Used-car dealers call for review on loan curbs

SINGAPORE — The association representing the interests of over 400 used-car dealers here has renewed its call for a review on car loan curbs.

The Singapore Vehicle Traders Association (SVTA) said many dealers have seen sales fall between 30 and 80 per cent since the 60-day reprieve period ended early last month.

They sold most of their stock of about 7,000 cars between April 6 and June 4.

Before the curbs kicked in, car buyers were able to take out loans of up to 100 per cent. Now, they are unable to do so and dealers are feeling the pinch once again.

SVTA Honorary Secretary Raymond Tang described the current market situation as being “very bad”.

“We have conducted a survey and majority of the dealers are not selling (well),” he said.

Under current rules, buyers of both new and second-hand cars can only get a loan of up to 60 per cent of its purchase price. The loan period is capped at five years, down from 10 years.

Dealers said sales have also been affected by a smaller supply of second-hand cars in the market, as more people hold on to their vehicles due to surging Certificate of Entitlement (COE) premiums.

First Automobile Premium Director Vincent Wong said: “We have experienced as much as 30 to 40 per cent 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.”

The Monetary Authority of Singapore introduced loan curbs in February to encourage financial prudence. The curbs were lifted for 60 days, after repeated appeals by used-car dealers.

With COE premiums remaining high in recent bidding exercises — where prices for both small and big cars were over S$70,000 in the latest exercise that closed on Wednesday, despite more COEs being made available next month — the association has proposed that used-car buyers be allowed to borrow up to 80 per cent of the purchase price, and where the loan can be serviced over eight years.

Mr Tang said the proposed quantum would help mass-market buyers, who may have difficulty forking out 40 to 50 per cent of the downpayment under the new rules. The move will also help ease surging COE premiums, he added. “If there is a small group of people coming over (to the used-car market), that might also slow down the demand on the new car,” said Mr Tang.

The SVTA intends to submit its proposal to Singapore’s central bank this month.