Banks and finance companies write off 10,533 bad car loans

Banks and finance companies wrote off 10,533 bad motor loans last year, slightly fewer than the 11,001 written off the year before. According to the Credit Bureau (Singapore), the figure refers to loans taken by borrowers who have missed a number of repayments and which the lenders have exhausted all means of recovering. It said the point at which a loan is written off varies from lender to lender, but The Straits Times understands it is typically after three missed instalment payments.

Last year's bad loans translate to 4.31 percent of 244,488 car loan holders as at 31^st December last year. The previous figure was 4.28 percent of loan holders as at 31^st December 2015. The bureau said some loan holders have more than one loan, but the vast majority had one. Meanwhile, the bureau found that the number of delinquent debtors - those who miss one month of their instalment payment - has dropped.

In May last year, the Monetary Authority of Singapore eased the curbs to allow buyers to borrow up to 70 percent of a car's purchase price, up from 60 percent. This was for models with an Open Market Value (OMV) of up to $20,000. Buyers of cars with OMVs of more than $20,000 could borrow up to 60 percent of the purchase price, up from 50 percent. The maximum loan tenure was raised from five to seven years.