Friday, November 28, 2008

What you need to know about OPC

When you considered getting an off peak car, you've definitely heard of the benefits where the two main ones are

1. $17,000 rebate off the car price
2. $800 rebate of your yearly road tax

What the above means is that if the car you like in the showroom is listed at $55,000, you only need to pay $55,000-$17,000=$38,000.

As for the road tax, if you're getting a 1.8l car whose yearly road tax is $978, you only need to pay $178. If your yearly road tax is less than $800, for example $744 for a 1.6l car, then you need to pay the minimum of $50.

Quite a good deal isn't it? Well, you must understand that when it comes to the government, nothing is free.

Of course you are restricted from using the car from 7am-7pm on weekdays and 7am-3pm on Saturdays and the eve of 5 major holidays. If you want to use your car within the restricted hours, you have to use up the $20 daily coupon.

Apart from that, here is the thing most people do not know about, which is, where does the 17k comes from?

The 17k rebate is taken off the COE and/or ARF (Additional Registration Fee) which is basically a nice word for car tax.

What this means is that, if the COE for your OPC is 17k, then you need not pay for the COE but your COE value then is $0

If your COE is more than 17k, then your COE is worth the amount after 17k is minus off. So if your COE is 18k, then your COE is worth 1k.

What if your COE is less than 17k? Then the balance of the rebate will be taken off your ARF. So if your COE is 16k and your ARF is 10k, the balance 1k will be taken off your ARF, which will then be valued at 9k.

If your COE is 7k and your ARF is 10k, then after 17k is minus off, both your COE and ARF will be $0 value.

If the total of both your COE and ARF is less than 17k, then will not get maximum 17k rebate. What you'll get is the maximum of what both your COE and ARF totals up to. So if both of them totals to 15k, that will be the maximum rebate you'll get. So if the car price is 55k, then you'll have to pay 40k instead of 38k

Why is all data important? Well because this affect the value of your car later.

If you de register (scrap) your car later, you will get rebates based on how much tax (COE and ARF) you've paid.

For COE, it is pretty straight forward. The formula is

COE rebates = (COE paid/3650) * (3650 - days car is used)

For ARF rebates, which is called Preferential ARF (PARF) rebates, the formula is

Not exceeding 5 75% of ARF paid
Above 5 but
not exceeding 6
70% of ARF paid
Above 6 but
not exceeding 7
65% of ARF paid
Above 7 but
not exceeding 8
60% of ARF paid
Above 8 but
not exceeding 9
55% of ARF paid
Above 9 but
not exceeding 10
50% of ARF paid
Above 10 Nil

If both your COE and ARF is valued at $0, you will get no rebates when you de register your car. While you may not be de registering your car later on, this rebate (paper value) makes up part of the market value of the car when you plan to sell it off.

This means car A with COE and ARF is higher than car B will of course fetch a better resale value.

So remember, when it comes to the government, there is no such thing as a rebate if it is not taken from somewhere

No comments: