Cary buyers in Singapore are having a merry time with the Monetary Authority of Singapore (MAS) eased rules on motor vehicle loans, revealed a study by Credit Bureau Singapore (CBS).
Singapore’s consumer credit bureau in a press release has said that data from its members banks for both new and second-hand vehicles showed that motorists borrowed an average of S$65,868 to finance their car purchases in December last year – a 22.5 per cent increase from S$53,777 in May and a 10.9 per cent increase from S$59,408 in December 2015.
In the year 2016, motorists took up 76,942 new motor vehicle loans, 25.6 per cent more than the previous year.
The highest amount borrowed by an individual in last year was S$837,135, lower than the record of S$1.08 million borrowed by a single motorist in July 2015.
The loan curbs imposed in 2013 aimed to lower demand for cars and Certificate of Entitlement (COE) premiums, as well as encourage financial prudence and support efforts to promote a car-lite society.
The rules were eased after a “sustained moderation” in COE premiums over the subsequent three years. Car buyers can now borrow up to 70 per cent of the purchase price – up from 60 per cent – for cars with an open market value (OMV) of S$20,000 or less. Buyers of cars with OMVs of more than S$20,000 can now borrow up to 60 per cent of the purchase price, up from 50 per cent. The loan tenure was also raised from five to seven years.
Despite the heavier debt commitment, the CBS study found there was a decline in the number of delinquent debtors. Just 1.3 per cent of car loan holders had instalments overdue by more than 30 days in December 2016 – the lowest since January 2015 – compared to 2 per cent in December 2015. This compares to the record delinquency rate of 3.82 per cent in 2012, just before the MAS curbs were introduced.
The study was based on data for 244,488 car loan holders who took loans from member banks of CBS: Bank of East Asia, Citibank, DBS, HL Bank, Hong Leong Finance, HSBC, Maybank, Industrial and Commercial Bank of China (ICBC), OCBC, SIF, Singapura Finance, StanChart and UOB.