What is Paper Value of Cars in Singapore? Explained

In most countries, car prices depreciate as a function of the new cars price. In Singapore, there is an additional factor called Paper Value. When a new car is bought in Singapore, a number of taxes are paid on them (See it explained here). Turns out that the taxes paid are not all lost, and there is scope to recoup a portion of them when the car is de-registered from Singapore. That value recouped at de-registeration is called Paper Value

Four Red Cars with very different economics

And whether you actually de-register the car or not, this theoretical value of taxes (the Paper Value) you get back at de-registration affects the price of the car, as it represents a bottom ceiling, a value one will assuredly get back from the car regardless of the condition of the vehicle itself. I have used Paper Value to my advantage several times during my car journey but we'll get to that in due time

First let us understand how Paper Value works numerically and then we'll get into implications.

How to Calculate Paper Value:

Paper Value consists of two components, the PARF Rebate and the COE Rebate. Sounds complicated, but surprisingly easy to understand.

COE Rebate is simple. It's a straight line. De-register the car with 9 years remaining, you get back 90% of the COE paid. De-register with 1 year left , you get back 10%. First grade math.

For PARF rebate, maybe you need to go to the second grade. Or at least know how to read a table. The below one.

Age of Vehicle at Deregistration	Previous PARF Rebate Amount (for cars registered with COEs obtained before the second COE bidding exercise in February 2023, or cars that do not need to bid for COEs (e.g. taxis) registered before 15 February 2023)	Current PARF Rebate Amount (for cars registered with COEs obtained from the second COE bidding exercise in February 2023 onwards, or cars that do not need to bid for COEs (e.g. taxis) registered on or after 15 February 2023)
Not more than 5 years	75% of ARF paid	75% of ARF paid or,  S$60,000 (whichever is lower)
Above 5 but not more than 6 years	70% of ARF paid	70% of ARF paid or,  S$60,000 (whichever is lower)
Above 6 but not more than 7 years	65% of ARF paid	65% of ARF paid or,  S$60,000 (whichever is lower)
Above 7 but not more than 8 years	60% of ARF paid	60% of ARF paid or,  S$60,000 (whichever is lower)
Above 8 but not more than 9 years	55% of ARF paid	55% of ARF paid or,  S$60,000 (whichever is lower)
Above 9 but not more than 10 years	50% of ARF paid	50% of ARF paid or,  S$60,000 (whichever is lower)
More than 10 years	Nil	Nil

A lot of numbers. Maybe you should get the Math Tuition after all. I'll attach some practical examples of calculating it here on other websites.

Beyond the table, the main thing I want you to take away is PARF value at end of life. At the end of the 10 year life of the car, you are guaranteed 50% of ARF paid, or $60,000 whichever is lower (for most cars, 50% of ARF will be lower than 60,000).

Now to the more important implication of paper value. The second hand value of your car.

How to think of and use Paper Value:

Paper Value is essentially the least amount of money you can get for your car, regardless of what happens to it. Unlike in most countries, where if a car's 'body' is rendered useless either by an accident or other circumstances (say a flood), in Singapore, Paper Value, which is portion of the Tax paid on the car, is rebatable regardless of whatever happens to the car's body.

In the initial first five years of a car's life, Paper Value is something to keep an eye on but not entirely significant. Car Pricing is more determined by market forces (where the COE is which affects what new car prices are at). However in the latter five years, particularly in the last 2-3 years before it reaches COE expiry, the Paper Value is highly indicative of the trade-in price of your car. With very few exceptions, a 8-9 year old cars trade in value will be the Paper Value plus a token amount (not more than few thousand dollars) for the Car's Body (the Body value often called the Scrap Value or Export Value).

This has significant implications when you are buying Used Cars, as I recommend when it come to the Singapore Market (see my rationale here). If you are buying say a 4- 6 year old car, with an intended usage of 3-4 years, Paper Value is highly critical. Two similarly priced cars of similar age may have completely divergent paper values and hence very different implications on depreciation.

I will be illustrating this live with examples as I do my weekly series on Singapore Used Car Picks. I recommend a watch of one or two of the episodes to get a feel of Paper Value