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BANKING


Vehicle Loans


1.
What are the motor vehicle financing restrictions?

Any person who applies for financing from a financial institution for the purchase of a new or used motor vehicle, where the date of the agreement to purchase the vehicle is on or after 27 May 2016, will be subject to the following restrictions:

Open Market Value (OMV)

of motor vehicle

Maximum

loan-to-value (LTV)*

Maximum

loan tenure

Less than or equal to $20,000

70% (previously 60%)

7 years

(previously

5 years)

More than $20,000

60% (previously 50%)

* LTV is the amount of the loan expressed as a percentage of the purchase price of the motor vehicle. The purchase price includes relevant taxes and price of the COE.

2.

Why is MAS adjusting the motor vehicle financing restrictions? 

In 2013, MAS introduced restrictions on motor vehicle financing granted by financial institutions, to moderate the demand for cars and COEs and alleviate inflationary pressures. The measures also served longer term purposes: to encourage financial prudence and to support efforts to promote a car-lite society.

Since then, the contribution of private road transport (excluding petrol) to CPI-All Items inflation has eased from +1.3% points in 2011-2012 to -0.5% point in Q1 2016. The allowable vehicle population growth rate remains capped at 0.25% per annum. However, COE quotas have expanded in recent quarters alongside an increase in de-registrations. Based on current market conditions, MAS is of the view that the motor vehicle restrictions can be adjusted to their long-term sustainable levels.

3.
Why is MAS not lifting the motor vehicle financing restrictions completely?
The LTV and loan tenure framework will be retained over the long term to encourage financial prudence among households and help support the promotion of a car-lite society.
4.
Are there plans to adjust the motor vehicle financing restrictions in future? 
We have set the financing restrictions at what we assess to be their long-term sustainable levels.
5.
Are non-MAS regulated financial institutions subject to MAS’ financing restrictions if they extend motor vehicle financing?

Non-MAS regulated financial institutions are subject to financing restrictions under the Hire-Purchase (Motor Vehicles) Regulations 2013 administered by the Ministry of Trade and Industry where they extend motor vehicle financing on a hire-purchase basis. These restrictions are similar to those set by MAS for motor vehicle financing granted by MAS-regulated financial institutions.

Licensed moneylenders are also required to comply with MAS’ financing restrictions if they extend motor vehicle financing.

6.
Are there any types of motor vehicles which are excluded from the application of the financing restrictions?

Commercial vehicles and motorcycles continue to be excluded from the financing restrictions. 

Commercial vehicles include goods vehicles (excluding goods-cum-passengers vehicles), omnibuses, school buses, private hire buses, excursion buses, private buses, private hire cars, taxis, and engineering plants (such as a tractor, a road roller, an excavator, a forklift, a dumper, a grader, a concrete pump, a dozer, a loader, a skidder, a compactor, a scrapper, a pipe-layer, a handcraft, a pax step or an airport service equipment). 

 

7.
The date of the agreement to purchase my motor vehicle is between 26 February 2013 and 26 May 2016. What are the maximum LTV and loan tenure that apply to me if I refinance my existing motor vehicle loan on or after 27 May 2016?

You may refinance your outstanding motor vehicle loan up to the full amount outstanding and for a maximum tenure of (7-X) years, where X is the number of years since your motor vehicle loan was first disbursed, if you meet your financial institution’s credit assessment.

For example, if Mr Tan took up a loan with a 50% LTV and loan tenure of 5 years to buy a motor vehicle in June 2013, he may refinance his motor vehicle loan up to the full amount outstanding 3 years later in June 2016, for a maximum tenure of 4 years (i.e. 7 - 3 = 4), if he meets his financial institution’s credit assessment.

8.
The date of the agreement to purchase my motor vehicle is before 26 February 2013. What are the maximum LTV and loan tenure that apply to me if I refinance my existing motor vehicle loan on or after 27 May 2016?

You may refinance your outstanding motor vehicle loan up to the full amount outstanding and for the remaining validity period of the COE of the motor vehicle, if you meet your financial institution’s credit assessment.

Example 1
Ms Lim took up a loan at a 100% LTV and loan tenure of 9 years to buy a new car (i.e. COE validity period of 10 years) in June 2012. If she refinances her motor vehicle loan 4 years later in June 2016, she may refinance up to the full amount outstanding for a maximum tenure of 6 years (i.e. 10 - 4 = 6), if she meets her financial institution’s credit assessment.

Example 2
Ms Lim took up a loan at a 100% LTV and loan tenure of 6 years to buy a used car with a COE validity period of 8 years in June 2012. If she refinances her motor vehicle loan 4 years later in June 2016, she may refinance up to the full amount outstanding for a maximum tenure of 4 years (i.e. 8 - 4 = 4), if she meets her financial institution’s credit assessment.

 

9.
A used motor vehicle is subject to depreciation. Will MAS continue to take the depreciation into account when determining the applicable LTV limit?

Click to view answer

 

 

 

10.
Will MAS continue to allow physically disabled persons or their caregivers to be exempted from the motor vehicle financing restrictions? 

A physically disabled person and his/her caregivers may continue to apply to be exempted from MAS’ motor vehicle financing restrictions for the purchase of one motor vehicle.

The exemption allows a physically disabled person or his/her caregiver to obtain motor vehicle financing that is above MAS’ financing restrictions, subject to his/her financial institution’s credit assessment.

11.
How can I qualify to apply for an exemption from the motor vehicle financing restrictions?

To qualify for an exemption, you must either be a physically disabled person (PD) or a caregiver of a PD. 

Where you are a PD applying for the exemption, you must meet any one of the following criteria:

  • Receiving payout under the ElderShield Scheme
  • Receiving payout under the Interim Disability Assistance Programme for the Elderly
  • Receiving payout under the Pioneer Generation Disability Assistance Scheme
  • Holding a valid car park label issued by SG Enable for permanent disability
  • Certified by a Tan Tock Seng Hospital rehabilitation physician to be permanently physically disabled, but medically fit and functionally able to drive safely, where the PD is a driver
  • Certified by a fully registered medical practitioner authorized by the Ministry of Health to be permanently physically disabled and require maximal or total assistance in mobility, where the PD is a passenger

 

Where you are the caregiver of a PD and applying for the exemption –
(a) the PD must meet any one of the criteria in the paragraph above; and
(b) you must meet any one of the following criteria:

  • Have the same address on your NRIC as the PD
  • Have a familial relationship with the PD (i.e. parent, child, grandparent, grandchild, spouse or sibling of the PD)
  • Be a deputy of the PD under section 24 of the Mental Capacity Act (Cap. 177A)

 

12.
What documents must I submit to apply for an exemption from the motor vehicle financing restrictions?

Click to view answer

13.
How do I, a physically disabled person, obtain certification by a MOH-appointed medical assessor?

We encourage you, if you need to obtain a certification by a medical assessor to make an appointment for a medical assessment with the appointed assessor of their choice based on the list of MOH-appointed medical assessors, or if you intend to be a driver of the motor vehicle to be purchased, the Tan Tock Seng Hospital Rehabilitation Centre (located at 17 Ang Mo Kio Ave 9, Singapore 569766, tel: 6450 6181). 

You are advised to check with the clinic on the availability and the cost of the service.  You should bring along a copy of the medical assessment form. All costs of the medical assessment will be borne by you, and additional fees may be payable if further assessment or investigative tests are needed.


 
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