MAS eases car loan rules: Higher borrowing limit, longer loan tenure

The Monetary Authority of Singapore announced on Thursday, May 26, 2016, that it would be easing car loan measures. The changes will take effect from Friday, May 27.
The Monetary Authority of Singapore announced on Thursday, May 26, 2016, that it would be easing car loan measures. The changes will take effect from Friday, May 27.PHOTO: ST FILE

SINGAPORE - The Monetary Authority of Singapore (MAS ) has eased car loan guidelines, just three years after instituting them.

For cars with an open market value (OMV) of $20,000 or less, buyers can borrow up to 70 per cent of the purchase price, up from 60 per cent. Buyers of 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 raised to seven years, from five.

MAS deputy managing director Ong Chong Tee said: "In 2013, when we introduced the measures, our immediate aim was to help restrain escalating COE premiums and consequent inflationary pressures.

"Since then, demand conditions have moderated and it is timely to ease the measures."

Motor traders said many parties have found ways to circumvent the loan curbs. One common way is to inflate the invoice of the car. Another is to offer leases instead of hire-purchase deals.

Of late, ride-hailing apps like Uber have also been offering high loans to potential car buyers. They can do so because the cars are registered under a company's name, as private-hire vehicles, instead of the buyer's name.