Loan curbs for used cars to stay for now: MAS

 It seems like the loan curbs for used cars are here to stay -- at least for awhile.

Despite representations from used car dealers, the Monetary Authority of Singapore (MAS) said on Wednesday that the financing restrictions remain relevant as it encourages financial prudence among consumers and exerts a moderating influence on COE prices.

Under current rules that took effect in late February, used-car buyers can borrow only up to 60 per cent of the car's purchase price, with the maximum period of the loan capped at five years.

The Singapore Vehicle Traders Association met MAS on Tuesday to call for a review of the curbs.

The association said many dealers are suffering, with business dropping by at least 50 per cent.

It is proposing that buyers be allowed to borrow up to 80 per cent of the purchase price, and for the loan to be serviced for up to eight years.

MAS said in a statement on Wednesday that it appreciates the feedback, emphasising that the financing restrictions are not permanent.

It also added that it will continue to monitor the situation and review the calibration of the restrictions in line with market conditions.

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Second hand car dealers will have to rough it out under the loan curb conditions, but the severity of the situation seems to be exaggerated as we all know how these dealers work. It will be good that the rogues close down for good.

Racing on AYE

Amazing stuff, when such a big group of highly tuned cars taking the expressway like a racing track. The red Honda Civic has got great balls and skills to have made that lane cutting maneuver.

HOWEVER, this is illegal. No matter how skillful you are, the rules of the road have to be obeyed at all times. By racing illegally on public roads, you're endangering yourself and every other road users' lives. Such actions must be condemn and the traffic police have to clamp down these racers.

How sending a "Brian O'Conner" as an undercover?

Racing in KPE tunnel - Hyundai & Merc

What a close shave, looking like a scene out of the Hollywood movies. Great recovery by the Hyundai by the way. Good job in capturing these actions, the traffic police can better nab these reckless drivers with such an evidence.

Road Idiot - SFZ2848A

What do you think of such drivers in Singapore roads? Being totally impatient and full of rage. With the prominence of DVR, I would think most drivers will be more subdued. However it seems to be the opposite.

Used car dealers urge authorities to review car loans curbs

The Singapore Vehicle Traders Association which represents the interests of over 400 used car dealers here is renewing its call for a review on car loan curbs.

It said many dealers have seen sales drop by between 30 and 80 per cent since the 60-day reprieve period ended in early June.

Used car dealers sold most of their stock of about 7,000 cars during the 60-day reprieve period from April 6 to June 4.

Before the loan curbs kicked in, buyers used to be able to take up to 100 per cent loans for car purchases.

Now that they are unable to do so and dealers are feeling the pinch once again.

Raymond Tang, honorary secretary of Singapore Vehicle Traders Association, said: "In July, the situation is very bad. We have made a survey and majority of the dealers are not selling (well)."

Under current rules, buyers of both new and used cars can only get a loan of up to 60 per cent.

The loan period is capped at five years, down from 10 years.

Dealers said sales have also been affected by a smaller supply of used cars in the market as more people hold on to their cars.

Vincent Wong, director of First Automobile Premium, said: "We have actually experienced as much as a 30 to 40 per cent of depletion of sales and generally to us, it is quite an extensive impact. For the dealers to recover their stocks and replenish their stocks, it is quite difficult at this point of time.

Mr Wong added: "For many of these people, they are not able to change and so they are holding on to their cars. The dealers are also very careful in the valuation of cars. They cannot be buying too high and if they do, it will put themselves in a big financial difficulty."

The loan curbs were introduced to encourage financial prudence.

The Singapore Vehicle Traders Association said Certificate of Entitlement (COE) prices are still high in recent bidding rounds.

Prices for both small and big cars were over S$70,000 in the latest bidding round.

The association has proposed that used car buyers be able to borrow up to 80 per cent of loan which can be serviced over eight years. It said the move will help ease COE premiums.

Mr Tang said: "In this way, I feel that it might help to stabilise the COE premiums because they might pull a small group of people from buying a new car to the used car. If there is a small group of people coming over, that might also slow down the demand on the new car.

"Eighty per cent is quite a fair bit because in terms of used car, it is more towards the mass market and middle and lower income people. I think that telling them to fork out at one go of 40 to 50 per cent of down-payment is might be a very heavy amount for them."

The COE quota for the next six month period starting from August this year to January next year will be about eight per cent higher.

However, dealers said it will unlikely to have much of an impact and bring down COE prices significantly."

The association intends to submit its proposal to the Monetary Authority of Singapore this month.

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I'm surprised these dealers are still alive to make some noises. After the 60-day rule suspension, I had expected them to fold up or switch to other automobile related business but they actually held on. And now they want MAS to look like a joke by further amending the rule. Will MAS give in? It will be interesting to find out the result of the appeal.

Valets say cases of drunk patrons driving off are common

The scourge of drink driving looks like it is not going away any time soon, if The New Paper’s checks with valets at several nightspots are anything to go by.

Last weekend, we spoke to some of them at the Tanjong Pagar, Orchard Road and Boat Quay areas.

Five valets said it was not unusual to encounter clubbers who insist on driving themselves home, even when they had drunk too much.

Said a valet working in a club at Tanjong Pagar, who wanted to be known only as Mr Ameen: “We have customers who insist on driving themselves home after clubbing. I honestly don’t know why they take the risk. We charge them only $50 to drive them back, but if they refuse, we can only remind them that it is against the law as we can’t force them.”

Last year, the police arrested 2,917 people for drink driving.

This is a 6.6 per cent increase compared to 2,735 in 2011.

SOURCE

This is a very disturbing trend to reveal as we all know how drink driving can endanger other road users other than the driver himself. It is a very selfish act which should not be tolerated. It seems that people will only obey the law when they see the flashing red/blue lights.

Certificate of Entitlement (COE) prices rose across the board for all categories.

In the latest bidding exercise, the COE price for the open category experienced the biggest jump -- rising by S$7,001 to hit S$83,001.

The next biggest jump was in the big cars category, with premiums going up by S$6,751 to S$81,751.

The premium for small cars went up S$2,602 to S$69,903.

COE prices for commercial vehicles rose S$1,012 to hit S$59,001.

As for motorcycles, the COE price went up by S$11 to reach S$1,712.

From next month, the government will start imposing registration surcharges on cars with high carbon emissions under the new Carbon Emissions-Based Vehicle Scheme (CEVS).

Buyers of such cars will have to cough up between S$5,000 and S$20,000.

Motor traders said car buyers who wish to avoid the penalties are driving up COE prices in the latest bidding round.

Neo Tiam Ting, president of the Singapore Vehicle Traders Association, said: "The CEVS come in not only for Category B vehicles but for all vehicles, but Cat B vehicles will be affected more. Those in Cat B, those with high-capacity cars will be affected more, that's why the COE goes up more than A."

Motor traders said higher prices for big cars are also due to the perception that authorities will be fine-tuning the categorisation of COEs to further segregate higher-end models from cheaper ones.

Eddie Loo, managing director of CarTimes Automobile, said: "After the re-categorisation, I think it will put much more pressure on Cat B. So I think for the luxury cars, premiums will still be going up. Before they reach S$100,000, I think it is better to go into the market first."

The public has until July 7 to give their suggestions on ways to refine the COE system.

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New rulings are forcing everyone to jump into the market now causing a relatively huge jump in premiums across the board. The Cat B buyers will be experiencing very high premiums until the rulings are finally in place. For now, let the figures rise.

Used-car dealers, small firms not jumping on car leasing bandwagon

Most used-car dealers and small motor firms Channel NewsAsia spoke to are not jumping on the car leasing bandwagon, despite bigger players getting in on the act since the authorities imposed borrowing limits on vehicle purchases.

They cite high costs of running a leasing business and unfamiliarity with how to do it as reasons.

Still, a few are eyeing the business model as an alternative to car sales.

Car leasing schemes are a mid-point between short-term rental and ownership, where you typically hold on to a vehicle for over a year and pay a monthly fee to use it.

The car goes back to the leasing company after that.

Not being stuck with a depreciating asset like a vehicle has drawn people to the scheme, plus the fact that a sizeable downpayment isn't needed.

The government's imposition of loan curbs means buyers have to foot a minimum 40 per cent downpayment for vehicle purchases.

Observers have noted that car leasing is one way of beating the curbs. Others call it an option.

Eddie Ho, general manager of Sime Darby Services, said: "It's not a way to beat the government's system but it's just another alternative for motorists to consider, because there's no way we can beat the system.

"Ultimately, leasing...to me is like another dish on the menu for the companies to sell."

Not all motor firms are keen on leasing, since much of the onus falls on the leasing company to keep leased vehicles in order.

Many companies simply don't have the resources to do it.

Still, some plan to capitalise on the opportunity.

CarTimes Automobile plans to starts a leasing arm in June 2013 while Yong Lee Seng Motor has been dabbling with leasing for around three years.

Raymond Tang, Yong Lee Seng's director, said: "The difficulty of doing it is that a lot of follow-up, a lot of support you need to give to these consumers. Or else, the consumers will not be happy...what happens if the car breaks down in the middle of the night? You must have workshop support."

Observers note that the government's "car-cooling" measures have shifted more attention to the leasing business, although it has been around in Singapore for over a decade.

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A way to beat the system for aspiring "car owners". You can have a car but save the hassle of 100% owning the car. It's a viable option if one is unable to fork out the huge downpayment needed according to the new ruling by MAS.

69% of used cars eligible for full loans sold

About 69 per cent of used cars eligible for full loans have been sold as of 27 May since authorities lifted borrowing limits for buying those cars for 60 days.

This concession will last till Tuesday.

Motor firms are bracing for uncertainty thereafter.

Dealers whom Channel NewsAsia spoke with expect the market to be even quieter, with car loan curbs in full force.

To help used car dealers clear old stock acquired before new borrowing restrictions were introduced, a two-month concession was given. This meant that buyers could continue taking up to 100 per cent loan for vehicle purchases.

The concession applied to some 7,000 used cars. Over 4,800 have been sold so far.

Classic Credit had around 180 vehicles from old stock. About 170 have been sold, but customers remain cautious.

Andy Ong, sales consultant at Classic Credit, said: "It all depends, you see, on the customer preference - what they want. Because mostly for used cars, they are going for those budget cars. Talking about high-end, they should rather go for the new cars right? Because those people are those well-to-do families."

Prospective car buyer Clarence Pang said: "Actually, I'm just checking out the cars, just looking at the value… maybe if the price is good, (I will) get it, or if not, just hold on."

Freddie Yap, also a prospective car buyer, said: "I will never, ever sign any papers to buy a vehicle over S$100,000."

Dealers are not expecting things to get any better, especially when car loan curbs for used cars kick in.

Companies have been downsizing operations or have moved out entirely, due to slowing business. Yet, others will see opportunity.

Taking up empty spaces are commercial vehicle sellers as they are unaffected by loan curbs.

Kenson Goh, sales executive at Car Design, said: "Most car dealerships will actually shrink. From maybe about four fronts to maybe about one or two fronts only. So definitely, a lot of people are cutting costs."

To ease the situation, the Singapore Vehicle Traders Association hopes authorities can raise borrowing limits from 60 to 80 per cent. It said this will reduce downpayment obstacles preventing some from buying a car.

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In a blink of an eye, 60 days is almost up, and 69% of the stock have been cleared. There are still a good 2000 of them unsold as of now I guess, so if you're still pondering on your second hand car purchase, I guess it's about time you head down and see if there's anything worth your dough.

The dealers should be slashing the prices or they might never be able to offload these 31% sitting in the showroom. The next COE bidding will be more interesting.

Driver who blocked ambulance fined $160, incurs 4 demerit points

The driver of a blue Honda caught on camera for refusing to give way to a private ambulance has been penalised by the Traffic Police.

Deputy Prime Minister Teo Chee Hean said in a written reply to Arthur Fong, MP for West Coast GRC, that the driver has fined $160 dollars, and incurred four demerit points to his driving record.

The driver of the Honda was captured on video refusing to give way to an ambulance, despite the ambulance's blaring siren and flashing red lights.

The video was taken on Mar 14, and uploaded to YouTube a day later. It then went viral on the Internet.

In the video, a blue Honda car is seen staying on the right lane in front of an ambulance. Even as the two vehicles drove down the Pan-Island Expressway (PIE), the blue Honda stayed in front of the ambulance and did not give way.

Later, the ambulance driver slowly filtered left and edged out to the neighbouring lane. The ambulance driver then wound down the window and started gesturing towards the driver. He then drove off rapidly after that.

A Stomp contributor said what the driver did was illegal, according to the Public Order Act.

The contributor wrote:

"Under the Public Order Act, Chapter 257A, Part II: Public assemblies and processions. #18 Obstruction to free passage of any ambulance states that the person shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 6 months or to both."

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Good job done by the authorities. Such actions should never be pardoned. Singaporean drivers are an ungraceful bunch, even when it's an emergency vehicle at its mercy.

Multiple-car owners may face surcharge, COE system to be refined

To spread car ownership more evenly, the government is considering levying a surcharge on individuals who wish to own more than one car.

Engine power could also be factored into the categorisation of cars under the Certificate of Entitlement (COE) system.

Transport Minister Lui Tuck Yew spoke about these suggestions when he visited the site of the upcoming Marina Coastal Expressway on Thursday.

The current COE categories are based on engine capacity.

Traditionally, mass-market cars (small cars of 1,600cc and below) are in Category A.

But the car industry has evolved, and now higher end options are also in that category.

Such luxury cars took up about a third of Category A registrations last year, compared to just 7 percent in 2010.

Mr Lui said: "Models such as Mercedes C180 Kompressor and Audi A1 have an open market value and engine power that is significantly higher than those of more mass-market models such as Toyota Corolla Altis and Honda City.

"While this is a reflection of increasing affluence and consumer preferences, we also want to make sure that Category A, which is intended for buyers of smaller budget cars, retains its original purpose."

Hence, to better delineate Category A, engine power - which determines the performance of the car - could be used as an additional criterion.

Honorary Secretary of the Singapore Vehicle Traders Association Raymond Tang said that categorising COE on engine power alone will be fairer to buyers from the middle income groups.

He said: "Cars, for instance MPVs, Honda Stream, Toyota Wish, they are in Category B because of their cc (cubic centimetres).

"But in terms of their horse power and in terms of (buyers), it should be for those lower and middle income people. So if they are in Category B, it causes a stress to them, because they are challenging those 'big boys'."

Another option is to have an individual who wants to own a second car or more, fork out more cash upfront on top of COE.

Mr Lui said: "I am open to considering sensible options that could possibly take the form of, for example, levying a surcharge for the second, third or more cars owned by the same individual.

"The rationale would be that in exchange for the privilege of owning several cars, these owners should pay proportionately more by way of levies."

Mr Lui acknowledged that there are downsides to such a policy.

For example, some owners could circumvent the rule by registering the car in the name of a relative or family member.

If implemented, the surcharge will not apply to existing multiple-car owners. Commercial vehicles and motorcycles will also not be affected.

The public and industry players will be consulted on the proposed changes, before a decision is made later this year.

SOURCE

Changes to the COE system has been long overdue, especially now that the luxurious brands are spreading its range of cars into the Cat A sector. With less than 10% in 2010, luxurious brands now cover close to half of Cat A bidders. That is a big cause for concern as Cat A is supposedly catered for less budget car buyers.

Another change is charging extra for individuals owning more than one vehicle. Well, if he/she is rich enough to own more than one car, what is this extra cost to him?

Secretly fast and furious in Hong Kong's street racing world

As night begins to give way to dawn, 40 high-performance cars pull up on an empty Hong Kong backstreet. While the city sleeps, their revving engines fill the air with a heavy smell of petrol.

The drivers huddle together to set the route, always at the last possible minute. One of them spots the red and blue glare of police lights and they scramble to their cars, regrouping a few miles away to continue the race.

By day, Eva is a nurse. For one night each week she is also an illegal street racer -- one of hundreds in Hong Kong who are bound by their addiction to breakneck speed.

With the engine of her black Mitsubishi Lancer Evolution VII modified to generate maximum power, the 25-year old is only the second woman to join an illicit club whose members include teachers, businessmen, lawyers, and even a Taoist priest.

Most of them would not even cross a pedestrian walkway on a red light in the day -- jaywalking is an offence in Hong Kong -- but the rules of a normally ordered city are put to one side in this twilight world of street racing.

Tearing along public roads at speeds of up to 200 kilometres (124 miles) per hour, Eva is fiercely proud of her secret identity as an illegal racer -- one that she never plans to reveal to her parents.

"They cannot imagine what racing is because I'm a girl and I'm a little girl in their eyes... So I will not tell my parents. I don't want to bother them."

While illegal street racing is a global phenomenon, rife in cities from Los Angeles to Sydney and Kuala Lumpur, in Hong Kong it is as much about being part of a racing community as it is a battle on the road.

"Every day we do the same thing, the same time. And then suddenly we can have our time to drive together," says Alex, 27, who has been racing for four years.

Blazing down a clear road normally clogged with traffic unleashes the tension of living in an overcrowded city, he explains.

All other cars are obstacles "when you're driving at 250 kilometres an hour", the jewellery trader says.

"All of them are walls. I'm the one who can win, win the road... I'm king of the road."

Alex didn't overtake anyone on this particular morning, after noticing an unmarked police car following friends ahead, but drove at more than 200 kilometres per hour on a road where the speed limit is 70.

"A dangerous, selfish act"

The potentially devastating consequences of racing are far from the minds of the drivers comparing cars after the "morning drive" -- the seemingly innocuous term they use to describe breaking the rules of the road.

"When I'm driving very fast, I feel I've combined with the car. The car is part of my body. I am in control," says one 36-year-old, even though like most racers she knows at least one person who has had an accident while speeding.

Hong Kong police said there are no figures on injuries caused by illegal racing and there have been no related deaths in recent years, but stress that one fatal case would be one too many.

"Road racing is a highly dangerous and selfish act that puts other members of the public in severe danger... What we want to try and do is to make sure that the road is safe," Inspector Ngai Chun-yip, who heads the illegal road racing unit in the northern territories of Hong Kong, told AFP.

Last year there was an eight percent rise in the number of illegal racing complaints compared to the year before. Ngai led 291 anti-racing operations, increasingly using online videos uploaded by racers to help track them down.

Richard was one of the 1,700 people prosecuted in the crackdown.

Back at the winding road where he was caught speeding, he points at the bushes in which police rigged speed cameras. After 120 hours of community service and losing his driving license for a year, the 41-year-old says he rarely races anymore.

"If I really want to drive fast, maybe I will go to China (and use) the racing track. But not on the roads in Hong Kong."

He added that if arrested again he may face jail and would lose his job as an English tutor.

Police describe racing in the city as an ad-hoc rather than a large-scale or well-organised activity. The racers gathered for breakfast paint a different picture.

Morning or midnight races take place every week in several different parts of the territory, while there are also more spontaneous contests when drivers eye a willing competitor on the street or simply take a chance to rip down highways alone.

Beneath the racing community's camaraderie lurks an undeniable sense of the status that cars and racing bring.

"There are too many rich people in Hong Kong. All my friends race, all own sports cars. Most of it is to show off," says Nick, who owns a Porsche and a Ford Focus rs500.

With the cost of cars and modifications -- faster wheels and engines or louder exhausts -- running into hundreds of thousands of dollars, it's an expensive as well as a risky way to make a mark.

Amateur racers have long been lobbying for an official race track in Hong Kong which they claim will stop people racing illegally on the streets.

Some already cross the border into mainland China to use a circuit where two races over a weekend can cost as much as US$10,000.

Others admit a track will never replace the thrill of racing on public roads. "You cannot match the excitement," says Nick. "Some people will always race on the streets."

(All racers' names have been changed.)

SOURCE

So it's all real, those HK films in the 1990s namely The Legend of Speed and Full Throttle. Street racing do exist in a congested city like Hong Kong. While it may sound cool and exciting, and every speed lover will be eager to take up the challenge of maneuvering those the public roads in high speeds, but the consequences often happen to be fatal. It's good to hear there hasn't been any fatalities in these illegal races for the past few years, but why risk it?

SKF5769X

Reckless and not needed. Leave such "racing" to the tracks and not on the public roads. It is endangering everyone's life.

Used car showrooms see visitor surge

Used car dealers saw a surge in visitor numbers to their showrooms, after the MAS announced on Friday that loan restrictions on some used cars would be suspended for 60 days from April 6.

Following feedback from the Singapore Vehicle Traders Association, the Monetary Authority of Singapore (MAS) lifted temporarily its curbs on vehicles that were in stock or acquired before February 25, when the restrictions were announced.

The MAS curbs limit car loans to no more than 60 per cent of the purchase price and a tenure of not more than five years for vehicles with an open market value (OMV) of S$20,000 or less. When the OMV is more than S$20,000, a tighter limit of 50 per cent will be imposed.

To buy, or not to buy.

That was the question on the minds of those who went shopping for a second-hand car at showrooms in Ubi on Saturday.

But they have only up till 4 June to make up their minds.

A man at a showroom said the 60-day reprieve is a good time "to look around" while another potential buyer said "there is a window for us to do it, so we better do it as fast, as soon as possible".

The temporary lifting of restrictions is good news for second-hand car dealers who saw a drop in demand for their vehicles since the curbs were rolled out.

Eric Liew, general manager of Fugen Automobile, said: "I believe that in this short term, the measure will really help our business. I think more people are already coming in, looking at the cars right now."

But car dealers predict sales would not pick up until the third week, as consumers wait out for discounts.

Some dealers are considering offering discounts of up to 5 per cent for small cars and up to 10 per cent for big cars during the 60-day window.

They believe small second-hand cars will be popular among buyers.

Once the 60-day period is up, some dealers say they will scale down their business.

Fugen Automobile's Eric Liew said: "Looking forward, I would say that it's really very uncertain. Because after these 60 days, it will be back to the restrictions, and then we can foresee that most probably it'll become a very big slowdown."

SOURCE

Is 5-10% discount enough to entice potential buyers to pounce? This weekend will be like Chinatown during Chinese New Year period for the second hand car showrooms. The buyers will be like sharks circling their prey, going around and having a look at their potential purchase.

The waiting game begins, and the dealers better give much more attractive packages right now than to start massive slashes to their prices as the 60-day period nears the end.

MAS temporarily lifts current curbs on used car loans

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.

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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.

Driven to desperation, used-car dealers appeal again

Hit by the triple whammy of loan curbs, cheaper new cars and higher interest rates, used-car dealers here — some of whom failed to close a single deal in recent weeks despite holding a fire-sale — made another appeal yesterday to the authorities, just a week after their initial appeal was rejected.

Following a meeting between the Singapore Vehicle Traders Association (SVTA) — which represents more than 400 used-car dealers — and the Monetary Authority of Singapore (MAS), SVTA President Neo Tiam Ting said the association again proposed that the authorities do not impose the financing restrictions on cars that were bought by the dealers before the curbs kicked in on Feb 26.

Mr Neo said: “We are trying to work towards a solution where second-hand car dealers can sell these vehicles under the old rules, that is, bigger loan amounts and longer tenures.”

While the MAS declined to comment on the meeting, Mr Neo said the authorities’ doors were not closed. The MAS was “willing to meet up again”, he added.

Under the loan curbs, the tenures of car loans are capped at five years, with the maximum loan amount pegged to 50 or 60 per cent of the vehicle’s purchase price, depending on the Open Market Value. Previously, there was no cap on the loan, and buyers could take up to 10 years to repay the money.

In response to the SVTA’s original appeal, the MAS had sent a letter to the association last Wed. An MAS spokesman told this newspaper earlier that in its response last week, it “highlighted that the new and used motor vehicle markets are essentially linked”. He added: “If used motor vehicles were exempt from the financing restrictions, the demand for these vehicles would push their prices up and drive demand back to the new motor vehicle market, resulting in higher COE (Certificate of Entitlement) prices and compromising the policy objective.”

The MAS has also made some concessions, such as allowing depreciation to be taken into account when calculating the Open Market Value of a used motor vehicle to determine the loan-to-value ratio for car loans. It has also stressed that the curbs are not intended to be permanent, and will be adjusted as market conditions change.

On Wednesday, in the latest round of COE bidding — the second since the loan curbs were rolled out — the premium for small cars continued to slide to S$64,209 — the lowest in six months. While the COE for bigger cars rebounded to S$73,900, it was still some way below previous levels.

Apart from new cars being cheaper — which brought people back to the car showrooms — the interest rates for loans for used cars have also gone up, used-car dealers said. They were informed by some of the banks of the increase in recent weeks.

Mr Kelvin Tan of Straits Euro Motors said his firm has suffered a loss of about S$50,000 in the past two weeks, as it slashed prices to draw customers.

Mr Alex Wong, a manager at Hua Yang, said the firm would be shutting down two outlets next month. Pointing out how the falling COE prices have resulted in brisk sales for new cars, Mr Wong questioned the MAS policy which has seemingly hurt used-car dealers more. He said the company’s Turf City branch only sold two cars in the past fortnight.

Mr Teh Han Sing, Managing Director of Chin Lian Seng Motor Trading, said the local banks have increased interest rates for used-car loans to 2.88 per cent, up from 2.28 per cent.

Some financing companies such as Hitachi Capital and Century Tokyo Leasing have raised it further to 3.28 per cent, Mr Wong said.

Mr Wong added: “The banks are increasing their interest rates to make up for the shorter loan tenure. But our customers are very unhappy about this. Some of them have low budgets of maybe S$500 a month. But now they have to pay S$100 to S$200 more, which they cannot afford.”

Meanwhile, used-car dealers at Turf City said that their landlord has rejected their request for lower rents because they had just signed three-year tenancy agreements last year. Mr Teh, who said he has lost more than S$100,000 since the loan curbs kicked in, said: “The MAS should have told us much earlier, so that we don’t bring in and keep so much stock. I really don’t know how to continue.”

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MAS is doing the right thing by not succumbing to the dealers' request. Imagine the main bulk of the cars brought in by the dealers before the new ruling came about being not applicable to it, it would render the new law completely useless and nothing will change.

It is probably time for the dealers to "pay back" with the good past two years they had when COE was skyrocketing and they adjust their resale prices accordingly even though most of them have low paper value.

Right now, they are bleeding. It will be interesting to see how many will manage to survive by the end of this year.

Suggestion to lift restricted hours on private car rental scheme

The Singapore Vehicle Rental Association said the government can consider lifting the restricted hours currently placed on the private car rental scheme.

This comes as the Land Transport Authority (LTA) announced at the recent Committee of Supply, that it is studying the liberalisation of this scheme.

The Private Car Rental Scheme was introduced in 1996 to allow non-car owners to have access to private transport on weekends and public holidays.

Under this scheme, private car owners are allowed to rent out their cars from Friday, 7pm, to the following Monday, 7am; and from 7pm on the eve of the public holiday to 7am on the 1st working day following the public holiday.

Interested parties can rent out their cars through advertisements in the newspapers or other forms of media.

Currently, chauffeur-driven rentals are not allowed.

The Association said the scheme could be expanded to include rental on week days as well.

And as private car owners do not have to register with the LTA when using the scheme, the Association also feels there must be some form of control as this could affect taxi operators and car rental companies.

Honorary secretary of the Singapore Vehicle Rental Association Joseph Poh said: "One of the way is to allow them to go to car rental companies to transact all this rental transactions. If not properly controlled, these cars could be used for limousine services and ferrying. If that is the case, it'd interfere with taxi operations."

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Well, good news for car owners looking to supplement their car loan with some rental income, just like how people do it to housing, but on a temporary basis. It is a good idea to rent one's car out for added income, until conflict arises with insurance issues. Currently, a rented car will need to have an additional form of insurance during the rental period. Failure to do so means breaking the law, thus do not try doing it or you'll risk fines.

As a private car owner, would you bear to rent out your own car? You never know how the car will get abused when not in your care.

Motor traders fear plugging of loopholes in car loan curbs

Some motor traders hope the government will not further regulate the car loan industry, after it introduced new curbs last week.

They said such a move will price out more individuals from buying a car.

Car buyers now have to fork out a minimum cash downpayment of 40 per cent.

This comes after the Monetary Authority of Singapore (MAS) imposed a car loan restriction of up to 60 per cent.

Loans will also have to be serviced over a shorter period of five years.

The move aims to encourage financial prudence.

But buyers are still able to get a higher quantum over a longer period, from financing companies who do not fall under MAS' regulations.

One credit company which offers a quantum of up to 80 per cent, for example, has seen more interest from buyers.

Jesse Tan, managing director of Speed Credit, said: "Obviously because of the curbs, there are more enquiries, but the approval rate really depends on the customer, they still need to come with the downpayment, it is no longer just 100 per cent.

"We are more selective now, we also have to check with the customer whether they can finance the loan."

MAS has said that it is looking to plug the loophole.

But some said the industry needs some "breathing space" before more regulations are imposed.

Such a move will also restrict options for individuals or businesses who really need private transport.

Mohamed Taifoor, owner of Mohamed Taifoor Motoring, said: "I think they should be soft on it, and not regulate 100 per cent. They should be soft on this as it is an alternative because the needs of people (with) private transport (are) different.

"(Some may need it) for leisure, (others need it) just to go to office. But these are people who need it to make money out of it, to get income out of it."

Some used car dealers said business has already gone down by 50 per cent.

The Singapore Vehicle Traders Association - which has described the curbs as "drastic" - met MAS on Tuesday to register its concerns and is hoping for a more gradual curb.

It is waiting for a response by this Friday.

Raymond Tang, honorary secretary of the Singapore Vehicle Traders Association, said: "The rich can still afford to buy in paying 40 per cent or 50 per cent downpayment, so to them it is not an issue at all. But to the middle- and low-income people, it is really a big effect."

Despite a slowing market, dealers do not expect premiums for Certificates of Entitlement (COEs) to go down tremendously as the quota supply remains low.

Some dealers MediaCorp spoke with said they will have to adopt a wait-and-see approach before they can fully understand the impact on the market. They expect COE prices to more or less stabilise only after four rounds of bidding.

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Seriously, if you start loaning money from unconventional and non-regulated sources just to get a car, you're asking for trouble. It will be good that MAS manages to plug these loophole and stamp out all the crazy buyers who will do all means just to own a set of wheels.

Second-hand car dealers expect vehicle sales to fall

Some second-hand car dealers have described the recent new measures taken to cool the automotive market as a "drastic" move.

They cautioned that the move may even cause used-car sales to fall by more than half.

Car dealers said that prospective car buyers are usually young people with limited income, or families with children, and they are usually customers who take car loans.

However, with the tightening of measures on car loans and registration fees, car dealers said this will have a significant impact on car buyers.

Mr Eddie Loo, Owner of CarTimes Automobile, said: "It will affect the used car market very badly. Because those who bought the used cars, definitely they have some financial difficulties so with this down payment of 40 per cent to 50 per cent, it will definitely drive all the customers away from the used car market or even from buying a car."

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Yes, the new policy is here to stay, no matter how bad it can be to some. To the dealers who have been enjoying the golden period of high COEs for the past 24months, it is now time to suffer from the wrath. 

The cars you took in on low value has been selling at significantly high prices due to the COE. Right now, many will be stuck with the cars as less people are able to afford the 40% downpayment.

To those who are thinking of making their car purchases with 100% on maximum 10years loan period, it is now time to come back down to earth and stop dreaming.

20 arrested for drink driving

The Traffic Police's blitz against drink driving saw 20 motorists arrested early this morning.

In the pre-dawn operation, road blocks were set up at Ganges Avenue, Clemeanceau Avenue, Jalan Bukit Merah, Mountbatten Road and Sims Avenue from 1.30 am to 4.30 am.

More than 72 drivers were stopped and tested for alcohol consumption. Of these, 20 motorists - 18 men and 2 women aged between 23 and 53 - were arrested for drink driving.

The highest Breath Evidential Analyser (BEA) test result was 106 microgrammes of alcohol per 100 millilitres of breath which is more than 3 times the prescribed legal limit is 35 microgrammes.

Acting Commander of Traffic Police, Deputy Assistant Commissioner of Police Poh Lye Hin, said: "Drink drivers who failed the BEA test will be prosecuted in court. Pleading ignorance of our laws or having perceptions such as drinking two glasses of beer will be within the legal alcohol limit will not absolve you of the drink driving charge."

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I urge all drivers to be responsible for your own actions. By the time you see that flashing red/blue lights, it's too late. Leave the vehicle at home if you're heading out for a drink.

Have a safe and enjoyable festive season.