.

Read more: Owning vs Renting a Car in Singapore: A Cost Breakdown