I agree with Edwin Yeo (“Car loan limits may hurt the people they are meant to protect”, March 1) that the newly-introduced car loan regulations — for all the good intentions — may end up complicating the issue.

The fact that financial companies that are not regulated by the Monetary Authority of Singapore (MAS) are still able to disburse full loans to car buyers (“Authorities looking to close loopholes in MAS restrictions”, Feb 28) suggests that the issue of promoting financial prudence has not been sufficiently addressed.

Assuming the objective of the latest car loan regulations is to curb excessive personal expenditure on car purchases, I suggest the following tweaks to the system.

First, categorise Certificates of Entitlement (COEs) based on Open Market Values (OMV) instead of engine capacity. This will ensure that the COE price for, say, a 1,600cc Toyota Altis, does not end up being similar to that of a 1,600cc BMW 316. The Government can continue to regulate the number of COEs being allocated.

Second, the bidding of the COE should be on a “pay-what-you-bid” basis. Those who submit high reserve prices should pay that amount if they are successful, rather than the COE price (which is the price of the current lowest successful bidder plus S$1.)

This, coupled with categorising COEs according to OMVs, makes it less likely that you have folks wanting to bid S$80,000 for a Toyota Altis, especially if someone else walks away with a COE with a S$15,000 bid. This will ensure that those with greater financial ability to purchase a car do not end up inflating COE prices.

Finally, I propose that a percentage of the COE outlay be paid in cash, say 30 per cent. This might dissuade those who do not have the financial means to own a car from overextending themselves.

In this respect, the new loan limits may not entail buyers having to splurge beyond their financial means.

I hope the Government will consider these suggestions to ensure that car ownership does not become a social albatross that divides our society further.