Stricter Enforcement of Vehicle Loan Regulations to Prevent 100% Financing Packages

Mr Yip Hon Weng asked the Acting Minister for Transport whether the Ministry will review and more strictly enforce motor vehicle loan regulations to curb practices of some car dealers offering 100% motor vehicle financing packages which circumvent existing MAS loan rules.

Motor vehicle loans granted by financial institutions must abide by the Monetary Authority of Singapore's (MAS') motor vehicle financing restrictions. Under these restrictions, the maximum loan-to-value limit is based on the vehicle's Open Market Value (OMV), with those above $20,000 OMV capped at 60% and those below or equal to $20,000 capped at 70%.

However, alternative financing arrangements extended by car dealers are not regulated by MAS. These include leasing arrangements or lease-to-own schemes that are not structured as hire-purchase arrangements. Buyers are strongly advised to obtain loans through regulated arrangements instead of unregulated ones, as they will have no protection if there are problems with the loan arrangements.