Car ownership remains popular among Singaporeans. Source: Flickr
Singaporean car buyers are taking out bigger financing loans following an easing of vehicle-loan curbs since May 2016 while the numbers of those defaulting has fallen, according to Credit Bureau Singapore.
In December, the study said motorists borrowed an average of S$65,868 (US$46,700) to finance motor purchases.
It marked a 22.5-per-cent rise from May when the Monetary Authority of Singapore (MAS) eased car loan restrictions and a 10.9-per-cent increase from December 2015, when the average loan was S$59,408.
The highest principal amount borrowed by an individual last year was S$837,135, lower than the record of S$1.08 million borrowed by a lone car buyer in July 2015.
Last May, the MAS announced that for cars with an open market value of S$20,000 or less, up to 70 per cent of its purchase price could be borrowed, increased from the previous level of 60 per cent.
Four in 10 motorists who took up a loan last year were aged at least 50, with the next largest groups being those in their 40s (32.4 per cent) and 30s (27 per cent). Consumers in their 20s constituted 4.9 per cent of new loan holders.
For vehicles with a value of more than S$20,000 up to 60 per cent of the price could be borrowed, compared with the previous level of 50 per cent. The loan tenure was also increased from five to seven years.
Controls on car loans were introduced in 2013.
The survey was based on the 244,488 car loan holders who took loans from member banks of CBS: Bank of East Asia, Citibank, DBS, HL Bank, Hong Leong Finance, HSBC, Maybank, Industrial and Commercial Bank of China, OCBC, SIF, Singapura Finance, StanChart and UOB.
The study claimed that loan defaulting had fallen.
In December about 1.3 per cent of loan holders had an instalment that was overdue by more than 30 days, compared with 2 per cent in December 2015.
“Motor loan delinquency rates have dropped to very healthy levels. The delinquency rate of 1.3 per cent in December last year represents a 66-per-cent drop from the high of 3.82 per cent recorded in 2012 prior to the institution of curbs on motor vehicle loans by MAS,” Credit Bureau Singapore executive director William Lim said.
He argued that the trends were partly caused by lenders offering “responsible loans” based on more accurate data, and car buyers becoming more financially careful amid the economic slowdown.
“We expect the situation of rising loan balances and stable delinquency to continue, barring any economic distress,” Lim added.