From today, the Monetary Authority of Singapore (MAS) will place a cap on motor vehicle loans.
For vehicles with an Open Market Value exceeding $20,000, the maximum Loan to Value will be 50% of the purchase price, including the COE and relevant taxes where applicable. On the other hand, vehicles with an Open Market Value below $20,000 will have a maximum Loan to value of 60% of the purhcase price. In addition, the loan tenure will be capped at 5 years.
MAS says that the financing restrictions are necessary to encourage financial prudence among car buyers. In this prolonged environment of very low interest rates, there is greater risk of buyers over-extending themselves on motor vehicles.
However, there's a sliver of good news as this new rule from MAS will not apply to commercial vehicles and motorcycles.
Potential car buyers we spoke to were disappointed about this latest change. Mr Charlie Tan, a finance manager at an I.T. firm said, "Buying a new car is next to impossible now with the high COE and this latest MAS restrictions. Does this mean that buying a car is now reserved only for the wealthy and not for middle-income Singaporeans?".