Car showrooms across the island saw a surge in visitor numbers yesterday, following a move by the Monetary Authority of Singapore (MAS) to ease restrictions on loans for motor vehicles.
Both new and used car dealers saw an increase of between 10 and 50 per cent in showroom traffic, though many remain cautious about its impact on sales.
"We've had a good crowd since late afternoon on Friday with about 50 per cent more customers walking in," said Mr Victor Kwan, the managing director of Wearnes Automotive.
"The ease may help push those who have been sitting on the fence, as they may now (need to) pay less cash up front when buying a car."
Under a move that kicked in on Friday, buyers can now borrow up to 70 per cent of the purchase price for cars with an open market value (OMV) of $20,000 or less. This is up from 60 per cent previously.
Those who buy cars with OMVs of more than $20,000 can now borrow up to 60 per cent of the purchase price, up from 50 per cent.
The loan tenure has also been increased from five years to seven.
Showrooms were busy in Alexandra Road when The Sunday Times visited yesterday, with sales representatives attending to calls and customers checking out vehicles.
Engineer Jason Teo, 38, who visited the showroom of Toyota distributor Borneo Motors Singapore, said the move helped him when buying a $104,888 Toyota Wish yesterday.
"The previous loan restrictions meant that we would have had to cough up a substantial amount up front, but the recent change gives us more leeway to figure out the payment," said Mr Teo.
However, Mr Kwan believes there remains a need to monitor certificate of entitlement (COE) prices in the months ahead, as well as the reaction from banks.
SH Automobile director Lionel Song agreed, saying: "More people are having a look, but they may be holding back to see if bank interest rates will be going down."
Mr Raymond Tang, first vice-president of the Singapore Vehicle Traders Association, said: "The increase in loan tenure will give potential used car buyers more options to consider cars with up to seven years of COE validity.
"Those with a tighter budget will also be able to spread their instalments over a longer period." He reported an increase in showroom visitors of up to 15 per cent yesterday.
Speculating that COE premiums may go up due to rising demand, some decided they should not wait too long to make their purchases.
Research assistant Chew Ah Bian, 40, was trying to decide between the Honda Civic and the Honda HR-V, both of which are retailing at around $108,999 inclusive of COE.
"The recent relaxation of rules could mean that more people will be looking to buy a car, which could push up the prices of COEs in the coming months," said Ms Chew, who is intending to make a purchase by the end of this weekend.
Ms Anna Goh, 40, who is self-employed, said the announcement pushed her and her husband to buy the Peugeot PureTech, retailing at $114,900 including COE. "The COE (for our current car) will expire in July and we wanted to wait a while for prices to drop, but it wouldn't have made a difference as we expect more people to make purchases now."