CNA Explains: Will new loan limits for private-hire cars mean less COE demand or higher ride-hailing prices?
Individuals buying vehicles registered as private-hire cars can now only borrow up to 70 per cent of the car’s purchase price, compared with 100 per cent previously, but experts say it remains unclear whether this will lead to lower demand for COEs.
Singapore's government recently implemented stricter loan limits for private-hire car buyers, capping the amount they can borrow at either 60 or 70 per cent of the vehicle's purchase price, down from the previous 100 per cent. This change aims to prevent individuals from using private-hire car registrations as a loophole to access larger, longer loans. The new limits will affect around 98,621 private-hire cars in Singapore, as reported by the Land Transport Authority.
Experts are divided on the potential impact of these changes. While some believe the tighter financing will decrease demand for Certificate of Entitlement (COE) premiums, others argue that many buyers may still be able to afford the same vehicles with conventional loans, or opt for cheaper options. Assistant Professor Lee Kwok Hao from NUS Business School suggests that the reduction in COE demand will depend on how many buyers abandon the market rather than alter their registration or ownership arrangements.
In terms of ride-hailing fares, Assoc Prof Theseira does not anticipate significant changes, as the loan restrictions primarily target buyers who were registering private-hire cars to maximize cash flow, rather than those who rely on the service for their livelihoods. Overall, the new loan limits are expected to have a mixed effect on the market, with some reduction in COE premiums, but the magnitude remains uncertain.
Written by urgent.news from CNA - Singapore's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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