Channelnewsasia.com | 05 Apr 2013 11:40 PM
Motor vehicle and residential property loan restrictions will be extended to licensed moneylenders from 6 April.
SINGAPORE - Motor vehicle and residential property loan restrictions will be extended to licensed moneylenders from 6 April.
A statement from the Ministry of Law said that a new licence condition was issued to moneylenders on Friday.
The new licence condition will require moneylenders to comply with the prevailing loan restrictions set out by the Monetary Authority of Singapore (MAS).
Banks are prohibited from granting any credit facility beyond a stipulated quantum or tenure to borrowers for the purchase of a residential property or motor vehicle.
Prior to the granting of credit facility, banks have to conduct mandatory checks with credit bureaus and HDB to assess the borrower's creditworthiness for the purchase of residential property.
As for motor vehicle purchase, it would be mandatory checks with credit bureaus only.
The Ministry of Law said the temporary lifting of the financing restrictions for the purchase of used cars registered on car dealers' inventory on or before 4 March 2013 applies to the moneylenders.
The Ministry of Trade and Industry also said that loan restrictions will be extended to non-MAS regulated financial entities from 6 April.
However, second-hand cars registered under the Land Transport Authority's Temporary Transfer Scheme as of 4 March 2013 will be exempted from the financing restrictions, if the agreement to purchase such used cars is dated between 6 April and 4 June 2013 (both dates inclusive).
This is an extension of the recent MAS financing restrictions on motor vehicle loans granted by MAS-regulated financial institutions.
Specifically, a hirer will need to pay the minimum deposit of 40 per cent for cars with open market value (OMV) below S$20,000 and a minimum deposit of 50 per cent for cars with OMV above S$20,000.
And the maximum loan tenure is capped at five years.
The above limits will be introduced via the new Hire Purchase Regulations, made under the Hire Purchase Act.
The provisions within the Hire Purchase Regulations are similar to MAS's loan restrictions to ensure consistency across both sets of regulations.
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