Changes to OPC rules

LTA is considering to reduce if not totally remove restriction for off-peak cars on Saturdays. They are also considering doing away with paper coupons and implement an electronic payments system instead.

Both the above are very much welcomed.

OPC owners have been requesting for the restrictions to be lifted since LTA did the same for the VEP on Saturdays for foreign registered cars. Surely one of the main reasons for implementing such change in 2005 was due to the roads on Saturdays able to handle increased traffic as a result of the government pushing for 5 days work week. The reason why such restrictions cannot be lifted for OPC because it will worsen the congestion on the roads is no longer valid.

With such changes, is it expected that OPC will gain more popularity and possibly add to the already bad traffic. How true is that?

Drivers know that roads here are jammed up in the morning around 7am to 9:30am and in the evening around 7pm to 8:30pm. The morning jams are mostly attributed to parents sending their kids to school before the themselves head to work. This is fact because during school holidays, the roads are clear. Probably parents either drive to work later or they decided to take public transport. The evening jams, in the reverse order, are caused by drivers returning home from work.

Therefore even with an increase in OPCs in the future, it should not have an adverse effect on the morning traffic as OPCs cannot be driven after 7am, before the real jam starts.

As for the evening jams, OPC cars made up for 7.7% of the 500,000 cars here. That is about 40,000. Even if all of them ply the roads at the same time, it is still 7.7% compared to the other 93.7% non-OPCs out there. In fact, most OPCs are parked at home and only driven on weekends. Therefore even if the number increases but with most parked at home on weekdays, nothing much will change.

Same goes for Saturdays as the traffic conditions on Saturdays are no where as bad as on weekdays. With the restrictions on Saturday lifted, situation should be pretty much the same.

Having more OPCs simply means less non-OPCs. If the COE is properly implemented, it makes no difference what type of cars are there on the roads.

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