Let's find out how the new financing restrictions set out by the MAS may affect Certificate of Entitlement (COE) prices.

The substantial revision on motor loans will no doubt require a change in spending habits before one can commit to the loads of heavy initial costs - more specifically the upfront payment. Under the new rule, car buyers have to fork out an additional 40 to 50 percent of the purchase price at order, which will easily run above $50,000 with the current car prices.

With a cap of 50 or 60 percent loan, the biggest obstacle now to getting a new car is the cash outlay

The shortening of repayment period may also exert greater pressure on consumers, fearing that they may not have the ability to sustain the monthly outlays.

The luxury segment in particular, is held ransom by the loan curb as well as the revised tiered Additional Registration Fee (ARF) structure - which exponentially increases the amount of tax imposed in relation to the price of the car - with the intention of making wealthier buyers pay more.

For the first $20,000 of a car's Open Market Value (OMV), the current 100 percent ARF remains. For the next $30,000 in OMV, an incremental 140 percent ARF applies. And for the remaining OMV that is above $50,000, a 180 percent ARF applies. As a result, it has been reported that some buyers have even cancelled their orders when they had to pay a substantial sum in addition to the pre-agreed price.

Although buyers who are more cash-rich will continue to meet the upfront payments for a car, they are likely to hold back and observe where the market is headed before deciding what the next logical move is.

At the higher end of the supply chain, car dealerships may foresee such worries from consumers, especially those who had borrowed as much as possible for their current cars as well as first-time buyers. And as business owners, it is only natural if they take more precautions in such market situations.

All the factors point towards a diminished demand for cars, and in direct relation, leading to a more conservative bidding of Certificate of Entitlements (COEs).

While it is anybody's guess which way the COE premiums will be heading in the upcoming bidding exercises, there are strong indicators that it will go with the gravities of the above mentioned issues and take a sinker for the moment.

Text by Editorial Team

Sgcarmart's Editorial Team has got plenty of soul, but none of them are soldiers. Oorah!

COE prices to sink

28 Feb 2013

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2,435 views

Let's find out how the new financing restrictions set out by the MAS may affect Certificate of Entitlement (COE) prices.

The substantial revision on motor loans will no doubt require a change in spending habits before one can commit to the loads of heavy initial costs - more specifically the upfront payment. Under the new rule, car buyers have to fork out an additional 40 to 50 percent of the purchase price at order, which will easily run above $50,000 with the current car prices.

With a cap of 50 or 60 percent loan, the biggest obstacle now to getting a new car is the cash outlay

The shortening of repayment period may also exert greater pressure on consumers, fearing that they may not have the ability to sustain the monthly outlays.

The luxury segment in particular, is held ransom by the loan curb as well as the revised tiered Additional Registration Fee (ARF) structure - which exponentially increases the amount of tax imposed in relation to the price of the car - with the intention of making wealthier buyers pay more.

For the first $20,000 of a car's Open Market Value (OMV), the current 100 percent ARF remains. For the next $30,000 in OMV, an incremental 140 percent ARF applies. And for the remaining OMV that is above $50,000, a 180 percent ARF applies. As a result, it has been reported that some buyers have even cancelled their orders when they had to pay a substantial sum in addition to the pre-agreed price.

Although buyers who are more cash-rich will continue to meet the upfront payments for a car, they are likely to hold back and observe where the market is headed before deciding what the next logical move is.

At the higher end of the supply chain, car dealerships may foresee such worries from consumers, especially those who had borrowed as much as possible for their current cars as well as first-time buyers. And as business owners, it is only natural if they take more precautions in such market situations.

All the factors point towards a diminished demand for cars, and in direct relation, leading to a more conservative bidding of Certificate of Entitlements (COEs).

While it is anybody's guess which way the COE premiums will be heading in the upcoming bidding exercises, there are strong indicators that it will go with the gravities of the above mentioned issues and take a sinker for the moment.

Text by Editorial Team

Sgcarmart's Editorial Team has got plenty of soul, but none of them are soldiers. Oorah!

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coe coe prices coe prices drop coe prices sink coe prices fall coe drop coe sink coe fall new financing restricions new regulations by mas new restrictions by mas motor vehicle loans