MAS imposes restrictions on private car loans

SINGAPORE: The Monetary Authority of Singapore is imposing restrictions on loans for private cars to safeguard against borrowers defaulting on their repayments.

Beginning on February 26, the central bank said consumers will be limited to borrowing 60 per cent of the purchase price of a motor vehicle when the open market value (OMV) is S$20,000 or less.

A tighter limit of 50 per cent will be imposed when the OMV is more than S$20,000.

The MAS is also capping the tenure of a motor vehicle loan at five years.

"The financing restrictions are necessary to encourage financial prudence among buyers," the MAS said in a statement.

"In this prolonged environment of very low interest rates, there is greater risk of buyers over—extending themselves," it said.

The new restrictions do not apply to loans for either commercial vehicles or for motorcycles.

For re—financing facilities, only the cap on loan tenure applies.

The MAS previously had in place financing restrictions on car loans from February 1995 to January 2003.

— CNA/fa