Two Members of Parliament (MP) have voiced out their concerns about the new car loan curb. "Spare a thought for those who have a pressing need for cars but have now been priced out because of new loan curbs," the two MPs said yesterday.
Ms Jessica Tan (East Coast GRC) and Mr Lim Biow Chuan (Mountbatten GRC), who termed the changes 'sudden' and 'drastic', highlighted the plight of those who genuinely need cars but now cannot afford them.
Ms Tan called for a relook, taking into consideration a 'needs-based' car ownership.
This would cover families who take public transport, but would like the flexibility of a car because they have young children, elders or the disabled.
She used the example of a Mazda3 or a Toyota Altis, which fall into the range of cars with Open Market Values (OMV) below $20,000, and hence will not see any increase in Additional Registration Fees (ARF), based on the new tiered ARF structure.
But with the new financing restrictions, buyers still have to fork out $50,000 cash upfront, as these cars cost about $130,000 to $140,000 each after taxes and Certificate Of Entitlement (COE) prices.
Loans are now capped at 60 percent of a car's price, and need to be repayed within five years. Previously, buyers could take loans of up to 100 percent of the purchase price and stretch the tenure to 10 years.
Mr Lim said it would be better for the authorities to revert to the rule a decade ago, which saw a car loan limit of 70 or 80 percent. He proposed that the financing limit be set at 70 percent for all cars for a maximum of five years.
