By now, everyone must be familiar with the auto loan restrictions imposed by the Monetary Authority of Singapore (MAS) a couple of weeks ago. Loan tenures were slashed to 5 years and applicable loan-to-value (LTV) limits were capped at 50 or 60 percent depending on OMV value.

*Update for 27-May-2016 : The loan restrictions have been eased to a max loan tenure of 7 years and LTV of 60 or 70 percent depending on OMV value. More about it here.*

Based on this new ruling, the MAS has announced, it will adopt a straight-line depreciation value to be taken into account when calculating 'applicable OMV' value of a used car to determine the appropriate LTV limit.

(OMV / 120 months) x number of remaining months

Refer to the examples below to understand how applicable OMV is calculated and the LTV limit is determined. Examples below have been editted to be based on the new rules that kicked in on 27-May-2016.

If the original OMV of the car is $25,000 at the point of registration on 1^st May 2013, the applicable OMV for the car on 10^th June 2016 would be:

Age of vehicle at time of purchase = 37 months 

Number of months left = 83 (120 - 37)

Thus OMV = ($25,000 / 120) x 83

                = $17,292

As the applicable OMV is below $20,000, the LTV limit is 70 percent.

If the original OMV of the car is $45,000 at the point of registration on 12^th March 2012, the applicable OMV for the car on 12^th June 2016 would be:

Age of vehicle at time of purchase = 51 months 

Number of months left = 69 (120 - 51)

Thus OMV = ($45,000 / 120) x 69

                   = $25,875

As the applicable OMV is above $20,000, the LTV limit is 60 percent.