ARF of up to 180% - how will things change?

[Kangadrool]

for now, i can see 2 things may happen:

 

1. people who are looking to buy an expensive car today will go buy someone's cat E COE at high price so that it won't fall under 1st COE bidding of March.

 

2. (I speculate) we may start seeing lower spec cars that were never imported into Singapore: plastic bumpers, cloth seats, steel rims, just to push OMV below $20,000

 

Some may try their luck to bring in cars without wheels, steering wheels, doors, engine and tranny and try to convince LTA that they are not the essential parts of an automobile.

 

 

[Pckwpckw]

You r so wrong. Confirm crash, no questions about it.

If dont crash, you can expect 30% loan n 3 years?!

Don't worry the car dealer will give you 50% more for your trade in. All this accounting can be solve.

[Nomoney]

Eyh......71k to pay ??

I'm confused..........

 

55k OMV

First 20k OMV @ 100% = 20k

Next 30K OMV @ 140% = 42k

Next 5k OMV @ 180 % = 9k

 

New ARF 71k + OMV 55k = 126k (basic cost)

Old ARF 55k (100% OMV) + OMV 55k = 110k (basic cost)

 

Therefore, addtional ARF for 55k OMV car will be: 126k - 110k = 16k

 

Hope this helps!

[Alheych]

What I foresee would happen could be this (I could be wrong though):

 

In the short term, there might be a crash, as the vast majority of car buyers who take massive loans will be instantly eliminated.

 

COE prices therefore drop, perhaps not drastically (to say $2), but at least significantly. After all, it is a demand and supply system, and would be affected by such a measure which takes out a huge chunk of demand.

 

In the long term, only people with cash in hand can buy cars, which, let's be honest, is not many. This, in effect, is sort of like a cooling measure. Honestly speaking, who in their right mind would plonk down $50k cash to buy a Vios? Virtually nobody.

 

So therefore, prices of cars will actually fall, but they are only accessible to those with cash reserves. It will definitely not be like today's prices, because otherwise car showrooms will go out of business. I think 50k ish or less for a small car will not be unreasonable, because you still need to fork out 25k cash for it anyway, which rules out quite a lot of people already.

 

We will have a market whereby cars are somewhat reasonably priced (not too cheap, but not crazy expensive either), but only those who actually have the money can afford. Which I think is good, because I don't believe in taking huge loans for a depreciating asset like cars. It's just throwing money down the drain.

 

It will also force people to save up to buy car, instead of spending what they cannot afford.

 

 

Of course, if demand still remains high (meaning a lot of people have cash in hand), then all of the above will be moot and we're screwed.

 

i hope what you say is accurate, but that assumes a rational citizenry.

 

but i also think it is possible that singaporeans are so forgetful, we will start buying cars like there's no tomorrow soon.

[Check13]

Don't worry the car dealer will give you 50% more for your trade in. All this accounting can be solve.

Give you or lend you? There's a difference.

[Subtlesilver]

What about those who signed contract to book car in Jan. This before all the implementation today. Will contract hold?

 

This will be interesting to watch, especially if car dealers have already "bidded' for non Transferable COEs, but final loan agreement has not been signed/processed.

 

Will

 

a) dealers force consumers to buy? (but can't as they won't be able to afford financing and havent collected cars?)

b) dealers make a case with banks (which means they are not really listening to government)

c) dealers take the hit of coe (which is also unlikely as that means the dealers will be hit bad)

 

How will this play out?

 

 

[Theredstar]

I think this may happen with the new measures.

COE nose dive (eg to $50K), it will be cheaper to own a brand new car as it depreciates lower than holding on to a high COE value car.

Those who are cash rich can bit the bullet, top up the difference (if there are loans) and changed to a lower new COE cars by scraping their current high COE rides.

Those who take high loan and can't afford to top up will have to keep the current rides and keep paying installment with high depreciation.

 

only time will tell.......

 

Ah yes

Think I heard about this trend last time- people scrapping early cos COE dropped

Cheaper to buy new car...

 

My angle is that at least those who need and bOught early managed to buy in... Otherwise now no way tO afford Liao

 

[Theredstar]

Fat finger

Edited February 25, 2013 by Theredstar

[Subtlesilver]

This will be interesting to watch, especially if car dealers have already "bidded' for non Transferable COEs, but final loan agreement has not been signed/processed.

 

Will

 

a) dealers force consumers to buy? (but can't as they won't be able to afford financing and havent collected cars?)

b) dealers make a case with banks (which means they are not really listening to government)

c) dealers take the hit of coe (which is also unlikely as that means the dealers will be hit bad)

 

How will this play out?

 

Especially with new "hot" cars like the VW Golf - the waiting list was till may, and while many have paid 5K to book and VCS might have even bidded their coe to block some COE's, and the consumer's loan was "approved" then, but not yet disbursed or collected, what will happen?

 

 

[Nhyone]

What about those who signed contract to book car in Jan. This before all the implementation today. Will contract hold?

Even if the COE drops to S$50k, for an "entry-level" car at $110k (instead of $140k), that's still cash upfront of $40-50+k.

 

Hope they have the cash...

[Alheych]

Even if the COE drops to S$50k, for an "entry-level" car at $110k (instead of $140k), that's still cash upfront of $40-50+k.

 

Hope they have the cash...

 

just wondering if change in governmental policy will be considered frustration under contract law

[Voodooman]

What about those who signed contract to book car in Jan. This before all the implementation today. Will contract hold?

 

Ok, not affected provided you have signed an agreement to buy the vehicle.

 

4 The rules will apply to loans granted for the purchase of motor vehicles where the date on which the agreement to purchase a motor vehicle is on or after 26 February 2013, or where there is no agreement to purchase a motor vehicle, the date on which the borrower successfully obtains a COE is on or after 26 February 2013. In the case of re-financing facilities, the rules will apply where the application date of such facilities is on or after 26 February 2013.

[Stinkray]

55k OMV

First 20k OMV @ 100% = 20k

Next 30K OMV @ 140% = 42k

Next 5k OMV @ 180 % = 9k

 

New ARF 71k + OMV 55k = 126k (basic cost)

Old ARF 55k (100% OMV) + OMV 55k = 110k (basic cost)

 

Therefore, addtional ARF for 55k OMV car will be: 126k - 110k = 16k

 

Hope this helps!

 

thanks.....

[Tedlhw]

So therefore, prices of cars will actually fall, but they are only accessible to those with cash reserves. It will definitely not be like today's prices, because otherwise car showrooms will go out of business. I think 50k ish or less for a small car will not be unreasonable, because you still need to fork out 25k cash for it anyway, which rules out quite a lot of people already.

 

We will have a market whereby cars are somewhat reasonably priced (not too cheap, but not crazy expensive either), but only those who actually have the money can afford. Which I think is good, because I don't believe in taking huge loans for a depreciating asset like cars. It's just throwing money down the drain.

 

It will also force people to save up to buy car, instead of spending what they cannot afford.

 

Of course, if demand still remains high (meaning a lot of people have cash in hand), then all of the above will be moot and we're screwed.

I think u are right. The ARF increase will help to 'offset' any price drop for the 'luxury' models(so to speak), but overall, car prices will drop due to COE drop.

So depending on how much the drop is, say if COE drop tp 30-40k, those with high COE car can dereg their cars and buy a lower COE car with lower depre.

Really have to where COE settles at. Very good move by the govt. Actually ok la, just weed out marginal buyer, esp those rolling over their 10 year loan one.

 

Use an example, if a car now cost 200k with 90k COE, assume COE drop to 40, but ARF increase cost by about 10, so this 200k car will now cost 160K.

Previously a buyer 70% LTV and 7 year loan, will down pay 75k and pay 1.7K per month.

Now this same car cost 160k, cash 80k down, loan 5 year=1485.

 

So based on this assumed scenario, actually not so bad what.

Weeded out are those who cannot cough up 75-80k in the first place.

To mid tier buyers, better still. Spend less on interest. The throttle(pay in cash) type of course no impact, now even happier.

Only people crying are the banks!!

 

[Mllcg]

I dont read anything about 2nd hand cars, does it apply to all car transaction across the board?

 

all cars brand new or otherwise

[Fuelsaver]

Actually, like that benefit who ah? The rich?

The rich never get affected by any policy that doesn't put them at disadvantage.

[Mllcg]

The rich never get affected by any policy that doesn't put them at disadvantage.

 

so how to get rich?

 

 

[Songsong]

Thank god! my prayers had been answered!

 

The first car i owned was a renault in 2001 brought for 78K paid 30% down laon 70%

 

The second was a nissan latio in 2006 brought for 68K paid 50% down loan 50%

 

The 3rd ride and current ride is a honda brought in 2007 paid 105k down 60% loan 40%

 

Last nov me and my wife enrol in our class 2A course with bbdc because we had discuss and decided that the COE was crazy for us to renew. almost 90k cash to renew our coe. So we decide to take our 2A even after holding 2B for almost 13yrs so that we can buy a three wheeler bike.

 

we are prudent folks and would never paid 100k for COE even if we can afford to do so.

 

Next monday is our TP dates for our class 2A, just now she said even she fail on monday also never mind cause there is a chance COE will fall within her budget of 30-40k in the next 4.5 yrs.

 

is it possible?