SINGAPORE — Young families and executives will be those most affected by the new car loan curbs announced by the Monetary Authority of Singapore (MAS) on Monday, according to motor traders.

They noted that families and individuals will need to fork out higher down payments and use a bigger portion of disposable income to service car loans.

Yong Lee Seng Motor’s Raymond Tang said: “The hardest hit will be the families with small children or elderly parents to care for as they have a genuine need for a car but may not have the cash for the down payment.”

Hiap Tat Seng Enterprise Managing Director Derek Tan added: “It is going to be very difficult for a young person to save the amount needed just for the cash down payment. It will take them at least five to six years to save the amount.”

Mr Neo Tiam Ting, President of the Singapore Vehicle Traders Association (SVTA), felt it was “not right” to curb access to car financing for those “who really need cars”. Mr Neo, who owns Think One Automobile, which sells both new and used cars, added: “The young people have just come out to work and you can’t expect them to have that much savings for the down payments.”

The SVTA said it sent a proposal yesterday to Deputy Prime Minister Tharman Shanmugaratnam for a surcharge based on the Open Market Value (OMV) and horsepower of vehicles as a way to cool the high Certificate of Entitlement premiums. It will also be holding an emergency meeting today to discuss a possible appeal against the MAS measure.

Marketing Manager Jackson Lee, 44, who was at The Grandstand Car Mall yesterday, said he was thinking twice about what car to buy. “I will reconsider the make of the car as well as whether I need a brand new car before making my decision,” he said.

Finance executive Lim Weili, 26, said he would now have to shelve plans to buy a car. Mr Lim, who started working about one-and-a-half years ago, said: “At this age, we do not have the lump sum that is required for the down payment and the shorter tenure effectively doubles the monthly instalment.”

According to estimates by industry players, previously, about eight in 10 buyers of small cars (1600cc and below) undertook loans amounting to between 90 per cent and the full price of the cars. With banks previously offering tenure as long as seven or 10 years, the industry players added that these buyers would typically opt for the longest tenure possible.

Nevertheless, a DBS spokesperson said, in response to TODAY’s queries, that car buyers here tend to repay the loan in full within four to seven years. According to Credit Bureau Singapore, the monthly average delinquent rate had dropped marginally from 2.76 per cent in 2011 to 2.53 per cent last year.