Singapore Extends Car Loan Restrictions to Private Hire Vehicles

Singapore authorities announced that individuals purchasing private-hire cars will face the same loan restrictions as regular car buyers starting Friday, effectively closing a financing loophole.

The new regulations limit loan tenures to seven years and cap maximum borrowing at 70 percent of the purchase price for vehicles with an open market value of 20,000 dollars or less.

For vehicles exceeding 20,000 dollars in open market value, the maximum loan-to-value ratio is restricted to 60 percent, according to a joint statement released on Thursday.

The policy change follows a recent surge of about 500 individual-owned self-drive private-hire car registrations each month, which officials said indicated motorists were exploiting exemptions intended for commercial vehicles.

Government ministries noted that some individual buyers registered vehicles under the commercial category solely to access more permissive financing terms without any intention of offering ride services.

Prior to the adjustment, individual-owned private-hire cars were completely exempt from standard motor vehicle loan limits because authorities originally categorized them strictly for commercial use.

Glenn Tan, president of the Motor Traders Association of Singapore, said that the move closes a major loophole in car financing restrictions.

Glenn Tan said the policy effectively eliminates one shortcut that allowed certain buyers to secure a 100 percent car loan.

The restrictions apply to individual buyers obtaining loans from financial institutions and licensed or exempt moneylenders, as well as those entering hire-purchase or conditional sale agreements.

Sole proprietors are also covered by the updated rules, while commercial vehicles, business-owned private-hire cars and motorcycles remain exempt from the financing limits.

The authorities stated that they considered establishing a separate certificate of entitlement category for private-hire vehicles but rejected the idea due to potential drawbacks.

Officials warned that a separate category would likely cause higher rental rates for drivers and increased fares for passengers.

NTUC Assistant Secretary-General Yeo Wan Ling said that existing drivers with current loans will not be affected by the regulatory changes.

Yeo Wan Ling said that local drivers remain concerned about the adjustment because their vehicles serve as their primary means of livelihood.

The government stated that it will continue monitoring market developments and consider further steps to ensure consistent application of financing rules across various credit arrangements.