Singapore tightens car loan rules to curb misuse of private-hire vehicle exemption
SINGAPORE: Singapore is closing a car financing loophole that allowed some individually owned private-hire vehicles to enjoy more generous loan terms than ordinary private cars. From Oct 30, individual buyers registering their vehicles as private-hire cars (PHCs) must follow the same borrowing limits as private car buyers. The change follows a rise in registrations, with about 500 individually…
Singapore is tightening regulations on car loan terms for private-hire vehicles (PHCs) to prevent misuse of the exemption. Effective Oct 30, individual buyers registering their PHCs will now face the same borrowing limits as private car owners. The change comes after a rise in registrations, with about 500 individually owned self-drive PHCs registered each month.
A report by Channel NewsAsia (CNA) on Oct 29 suggested some buyers were exploiting the commercial vehicle exemption to secure better financing without intending to provide PHC services.
Under the revised rules, PHCs with an open market value (OMV) of S$20,000 or less can be financed up to 70% of the purchase price, while vehicles with an OMV above S$20,000 are capped at 60%. The loan amounts encompass the vehicle's purchase price, relevant taxes, and Certificate of Entitlement (COE) costs. Loan periods will also be limited to seven years.
These restrictions apply to individuals, including sole proprietors, borrowing from financial institutions and licensed or exempt moneylenders, covering hire-purchase and conditional sale agreements.
Existing loans will not be affected. Business-owned PHCs, commercial vehicles, and motorcycles retain their exemptions. The National Private Hire Vehicles Association (NPHVA) expressed concerns that existing borrowers would remain unaffected, but emphasized that drivers rely on their vehicles for income. The association pledged to monitor whether the new rules could increase vehicle ownership costs for genuine drivers, push more towards rental fleets, or raise operating expenses.
Ride-hailing company Grab supported the restrictions, citing industry standards as a means to safeguard drivers' long-term livelihoods. The Land Transport Authority (LTA) considered creating a separate COE category for PHCs and car-leasing companies, potentially raising rental costs for drivers and passenger fares. However, they opted to explore alternative methods, such as giving individual buyers more control over COE bidding and enhancing price transparency, to maintain a balance between commercial use and affordability for private buyers.
Written by urgent.news from The Independent Singapore's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
