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Motorists taking bigger loans as COE prices surge

Latka

By Latka,
in General Car Discussion

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Latka

Latka

1st Gear

CNA

 

Motorists taking bigger loans as COE prices surge

 

SINGAPORE: As car prices rise, motorists in Singapore are chalking up bigger debt on their motor vehicle financing, according to latest figures released by Credit Bureau Singapore (CBS).

 

The average loan quantum in July 2011 increased by 38 per cent, compared to the same period two years ago.

 

Motorists now take loans with an average principal amount of $85,105, compared to $61,511 two years ago, and $74,399 a year ago.

 

Despite the heavier debt commitment, delinquency rates for motor vehicle loans are on the decline.

 

Only 2.49 per cent of car loan holders had an instalment that was overdue by more than 30 days in July 2011, compared to 2010's figure of 2.65 per cent, indicating that consumers are managing their payments well.

 

William Lim, Executive Director of CBS, said the figures do not come as a surprise.

 

He said: "It is unsurprising that loan quantum has surged given that COEs premiums, and consequently car prices have soared in the last two years. At the same time, premium cars have also overtaken mass market brands in sales, and luxury and sports cars have also hit new highs."

 

CBS' data also show that as a result of high car prices, the demand for new motor vehicle loans continue to fall.

 

From January to July this year, consumers took up 36,911 car loans, compared to 38,913 and 43,119 in the same period in 2010 and 2009, respectively - these include loans for new and second-hand cars.

 

The CBS study also further revealed the effects of gender and age on motor vehicle loan trends.

 

The age group of 40-44 borrowed the highest loan quantum, which stood at $99,411 in July 2011.

 

Conversely, those aged 21-29 borrowed the lowest loan quantum of $57,857.

 

Senior consumers above 54 years old bore the heaviest brunt of the steep increase in loan quantum, experiencing the highest increase of 53 per cent in their principle amounts in July 2011 compared to two years ago.

 

Consumers aged 35-39 made up 19 per cent or almost one-fifth of new car loan holders, making them the top customer segment for these loans, according to the snapshot in July 2011.

 

Young motorists exhibit the highest delinquency rate of 3.66 per cent, while consumers above 54 years old have the lowest delinquency rate of 2.02 per cent. CBS said the trend is consistent with other loan products.

 

Male motorists tend to take bigger loans than female motorists. They also make up 75 per cent of new loan holders, outnumbering female loan holders by three to one.

 

Lui Su Kian, Head of Deposits and Secured Lending, DBS Bank, said: "The average loan amount for car loans with DBS have increased by more than 10 per cent year-on-year. However, affordability remains healthy as customers seeking maximum financing have remained stable.

 

"As we see more wealth being created in Asia, we have also observed that the financing of cars priced at more than $200,000 have doubled compared to 2010."

 

CBS said it will continue to monitor the delinquency rate for motor vehicle loans, encouraging motorists to assess the affordability of their car loan carefully and practise responsible borrowing.

 

- CNA /ls

 

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Watwheels

Watwheels

Supersonic

How come banks are not afraid of history repeating itself like in 1997? COE was at that time also very high, crisis hit many ppl and they defaulted their car installment, end up the banks repo the cars but no buyers.

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1fast1

1fast1

Supersonic
(edited)

I knew this was going to happen. Car loan reform is urgently needed if the LTA sticks to this dumbass COE policy (rather than going to a usage based road tax).

 

If this snowballs, we're headed for a credit crisis just like the US, except it's going to be over stupid liabilities like cars rather than the roofs over our heads. [rolleyes]

Edited by Turboflat4
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Without_a_car

Without_a_car

Clutched

I knew this was going to happen. Car loan reform is urgently needed if the LTA sticks to this dumbass COE policy (rather than going to a usage based road tax).

 

If this snowballs, we're headed for a credit crisis just like the US, except it's going to be over stupid liabilities like cars rather than the roofs over our heads. [rolleyes]

 

But it's profitable for state coffers.

 

When the credit crisis happens, just blame the owners for living beyond their means.

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Latka

Latka

1st Gear
  • Author

Does the word "decreasing" default means the banks are worried?

 

Well, just wait till crisis arrives at our shores early next year.

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RadX

RadX

Moderator

I knew this was going to happen. Car loan reform is urgently needed if the LTA sticks to this dumbass COE policy (rather than going to a usage based road tax).

 

If this snowballs, we're headed for a credit crisis just like the US, except it's going to be over stupid liabilities like cars rather than the roofs over our heads. [rolleyes]

 

ESP OPC cars [laugh][laugh][laugh]

 

damn, bedok reservpoir gonna be busy

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