Used cars get a 60-day reprieve from new loan restrictions

Temporary concession begins April 6.

The Monetary Authority of Singapore (MAS) saidt it will lift the current restrictions on car loans for a period of 60 days for the purchase of used cars that were part of car dealers’ inventory before the restrictions were introduced on 25 February 20132. As dealers have up to seven days to register used cars under the Land Transport Authority’s Temporary Transfer Scheme (TTS), used cars registered as of 4 March 2013 will be eligible for this concession, MAS said.

The lifting of the financing restrictions on purchases of used cars under the TTS as of 4 March 2013 takes into account the distinct conditions in the used car market currently.

"The inventory of used cars acquired by dealers at relatively high in-built Certificate of Entitlement (COE) values before the introduction of the financing restrictions has made it particularly challenging for them to adjust to the new market conditions. Demand has also fallen more sharply in the used car market compared to that for new cars," said MAS.

This convinced the Singapore central bank to temporarily lift the financing restrictions for the purchase of the limited pool of used cars registered under the TTS as of 4 March 2013.

"This pool comprises less than 7000 cars. Based on trends in purchases of used cars since the announcement of the new restrictions, it is expected that much of this inventory can be cleared within a period of two months," it said.

This concession takes effect from 6 April 2013 and will be in place for a period of 60 days3, after which, the financing restrictions will apply. MAS has taken into account useful feedback from the Singapore Vehicle Traders Association on the state of the used car industry.

"While it is not possible to relieve the industry from the impact of the financing restrictions on an ongoing basis, the two-month relaxation of the rules for its pre-existing inventory will help the industry adjust to the new conditions," it said.

MAS added that it will continue to monitor developments in the car market and COE premiums, and will recalibrate the financing restrictions for new and used cars when appropriate.