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Rules on motor vehicle financing eased

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The Monetary Authority of Singapore is easing the maximum loan-to-value (LTV) ratios and loan tenure for motor vehicle loans following a sustained drop in Certificate of Entitlement (COE) premiums and inflationary pressures over the last three years.

As from Friday (27 May), the maximum LTV ratio for motor vehicles with an open market value at less than or equal to $20,000 will be at 70 per cent, compared with 60 per cent previously, the MAS said in a media release on Thursday (26 May). The maximum LTV ratio for vehicles valued at more than $20,000 will be at 60 per cent, up from 50 per cent previously.

The maximum loan tenure for all motor vehicles will be seven years, up from five years previously.

In 2013, MAS introduced restrictions on such financing to moderate the demand for cars and COEs and ease inflationary pressures.

MAS Deputy Managing Director Ong Chong Tee said, “Since then, demand conditions have moderated and it is timely to ease the measures. MAS will, however, continue to have the LTV and loan tenure framework in place for the long term to promote financial prudence and help support the promotion of a car-lite society.”