Car Loan Restrictions & Options
It Just Got Harder To Own A Car In Singapore
On the 25th of February 2013, car loans in Singapore were subjected to 50% maximum loan amount for cars above $20,000 in OMV (open market value) and 60% for cars which are less than the $20,000 threshold. Is this going to be permanent? The MAS gives no clear indication of lifting the restriction in the short term.
On 27th of May 2016 the loan cap for cars was changed to reflect a more pro consumer stance, with loan limits raised to 70% for cars with OMV up to $20,000 and 60% for cars with OMV greater than $20,000. Loan tenure has also been eased from maximum of 5 years to a maximum of 7 years.
So what are the options for a guy who is out there, with a deposit and who was almost ready to commit to purchase a car under hire purchase loan.
Option one: Wait. Its cruel but yes, that is one of the options. Unless you suddenly had the cash to put down a deposit of 30 to 40% of the car value. Just have to keep on saving.
Option two: Shop around for a less costly car, and hey, second hand is a viable option. There are decent examples out there of second hand cars where their previous owners had shouldered the brunt of the depreciation – which is usually the first two years. You can hop right in and take advantage of that and own a decent car at a cheaper price – a price that may be able to help you meet the recent loan requirement put in place.
However, some expect used car prices to go up as new ones become out of reach. We have some cars in stock that may interest you and we try to price these selected models competitively. There are also those that were bought in early and are still eligible for high loan or financing. So if there is a great need for that car, but financing is the issue, this could be an option. However, do note that the government has allowed a grace period of only the sixty days for the lifting of the loan restrictions on used cars.
Contact us to find out more.
Option three: Stick with your current car. Getting tired of how it goes? A tune up may help. Find a club of similar car owners and you could find that they have interesting things done to the same model car you now own that may make it perform better. And such clubs usually organise interesting events that may be of interest to you. It certainly is the advice that some car experts are giving at the moment, as they expect that COEs may drop due to the new loan restrictions.