MAS eases car loan rules as COE prices sink

Loan tenures have been lengthened.

The unabated drop in motor vehicle prices has prompted the Monetary Authority of Singapore (MAS) to ease restrictions on car financing. The central bank revealed that loan-to-value (LTV) ratios and loan tenures allowed for car loans will be eased, on back of the expansion in Certificate of Entitlement (COE) quotas and the rise in car deregistrations.

Starting May 27, the LTV ratio for car financing will be raised to 70% for cars valued at $20,000 or less, from 60% previously. The LTV ratio for cars valued above $20,000 will be raised to 60%, from 50% previously. At the same time, the maximum loan tenure has been extended to seven years, from five years previously.

The restrictions were first rolled out in 2013 to moderate the demand for cars and COEs and alleviate inflationary pressures.

“Since then, demand conditions have moderated and it is timely to ease the measures. MAS will, however, continue to have the LTV and loan tenure framework in place for the long term to promote financial prudence and help support the promotion of a car-lite society,” said Ong Chong Tee, Deputy Managing Director, MAS.