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Aggressive car loan schemes now target private-hire drivers
AUTO distributors are casting their net wider and targeting not just the usual car-buyers but also private-hire drivers with aggressive loan schemes.
One of them is Cycle & Carriage, the long-time Mercedes-Benz distributor whose other brands include Mitsubishi and Kia.
C&C is partnering Goldbell Financial Services (GBFS) to offer a private-hire financing scheme which extends up to 90 per cent financing repayable over 10 years - the highest in the market.
Most private-hire loans are capped at a quantum of 80 per cent with a maximum tenure of seven years.
Under the private-hire scheme, a vehicle must be registered under a company name as a "private car for hire" and covered by commercial motor insurance, which is higher than a regular car's private motor insurance.
GBFS general manager Helen Neo said the intention is to support retrenched workers or viable small and medium-sized enterprises with cash-flow concerns, because of the Goldbell Group's "earnest belief in Corporate Social Responsibility".
At the same time, it noted the rising number of new private-hire drivers. She added: "We therefore decided that we can assist those who are seeking self-employment." While a few car companies have expressed interest in tying up with Goldbell, the group has chosen C&C as its exclusive partner for now. One reason is its suitable range of car models, for example, the Mitsubishi Attrage, a compact sedan with a 1.2-litre petrol engine.
Eric Chan, Cycle & Carriage's managing director of Singapore motor operations, said: "The Attrage has proven to be perfect for a ride-hailing business model with its spacious cabin, big boot and fuel efficiency. This model fulfils all of the driver's requirements."
The car seats five passengers with sufficient luggage space for a full-size child seat and a pram.
Mr Chan said that private-hire drivers represent a growing segment of buyers who use their cars as a business tool that allows them to write off taxes and expenses.
One sales manager with a popular Japanese dealership, speaking on condition of anonymity, agreed. He said some dealers are focusing on this group as competition heats up and demand dwindles amid the slumping economy.
"Business has slowed down in the past few months, with many people worried about their jobs amid the economic uncertainty," he added.
Under the terms of a normal loan for a personal car, up to 70 per cent of the car price can be borrowed if its open market value (OMV) is below S$20,000; the loan is to be repaid over a maximum of seven years.
But those MAS rules do not apply with GBFS's financing package for company cars, called "Drive Like a Boss".
Typical customers include car-rental companies, taxi drivers and existing private-hire drivers wishing to convert from car rentals to car ownership.
Ms Neo said: "We also expect a good mix of young entrepreneurial individuals who want to be their own boss."
However, there is a significant difference in interest rate - 2.78 per cent for seven years for a normal car loan, versus GBFS's 3.98 per cent.
Still, Ms Neo said, "Drive Like a Boss" is more affordable than renting or leasing. "The most important thing about our financing plan is that at the end of it, the self-employed drivers own the vehicles. This is not the case if they were to rent it."
With ownership of their car of choice, she added that drivers will find ways to make maintenance easier and cheaper.
"They can also draw value and convenience from the vehicles during personal time."