Post-Budget PARF Changes: Before vs After

Budget 2026 delivered one of the most significant changes to the Preferential Additional Registration Fee (PARF) rebate system in its history. The PARF formula was slashed by 45 percentage points across every age bracket, and the rebate cap was halved from $60,000 to $30,000. These changes took effect from the second COE bidding exercise of February 2026, fundamentally altering the economics of car ownership, deregistration, and the used-car market in Singapore.

The PARF Cut at a Glance

Under the old system, PARF rebates rewarded owners generously for deregistering vehicles within 10 years. The new formula slashes those percentages dramatically:

Vehicle Age at Deregistration	Old PARF (% of ARF)	New PARF (% of ARF)	Change
Up to 5 years	75%	30%	−45pp
6 years	70%	25%	−45pp
7 years	65%	20%	−45pp
8 years	60%	15%	−45pp
9 years	55%	10%	−45pp
10 years	50%	5%	−45pp

In addition, the maximum PARF rebate is now capped at $30,000, down from $60,000 previously. This cap hits owners of higher-OMV vehicles particularly hard. Use our PARF Rebate Calculator to compute your specific rebate under the new formula.

Dollar Impact: Before vs After

The combination of the 45-percentage-point cut and the halved cap produces dramatic differences in rebate values. Here are worked examples for vehicles deregistered at 5 years of age:

Vehicle OMV	ARF Paid	Old PARF at 5 Years	New PARF at 5 Years	Loss
$20,000	$20,000	$15,000	$6,000	−$9,000
$30,000	$34,000	$25,500	$10,200	−$15,300
$50,000	$52,000	$39,000	$15,600	−$23,400
$80,000	$100,000	$60,000 (capped)	$30,000 (capped)	−$30,000

Even for an affordable Category A car with a $20,000 OMV, the owner loses $9,000 in PARF rebate at the 5-year mark. For a premium Category B vehicle, the loss reaches the full $30,000 cap reduction. At later deregistration ages, the new percentages are even lower — a 9-year-old vehicle now receives just 10% of ARF, down from 55%.

Why the Government Cut PARF

The government's stated rationale centres on the EV transition. The original purpose of the PARF rebate was to encourage the early deregistration of older, more pollutive vehicles. As Singapore's vehicle fleet increasingly shifts toward electric vehicles — which produce zero tailpipe emissions — the environmental justification for generous deregistration incentives weakens. In the government's view, the fleet is becoming cleaner, so the urgency to push older vehicles off the road has diminished.

There is also a fiscal dimension. The PARF rebate represents a significant government liability. With COE premiums and ARF values both at elevated levels, the potential PARF payout per vehicle had grown substantially. Cutting the formula and capping the rebate reduces this fiscal exposure as the vehicle population turns over.

Impact on Deregistration Decisions

The PARF slash fundamentally changes the deregistration calculus for every car owner. Under the old system, the PARF rebate was a major financial incentive to deregister within 10 years — it made scrapping a 7-year-old car worthwhile because you could recoup 65% of your ARF. Under the new system, that same 7-year-old car returns just 20% of ARF (capped at $30,000).

The immediate consequence is that COE renewal becomes relatively more attractive. When the alternative — deregistering and collecting PARF — yields tens of thousands less than before, paying the Prevailing Quota Premium (PQP) to extend the existing vehicle looks more appealing. This creates a potential feedback loop: more renewals mean fewer deregistrations, fewer deregistrations mean lower future COE quotas, and lower quotas mean higher premiums.

For owners planning to deregister in the near term, the financial case for doing so has weakened considerably. Run the numbers carefully using our Total Cost of Ownership Calculator before making a decision.

Market Ripple Effects

• Used car prices: PARF has historically provided a floor for used car valuations — no rational seller would accept less than their PARF rebate. With PARF values slashed, used car floor prices will drop, particularly for vehicles approaching the 10-year mark.
• Dealer trade-in values: Lower PARF translates directly to lower trade-in offers. Buyers counting on their current car's trade-in to fund a new purchase will find less cash available.
• COE supply risk: If the PARF cut discourages deregistrations, the deregistration rate could fall, tightening future COE supply and supporting higher premiums — a perverse outcome that makes new cars even more expensive.
• Renew-vs-buy shift: The financial tipping point between renewing an existing COE and buying new has shifted firmly toward renewal. See our renew vs buy analysis for a detailed framework.

Optimal Timing for Trade-Ins

The old conventional wisdom was that deregistering at the 7–9 year mark offered the best balance between PARF recovery and vehicle usage. That calculus has changed. Under the new formula, a 7-year-old vehicle returns just 20% of ARF (capped at $30,000), compared to 65% previously. The financial cliff at the 10-year mark has also flattened: the difference between deregistering at 9 years (10% PARF) versus 10 years (5% PARF) is now marginal.

For most owners, the practical implication is that there is less financial urgency to deregister early. Holding a vehicle longer and extracting more usage value may now make more economic sense than rushing to capture a diminished PARF rebate. Owners who can maintain their vehicles well may find that running them to the full 10-year mark — or even renewing the COE — produces a better total outcome. For a full breakdown of the calculation, check our Budget 2026 impact analysis.

Frequently Asked Questions

How much less will I receive when I deregister my car?

The reduction depends on your vehicle's ARF and age at deregistration. For a vehicle with $50,000 ARF deregistered at 5 years: old PARF was $39,000, new PARF is $15,600 — a loss of $23,400. For a vehicle with $100,000 ARF: old PARF was $60,000 (capped), new PARF is $30,000 (capped) — a loss of $30,000. Use our PARF Rebate Calculator for your exact figures.

Does this affect vehicles already registered before February 2026?

The new PARF formula and $30,000 cap apply to deregistrations processed from the effective date (second COE bidding exercise of February 2026) onwards, regardless of when the vehicle was originally registered. If you are planning to deregister an existing vehicle, you will receive the new, lower PARF rebate.

Should I rush to deregister before the new rates apply?

The new rates took effect from the second bidding exercise of February 2026. If you were already planning to deregister soon, doing so before the effective date would have preserved the higher PARF rebate. For owners still considering deregistration, the new rates are now in effect — compare the reduced PARF rebate against the cost of COE renewal via PQP to determine which option makes more financial sense for your situation.

How does this affect the used car market?

Used car floor prices will decline because PARF provides a minimum valuation for vehicles under 10 years old. With lower PARF rebates, the floor drops. Sellers of 6–9 year old vehicles will be most affected, as the percentage cuts are steepest in those brackets. Buyers may benefit from lower asking prices, but only if sellers adjust their expectations to reflect the new PARF reality.