People falling into debt due partly to car ownership costs: CCS

SINGAPORE: Credit Counselling Singapore (CCS) said the costs involved in maintaining ownership of a vehicle is one of the reasons cited for car owners falling into debt.

With some credit companies offering higher loans and repayments beyond five years, CCS is reminding the public to be more mindful of their finances.

CCS said 54 per cent of some 1,500 car owners it counselled in the past four years cited a combination of costs like monthly payments, parking and ERP charges as factors that have resulting in them being in debt.

This revelation comes amidst the Monetary Authority of Singapore announcing that car buyers can take loans of up to 60 per cent of purchase price, with a repayment duration of five years.

But some credit companies that do not fall under MAS regulations are continuing to offer car loans of up to 90 per cent of the purchase price, although at interest rates of up to 3.88 per cent —— up from an average of about 1.88 per cent before the new rules kicked in last week.

Tan Huey Min, general manager of CCS, said: "To maintain a car in Singapore, on a monthly basis, we’re talking about close to S$1,800 or so, if you really take into consideration the road tax, insurance and petrol and everything, on top of the monthly instalment payment. Over the long run, if you pay off the loan in eight years, the amount you have paid is much more than if you had paid the loan off in five years.

"So that means the cost of owning and maintaining the car again is higher —— so it’s something as a consumer we have to be very mindful and very careful about... You have to think of how you’re going to maintain it over the next few years —— the monthly expenses you need to pay."

—CNA/ac/ck