Explainers
 Published Date: 26 May 2016

Rules for Motor Vehicle Loans

MAS sets maximum limits on loan tenure and amount for individuals borrowing to purchase a new or used motor vehicle, including hire purchases. These rules apply if the agreement to purchase the vehicle is on or after 27 May 2016.

Applies to: Full Bank (Locally Incorporated) , Full Bank (Branch) , Finance Company , Merchant Bank (Locally Incorporated) , Merchant Bank (Branch)

Overview

MAS introduced maximum limits on loan tenures and amounts to moderate the demand for cars and COEs. These limits also encourage financial prudence and support a car-lite society in the long-term.

Who It Applies To

The maximum limits apply to anyone applying for financing from a financial institution to buy a new or used motor vehicle, where the date of agreement to purchase the vehicle is on or after 27 May 2016.

Exemptions

The maximum limits do not apply to the financing of:

Loan and Tenure Limits

The financing restrictions are based on the open market value (OMV) of the vehicle:

OMV of motor vehicle Maximum LTV Maximum loan tenure

Less than or equal to $20,000

70%

7 years

More than $20,000

60%

7 years

Note: LTV is the amount of loan expressed as a percentage of the purchase price of the motor vehicle. The purchase price includes relevant taxes and COE price.

Next Calculating the Adjusted Value of Used Motor Vehicles