How to calculate car depreciation?

Every vehicle in Singapore has a fixed lifespan of 10 years. At the end of 10 years, the government returns a pre-determined amount to the car owner. You hear a lot of people talking about the depreciation of a car. For some, it might seem fairly easy to figure it out. But for others, it might not be that easy.

This article is for those who just don’t get it. And hopefully at the end of this article, you will finally get it.

And if you still don’t, don’t worry. There is SGCarDepre.com

Step 1. What’s the OMV

On Market Value or OMV, is the declared cost of bringing a car into Singapore. This number is declared by the importer of the car when it is brought in new.

OMV determines how much tax is charged on that car.

Step 2. ARF

Additional Registration Fee or ARF, is a tax on a car when it is first registered in Singapore. The ARF is derived by the OMV.

Knowing the ARF is important because the government will return 50% of the ARF to the owner at the end of 10 years.

The table below shows how to determine the ARF of a car.

Reg Date ARF
March 2004 to Feb 2008 110% of OMV
March 2008 to February 2013 100% of OMV
March 2013 Onwards First $20,000, 100%
$20,001 to $50,000, 140%
Next $50,001 180%

For example, if you’re buying a 5-year-old car registered in 2009, OMV of $20,000, the ARF of the car is $20,000.

Step 3. ARF Rebate (or Surcharge)

For cars registered after January 2013, they can receive a rebate (or surcharge) on their carbon emission. This is how it looks.

Band
Carbon Emission (CO2 g/km) Rebate* (From 1 January 2013) Surcharge (From 1 July 2013)
A1 0 to 100 S$20,000
A2 101 to 120 S$15,000
A3 121 to 140 S$10,000
A4 141 to 160 S$5,000
B 161 to 210 S$0 S$0
C1 211 to 230 S$5,000
C2 231 to 250 S$10,000
C3 251 to 270 S$15,000
C4 271 & above S$20,000

So now, how do you know whats the ARF of the car you are buying? Get the log card. For cars registered after January 2013, the ARF will be printed on the log card.

Step 4. PARF Rebate

So at the end of 10 years, the government will return 50% of the ARF to the user. Using the ARF, divide that number by 2, you get the PARF Rebate.

Using the above example, my 5-year-old car was registered in 2009. The ARF is $20,000 so the PARF Rebate is $10,000. I know for sure if I deregister the car at the end of 10 years, I’ll get back $10,000.

Step 5. Buy Price

Now you know how much you’re going to get back at the end of 10 years in the form of PARF Rebate, you’ll need to use your buy price. Subtracting the PARF Rebate from the Buy Price, you will know your Total Loss on the car.

If I just bought my 5-year-old car for $90,000. I know the PARF rebate is $10,000. My total loss for the next 5 years is $80,000.

Step 6. Time Left

Using the Total Loss that you calculate, divide by the number of years left, you will get the Annual Depreciation of the car.

Now, I have 5 years on my car, and my total loss is $80,000. My annual depreciation is $80,000/5 = $16,000.

If you still don’t understand this Annual Depreciation nonsense, don’t worry. Head over to SGCarDepre.com for the depreciation of cars on the market. No calculator required.

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