Explainers
Published Date: 26 May 2016

Rules for Motor Vehicle Loans

The maximum amount borrowers can refinance their motor vehicle for depends on when the loan was disbursed, loan tenure, COE validity period, depreciation value, and whether they meet the financial institution’s credit assessment.

Refinancing Rules

Borrowers can refinance their motor vehicle loan up to the full outstanding amount and a maximum tenure of (7 minus X*) years or for the duration of the COE validity if they meet the FI’s credit assessment.

The same calculation applies to new or used motor vehicles.

Date of agreement to purchase Maximum refinancing loan Maximum tenure
Before 26 Feb 2013 Up to full outstanding amount Up to validity of COE
On or after 26 Feb 2013 Up to full outstanding amount 7 minus X* years

*X is the number of years since the motor vehicle loan was first disbursed.

Example 1

Mr Tan took a loan with a 50% LTV limit and 5-year tenure to buy a new car in June 2013. He may refinance his loan up to the full outstanding amount 3 years later in June 2016, if he meets his FI’s credit assessment.

Maximum tenure: 4 years (i.e. 7 – 3 = 4).

Example 2

Ms Lim took a loan at 100% LTV and 9-year tenure to buy a new car with a COE validity of 10 years in June 2012. She may refinance her loan up to the full outstanding amount 4 years later in June 2016, if she meets her FI’s credit assessment.

Maximum tenure:6 years (i.e. 10 – 4 = 6)

Example 3

Ms Lim took a loan at 100% LTV and 6-year tenure to buy a used car with a COE validity of 8 years in June 2012. She may refinance her loan up to the full outstanding amount 4 years later in June 2016, if she meets her FI’s credit assessment.

Maximum tenure: 4 years (i.e. 8 - 4 = 4)