The 2026 PARF Rebate Cut: 5 Things Car Buyers Must Know

A lot of you are rethinking your plans to get a vroom vroom. Or at least you’re restrategising.

I know because I asked people about the recently announced Preferential Additional Registration Fee (PARF) rebate changes in our Pocket Change newsletter. The results were a landslide. 

If you’ve no idea what I’m talking about, Singapore is cutting the PARF rebate by 45 percentage points across the board, and lowering the maximum rebate cap from $60,000 to $30,000. 

The revised structure applies to cars registered with COEs obtained from the second COE bidding exercise in February 2026 onwards, according to the Land Transport Authority (LTA).

In plain English? Your car’s “paper value” at the end just dipped.

Here are 5 things you need to know before you sign that loan.

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1. Your car’s end-of-life value just shrank

The PARF rebate is what you get back when you deregister a PARF-eligible car before its 10-year COE expires. It’s calculated as a percentage of the ARF you paid when you first registered the car.

Here’s what changed:

And the cap? Now $30,000 instead of $60,000.

Let’s say you paid $40,000 in ARF:

• Under the old system, scrapping at 5 years could mean up to $30,000 back.
• Under the new system, that drops to $12,000.

That’s not a rounding error. That’s a real hit to depreciation calculations.

2. The 5-to-7-year “flip” strategy may not make sense anymore

Some drivers like switching cars mid-cycle. Buy new, drive 5 to 7 years, deregister early, pocket a healthy PARF rebate, repeat.

That playbook just got weaker.

With rebates significantly reduced, the financial reward for scrapping early is much smaller. If your strategy relied on recovering a big chunk of ARF midway through ownership, you may need to revisit the maths.

Ask yourself:

• Does upgrading every few years still justify the higher depreciation?
• Would stretching the car longer make more financial sense?

The answer might be different in 2026 than it was in 2025.

3. Renewing COE will start looking more attractive

At the end of 10 years, many drivers scrap their cars and move on.

Part of that decision used to be supported by a meaningful PARF rebate.

Now that the rebate is smaller, scrapping doesn’t feel as rewarding.

If your car is still running well and is in a good overall condition, extending it for another 5 years could start to feel less drastic.

That doesn’t guarantee a wave of renewals. COE prices and repair costs still matter. But psychologically, the “must change before 10 years” reflex is weaker than before.

4. EVs just gained a relative edge

Important clarification: the PARF cut does not magically make Electric Vehicles (EV) cheap.

However, it changes relative attractiveness.

Electric vehicles already benefit from schemes like the EV Early Adoption Incentive (EEAI) and the Vehicular Emissions Scheme (VES), which reduce upfront ARF payable.

Do note that EEAI will cease on 1 Jan 2027, so if you want to leverage it for your next car, don’t wait too long. 

Since PARF is based on ARF paid:

• Internal Combustion Engine (ICE) cars with high ARF lose more in absolute rebate terms.
• EVs, which may have enjoyed significant upfront rebates, are less dependent on a large end-of-life PARF payout.

The result? The long-term depreciation gap between ICE cars and EVs may narrow slightly.

5. Luxury car buyers feel the sting more

Because PARF is tied to ARF, and ARF increases with a car’s Open Market Value, higher-end vehicles previously enjoyed larger potential rebates.

The new $30,000 cap changes that dynamic.

For example:

• A high-ARF luxury car that previously could recover close to $60,000 now maxes out at $30,000.
• That’s a much larger absolute reduction than what a mass-market car owner might experience.

In short, the more expensive your car, the harder this cut can bite.

If you’re eyeing a six-figure ride, you’ll want to factor this into your long-term cost projections.

So…will this change how you approach car ownership?

To be honest, it should. Because these changes do remove a cushion many buyers have quietly relied on for years.

If you’re buying in 2026, here’s what that means in practical terms:

• Do not get a car assuming you’ll get a generous rebate at the end
• Know exactly how long you plan to keep the car
• Remember to factor in higher mid-cycle depreciation if you don’t plan to go all 10 years
• Compare EV and ICE over the full ownership period, not just the monthly instalment
• If you’re buying a higher-end car, calculate what happens if resale is 10–20% lower than expected

If you already drive till scrap or renew COE, this may not move the needle much. But if resale value plays a big role in how you justify a purchase, the math has shifted.

And in Singapore’s car market, small changes in the maths can translate into five-figure differences over time.

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