Current restrictions on car loans for the purchase of used cars will be temporarily lifted from 6 April for 60 days.
This applies to used cars that were part of car dealers' inventory before the restrictions were introduced on 25 February 2013.
In a statement, the Monetary Authority of Singapore (MAS) said used cars registered under the Land Transport Authority's Temporary Transfer Scheme (TTS) as of 4 March 2013 will be eligible for this concession.
MAS said the pool of used cars registered under the TTS as of 4 March 2013 comprises less than 7,000 cars.
MAS said it expects that much of this inventory can be cleared within a period of 60 days. After this, the financial restrictions will apply.
MAS said it has taken into account feedback from the Singapore Vehicle Traders Association (SVTA) on the state of the used car industry.
It said it would not be possible to relieve the industry from the impact of the financing restrictions on an on-going basis.
It said the two-month relaxation of the rules for the pre-existing used car inventory will help the industry adjust to the new conditions.
SVTA's honorary secretary Raymond Tang said: "The Singapore Vehicle Traders Association has held dialogues with them, and let them understand the situation of the market and also to let them know how the market has been working.
"We have appealed to them several times. We felt it might be better if they can do other things, maybe including improving the quantum of the car loans percentage.
"To some consumers, if they need a car, there is a breathing room of two months to go into the used car market and purchase.”
But some dealers are still cautious.
One told Channel NewsAsia that the 60-day period is short to gauge the effectiveness of the move.
They said a period of six months to a year is more ideal.
Matthias Goh, a second-hand car dealer at Juzt Carz, said: "It's still good news, we can try to clear as much stock as possible because with MAS announcing this, people might want to bring back the idea of buying another car.
"But that's for the next couple of months, but after that we will not know what the future will be like. It's very difficult for us to say but definitely good news for us right now."
MAS said it will continue to monitor developments in the car market and Certificate of Entitlement (COE) premiums. It will recalibrate the financing restrictions for new and used cars when appropriate.
Meanwhile motor vehicle and residential property loan restrictions will be extended to licensed moneylenders from 6 April, said a statement from the Ministry of Law. It said a new licence condition was issued to moneylenders on Friday.
SOURCE
What an unexpected turn of events, but temporary though. This crucial 60 days shall be a life line for the second hand car dealers. It will be a battle between them and the buyers, to see who is the more desperate one. And if bargaining trends don't change, buyers will take this chance to snatch a good price when nearing the deadline of 60 days.
Dealers on the other hand, this is probably their final chance to clear their inventory and "chop" the buyers before they scale down their business, or even close shop altogether. So to buyers, beware if they promise you a super package of warranty and such, 'cause they might no longer be running a business after this 60 days is over. If anything goes wrong, you might have nobody to fall back on to claim anything.
Across the street where showrooms are selling the new cars, this period will be a super lull one for them since the loan curbs will continue to apply to them. So we shall see some very interesting COE bidding prices with possibly less people buying new cars.
That being said, I urge all car buyers to do your finances wisely and do not overstretch yourself taking 100% loan amount and maximum repayment period. Buy what you need and can afford.
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