Singapore government slaps loan curbs on individual private-hire car buyers
New rules include loan limits of up to 70% of the vehicle’s purchase price and maximum loan tenure of seven years
[SINGAPORE] From Friday (Oct 30), individuals who purchase private-hire cars (PHCs) will now face the same financing restrictions as regular car buyers. These include a maximum loan amount of up to 70 per cent of the vehicle’s purchase price and a loan tenure limited to seven years.
A joint statement on Thursday from the Ministry of Transport, Monetary Authority of Singapore, Ministry of Energy, Trade and Industry, and Ministry of Law said that this is in response to the growing number of individual-owned PHCs that take advantage of freer financing terms but are not being used to serve rides.
“To ensure that PHC purchases cannot be used to circumvent financing restrictions that apply to private car buyers, individual buyers of PHCs will now be subject to the same financing restrictions as private car buyers. This will also ensure that new PHC drivers exercise the same financial prudence as other private car buyers,” it noted.
Financing limited
From Friday, PHCs with an open market value (OMV) of S$20,000 or less can borrow up to a maximum of 70 per cent of the purchase price. This includes all taxes and the Certificate of Entitlement (COE) premium.
For vehicles with an OMV above S$20,000, the maximum loan amount is 60 per cent of the total price. For all vehicles, the tenure of financing arrangements is capped at seven years.
The restrictions apply to individuals who are getting vehicle loans from financial institutions and licensed/exempt moneylenders. They also apply to hire purchase or conditional sale agreements.
The loan restrictions will not apply to commercial vehicles (including goods vehicles and buses), PHCs owned by businesses, or motorcycles.
However, individuals acting as sole proprietors will also be subject to the financing restrictions.
The joint statement added that prior to the rule changes, individual-owned PHCs were exempt from financing restrictions on the basis that they were for commercial use.
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But in recent times there have been more instances of individual buyers using the exemption without the intent to offer ride services.
“A recent surge in individual-owned self-drive PHC registrations (around 500 per month) suggests that some may be doing so primarily to access more permissive financing terms,” said the statement.
Other measures were considered, including creating a separate COE category for PHCs.
But that would likely mean higher rental costs for PHC drivers and higher fares for riders, “thus disadvantaging those who do not own a car or cannot drive”.
“It will also require more prescriptive rules on PHC drivers and cars, thus reducing the flexibility to meet the commuting demand of PHC users,” the statement added.
The other method of avoiding loan restrictions may also be addressed as the “government will monitor market developments and take further steps to apply the same restrictions consistently across financing arrangements, such as in-house loans”.
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