How low will COE go?

[13177]

Brother, how much a person earns is one thing, how much is saved or accumulated is another.

Someone who earns $5k a month having saved for a cople of years will be able to buy a secondhand B&B car comfortably. Versus someone who earns $8k a month but has no cash savings at the end of the day.

So which person is considered to hv more credibility?

Remember, an ace in hand is worth more than two in the deck.

 

Anyway both $5k and $8k per mth are in the low income bracket like me so should considernot to buy car at all

Earning $5-8K also depends whether this person is single or married with families?! If a person who is single, should be able to afford to buy a car.

[RadX]

applies to all

[13177]

does the 5yr loan rules apply to 2nd hadn cars?

Apply both new and used car.

[Mockngbrd]

does the 5yr loan rules apply to 2nd hadn cars?

i should think so. most likely only the tenure of the new rule will apply.

[Mcscot]

I think the COE will drop but maybe not for the first/second bidding since there are sooo many people who have booked their cars to be able to get the full loan.

 

Speaking to a few friend in the finance industry ... they claim that Singaporeans are have quite a substantial amount of money stashed in savings account and coupled with global liquidity, I don't think it will correct much. I maybe wrong!

[Joseph22]

Whilst i understand your point but that's not necessarily true. It is only your assumption (that MIK buyers are marginal). There are many who want a car with the best value and feel that this is what Korean cars are. Because as with many things, as you go up the ladder you get less incremental gains per additional dollar spent. So Korean cars at this time probably give the best balance of price and value. That doesn't make them marginal buyers. Real marginal buyers will go for the absolute cheapest as all they want is a car from point A to point B at the lowest possible price. MIKs are not the absolute cheapest. In fact these days they are not far away (price wise) from MIJ cars - the difference being the better features (and design) they offer compared to a similar MIJs.

 

For your second point, you have not shown any evidence that the previous loans are/were not sustainable as you claim. Again this is only your assumption. Based on an applied interest rate (AIR) of 1.88% flat rate, the effecttive interest rate (EIR) gets lower and lower the longer the tenure. For a 10yr loan, i believe a 1.88% loan is about 3%, maybe less. If i have $50,000 ot $100,000 sitting in my bank, i would rather invest for 4-5% return instead of saving on 3% interest. That's not over-extending myself. If govt really wanted to protect the consumer, they just need to reduce the max amount of loan that is allowed to be taken based on the borrower's current take home salary (eg 25%) rather than a limit based on the price of the car. When u based on price of a car, a person earning $5k/mth and a person earning $8k/mth are limited in the same way which doesn't make sense as what is over-extending to the former is comfortable to the latter.

 

let face it. the truth is, Korea car have more marginal buyer.

 

not to say Jap car dont have. but tendency of ppl buying jap car are also those who are weary of additional cost (repair cost) of couse you can say time are different korean car are not like last time easy to spoilt. but the time you refer to is recent only. so basically to lots of jap car buyer who are been conservertive.. the mindset dont change. hence CH_CO is safe to assumpt that Jap car have more ppl who are prudent due to their conservertive nature.

 

as compare to Korea car buyer??

[Alpha78]

let's wait and see the automobile industry people will come out cry papa cry mama ...

 

Confirm cry papa cry mama. Still a few unanswered questions for the car sales industry after the 2 measures were announced:

 

1. What happens to those who already signed on the dotted line but have not secured their COE? Dealer going to ask them to top up the ARF difference for those > $20k OMV? Dealer absorb? Dealer allow buyer to break the deal?

2. If COE plunges for the next 2 biddings, many second hand dealers with large inventory can prepare to fold up. Especially if they have taken in cars at a higher price.

 

On a side note, I wonder why showrooms for higher end cars remain open till midnight yesterday? The extra ARF would have kicked in because COE not secured yet, and loan limitations are the only thing to bypass.

[Pocus]

I don't think COE will drop THAT much...maybe down10-15k.

There are still alot of cash-rich people around, or people with cars can use it for trade-in to pay off downpayment.

 

 

[Relacklabrudder3]

dun worry, the banks are very creative, they will come up with a 'car maintenance loan' and tie it to car loan.

 

swee bo?

 

[Joseph22]

Earning $5-8K also depends whether this person is single or married with families?! If a person who is single, should be able to afford to buy a car.

if 5-8K single always spend away every single sense on gambling, women, booze.. etc...

 

and left with zero dollar at month end. how to buy car??

[Mockngbrd]

Confirm cry papa cry mama. Still a few unanswered questions for the car sales industry after the 2 measures were announced:

 

1. What happens to those who already signed on the dotted line but have not secured their COE? Dealer going to ask them to top up the ARF difference for those > $20k OMV? Dealer absorb? Dealer allow buyer to break the deal?

2. If COE plunges for the next 2 biddings, many second hand dealers with large inventory can prepare to fold up. Especially if they have taken in cars at a higher price.

 

On a side note, I wonder why showrooms for higher end cars remain open till midnight yesterday? The extra ARF would have kicked in because COE not secured yet, and loan limitations are the only thing to bypass.

Higher ARF is sup sup sui.... 50% DP is not.... 200k bmw u need to DP 100k cash le... macham 50% of a BKK condo liao.

 

dun worry, the banks are very creative, they will come up with a 'car maintenance loan' and tie it to car loan.

 

swee bo?

I think the detailed notes in the new regulations will prevent these sort of "creative" loans.

Edited February 26, 2013 by Mockngbrd

[Throttle2]

Earning $5-8K also depends whether this person is single or married with families?! If a person who is single, should be able to afford to buy a car.

 

Exactly, so there are many factors at play.

Not just monthly income.

 

Therefore, if can DP more, it means more secure for the bank and lender

[13177]

if 5-8K single always spend away every single sense on gambling, women, booze.. etc...

 

and left with zero dollar at month end. how to buy car??

Like that also must depends on the commitments and the expenses the person have?!

[Joseph22]

Like that also must depends on the commitments and the expenses the person have?!

yeah.. everything is relative for low to middle class.. we can only chose a few enjoyment not all..

 

either you want to live in condo but in debts and worse due to no saving cannot buy car now.

 

or

 

you can live in HDB and have lots of saving.. and because of that, can buy car if you want to

Edited February 26, 2013 by Joseph22

[Happily1986]

From a personal point of view it doesn't affect me, because I use cash to pay for my (very old) second hand car anyway.

 

But as a citizen with vested interest in transportation, I really want to see how this pans out and affect the sector. It seems like a huge transformation, literally overnight, that might have massive repercussions for the industry.

 

We will only really know the true and real effects in the next couple of COE biddings. After that, we will have a clear picture of where this country is going.

 

I can reveal one thing though: Car dealers have expressed frustration at the constant change in policy that affects sales. Because if they cannot plan ahead their operations for the next few years (have to hire/fire salespeople, mechanics, staff etc), then no point doing business.

 

If one day BMW or Toyota fed up and pull out of our country, could have quite a major impact on jobs.

 

Did BMW and Toyota ever had a major industrial presence here?

 

Authorised Dealer no count hor. The link between Inchcape and Toyota is as close as that between your friendly ah beng handphone shop and Singtel. Ditto for PML and BMW.

[Arowana1]

I beg to differ...

 

50% downpayment but allowing the tenure to drag for 10 years is a half bake measure in my opinion.

As one bro pointed out earlier, the economy may be going downhill from here.

I guess the gahment is trying to soften the blow of mass defaulting of payment in case it really happens.

 

if economy going downhill, they just drained people's money that can be useful in rainy days ... going 50% and 5 yrs is extreme

 

this is like asking hdb loan takers to drain oa until empty before they can take hdb loan ... no buffer left

 

i rather they allow amount of loan based on income as declared in tax returns

[Tjkbeluga]

Will see more people registering a SGD2 company to buy a company car....

[The_Bear]

There'll be 'marginal buyers' for different makes.

 

for eg entry level lux car, BMW 3 /5 series are sought after by many to boost their image. Many will take max loan to drive these car.

for MIJ / MIK BnB cars, lower income group with desire to own car will take loan to go for these.

 

Of course, there'll be many prudent people with the cash but choose to drive something 'cheap'. So you cannot stereotype buyers by the cars they go for...

 

With the current 'cooling measures' these people will be squeezed down to the next affordable level...

 

I ever talked to some old bird in business. They say give credit to the guy that drives a Camry but be careful of the guy that drives a BMW 3 series.