Monday, February 25, 2013

Singapore Motor Vehicle Market Cooling Measures

After all those rounds of property cooling measures, now we have our Singapore Motor Vehicle Market Cooling Measures announced by Monetary Authority of Singapore (MAS). MAS has reintroduced financing restrictions on motor vehicles loans, from February 1995 to January 2003 effective from 26 February 2013.

Under these new restrictions, the maximum motor vehicle loan amount will depend on the open market value (OMV) of the motor vehicle purchased. For a motor vehicle with OMV that does not exceed $20,000, the maximum loan-to-value (LTV) is 60% of the purchase price, including relevant taxes and the price of the Certificate of Entitlement, where applicable; and for a motor vehicle with OMV of more than $20,000, the maximum LTV is 50%.

In addition, the tenure of a motor vehicle loan will be capped at 5 years. MAS stated that "the financing restrictions are necessary to encourage financial prudence among buyers of motor vehicles.  In this prolonged environment of very low interest rates, there is greater risk of buyers over-extending themselves on motor vehicles."

The financing restrictions will not apply to loans for the purchase of commercial vehicles.  They will also not apply to loans for the purchase of motorcycles. By the surprise announcement of the new measures and tight deadline, car showrooms along the Alexandra Road stretch stayed open till midnight on Monday.

Riding the ultra low interest rate environment, cars are so expensive in Singapore
now that an average family sedan in Singapore is priced as much as an average house
in United States.

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