For many hard working Singaporeans, the only way of owning a car is to first obtain a car loan. But new government loan caps and repayment period restrictions have made this once-useful option available to far fewer people.
50% Car Loan Cap
Car loans are now capped at 50% of the OMV (open market value) for cars worth more than S$20,000, and 60% for cars with an OMV of less than S$20,000. The vast majority of would-be car buyers will be affected by the 50% cap.
5 Year Maximum Car Loan Period
But as well only being able to get 50% or 60% of the finance for a new car, any loan taken out must be repaid within 5 years. For many families, this would increase monthly outgoings to a much higher level than under the old rules.
While the new loan restrictions make it tougher for many working Singaporeans to meet repayments, for those who have additional costs to meet – such as paying medical bills for an illness – the new limits may make owning car almost impossible. The situation may be worsened if such a person depends on having car in order to carry out their day-to-day business – such as taking their children to school if they themselves are too ill to do so by walking/public transport.
Fuel Efficient Cars And Affordable Insurance
As in so many costly areas of life, technology and other innovations have helped to ease the rising cost of motoring. With petrol prices having increased much faster than inflation, the car manufacturing industry has responded by producing extremely fuel efficient cars. The latest Volkswagen BlueMotion (diesel), for example, delivers an incredible 3.14 L/100 km; (89.8 mpg – imperial) – although the BlueMotion is not yet available in Singapore.
In car insurance, too, great leaps forward have been made. DirectAsia.com is leading the way in delivering affordable motor insurance to all Singaporean drivers – chiefly by cutting out the middleman, who may add a commission at average 15% of the entire premium. This, in unison with excellent customer service and a hassle-free claims process, have shown that there is indeed a much cheaper way to deal with your insurance needs – while still getting world class cover.
How Have The New Car Loan Restrictions Affected You?
The new loan rules from the Monetary Authority of Singapore (MAS) represent a big change for car buyers in Singapore. How will the changes affect you? Feel free to tell us your stories in the comments section below.