The Monetary Authority of Singapore (MAS) will re-introduce financing restrictions on motor vehicle loans granted by financial institutions from Tuesday, 26th February 2013.
The maximum motor vehicle loan amount will depend on the Open Market Value (OMV) of the motor vehicle purchased. For a motor vehicle with an OMV that does not exceed $20,000, the maximum loan-to-value (LTV) is 60 percent of the purchase price, including relevant taxes and the price of the Certificate of Entitlement (COE).
For vehicles with an OMV of more than $20,000, the maximum LTV will be capped at 50 percent.
In addition, the tenure of a motor vehicle loan will be capped at 5 years.
According to The Straits Times, the MAS said, "The financing restrictions are necessary to encourage financial prudence among buyers of motor vehicles. In this prolonged environment of very low interest rates, there is greater risk of buyers over-extending themselves on motor vehicles."
The financing restrictions will not apply to loans for the purchase of commercial vehicles or motorcycle.
