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#1

Posted 04 August 2019 - 10:20 AM

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A Ferrari is not all that out of reach because of a loophole in car loan regulations. All anyone has to do is to register a company and this will allow him to legally obtain a 90 per cent car loan.

Current loan curbs require at least a 40 per cent cash down payment on the purchase price of a car with an open market value (OMV) of more than $20,000.

The Sunday Times found that some car dealers are openly advising buyers to register a company or a sole proprietorship to secure a loan of 90 per cent of the purchase price.

Last Friday, The Sunday Times visited Motorway, one of the largest dealers of pre-owned supercars in Lower Delta Road.

When this reporter showed an interest in a Ferrari California 4.3A sports car, priced at $298,000 and with its certificate of entitlement (COE) renewed till February 2029, the salesman offered a 90 per cent loan option.

This meant that only $30,000 was required for the cash down payment instead of $119,200.

"Do you have a company?" asked the salesman.

When the response was negative, he said: "Can you register a company? So we can loan up to 90 per cent to you."

He gave a breakdown of the cost.

For a loan of $268,000 - about 90 per cent of the price - at an annual interest rate of 3.98 per cent over a maximum loan tenure of seven years, the monthly instalment worked out to just $4,080, he said.

The offer was available only from Motorway Credit, he added, and not from banks or other finance firms.

The helpful salesman even suggested a company name - Joyce Leasing - for this reporter and said it was compulsory to include "renting and operating of private cars without operator" as the business activity when registering the firm with the Accounting and Corporate Regulatory Authority.

Without this, it would not be possible to secure a 90 per cent loan, he said. Under Monetary Authority of Singapore (MAS) regulations, loans for individuals wanting a supercar are capped at 60 per cent.

The salesman gave the assurance that the in-house loan process would be easy and convenient.

THE STRATEGY

If you can't pay, I'd simply tow the car back and sue you for bankruptcy. If five out of 10 cases continue to service their loans, I would have made money from the high in-house interest rate, which is twice the amount that the banks offer

Such schemes have become increasingly popular with buyers who cannot afford to come up with high cash down payments, industry watchers told The Sunday Times.

Such buyers generally go for cars that are above seven years old or cars with renewed COEs.

The Sunday Times obtained records of at least two firms that were registered for the purpose of buying supercars. When contacted, the car owners denied setting up the businesses solely for the purpose of securing 90 per cent loans.

The Sunday Times spoke to four car dealers who have doled out 90 per cent loans to buyers. They agreed to speak on the condition of anonymity so as not to attract "unnecessary attention from the authorities". They said the high cash down payment rule led to sales plunging by more than 80 per cent. The loan curbs were introduced in 2013.

"The scheme is definitely legit. I lend to a company and it is not against the law to loan 90 per cent of the car price to a company. I did not lend to an individual," said one dealer, who felt that most buyers would be able to afford the cars even though the monthly instalments are high.

Another dealer said: "Some finance companies ask for the payslips, but many would not bother. If you can't pay, I'd simply tow the car back and sue you for bankruptcy. If five out of 10 cases continue to service their loans, I would have made money from the high in-house interest rate, which is twice the amount that the banks offer.

"Such schemes are good for car dealers to help us clear our stocks. We will usually sell 10 to 30 per cent higher than the market price for higher loans."

A check of the dealer's company records showed that half of his potential buyers required loan amounts of up to 80 to 90 per cent of the purchase price.

Mr Eddie Loo, 56, president of the Singapore Vehicle Traders Association and founder of CarTimes Group, said he was not aware of such schemes.

Dismissing them as desperate sales, he agreed that such schemes would not breach MAS regulations. But he added that it would be risky for the finance firms as buyers could default on their loan instalments.

Acknowledging that the car market was down and dealers were struggling to stay afloat, Mr Loo said: "If you look at the trend, COE is still at a record low for Category A (up to 1600cc) cars. That reflects the economy. Even the bread and butter (cars) also hardly move."

An insurance consultant of 20 years said he had come across at least 200 cases of supercars and luxury sports cars bought through such schemes for the past three years.

The consultant, who spoke on the condition of anonymity, said the telltale signs were obvious as it would be unbelievable for a leasing business to own only one car. Also, it would be "ridiculous" to chauffeur someone with a two-door sports car, he said.

"They are lying that they will be renting out their cars. In genuine cases, finance companies would require their insurance to cover rental activities," he said.

When contacted, Motorway Group chief executive officer Michael Lim said: "After the loan curbs were introduced, a lot of people registered companies to get 90 per cent loans. But you will still need to have a strong income or a guarantor to get the loans."

Mr Lim said most of these purchases were for luxury cars like BMWs and Mercedes, not exotic ones like Ferraris, as people who buy supercars would usually have the means to buy them outright.

The Land Transport Authority had on its record 7,933 Ferraris, Lamborghinis, Porsches, Maseratis, McLarens and Aston Martins last year, almost a 10 per cent rise from 7,292 in 2017.

Dealers said they are seeing a growing number of young executives buying such cars.

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#2

Posted 04 August 2019 - 10:21 AM

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Legal loophole. And it's been ongoing for many years 


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#3

Posted 04 August 2019 - 10:29 AM

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Balloon scheme 🤫🤫🤫
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#4

Posted 04 August 2019 - 10:33 AM

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#5

Posted 04 August 2019 - 10:54 AM

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There r also dealers & finance companies willing to loan 90-100% without registering a company. All they have to do is to mark up the selling price.

Eg:
Selling Price = $50,000
40% downpayment = $20,000
Loan amount = $30,000

But if buyer dont have $20,000, or not a single downpayment, dealer will use this method...

Selling price: $83,350
Downpayment: $33,340
Loan amount: $50,010 (original selling price $50,000)

But loan interests can be 3.5%-7%....

And in this case, it’s 100% for buyer. On paper, there is a 40% downpayment. But in reality, downpayment is invisible.


Some dealers willing to help u if u have difficulty.. they link up many finance companies... all they need is to know ur monthly budget. The dealers also wont try bank loan. Cos sure cannot one. Finance/credit companies sure can.. cos most of their approval officer never base on real selling price to judge on how much to release loan. High % = they willing to take the risk and they earn more.

This is something the Strait’s Times didnt mention...
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#6

Posted 04 August 2019 - 11:05 AM

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"Mr Eddie Loo, 56, president of the Singapore Vehicle Traders Association and founder of CarTimes Group, said he was not aware of such schemes."

 

You think i believe meh??

 

those PHV route oso similar to such Helpful scheme like?


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#7

Posted 04 August 2019 - 11:27 AM

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"Mr Eddie Loo, 56, president of the Singapore Vehicle Traders Association and founder of CarTimes Group, said he was not aware of such schemes."

 

You think i believe meh??

 

those PHV route oso similar to such Helpful scheme like?

Know also must say Oh, got meh?  [:p]


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#8

Posted 04 August 2019 - 12:14 PM

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"For a loan of $268,000 - about 90 per cent of the price - at an annual interest rate of 3.98 per cent over a maximum loan tenure of seven years, the monthly instalment worked out to just $4,080, he said."

 

principal sum = $268,000

interest amount = $74,665 over 7 yrs

 

 

akin to selling people a rope to hang themselves with.


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#9

Posted 04 August 2019 - 12:45 PM

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"For a loan of $268,000 - about 90 per cent of the price - at an annual interest rate of 3.98 per cent over a maximum loan tenure of seven years, the monthly instalment worked out to just $4,080, he said."

 

principal sum = $268,000

interest amount = $74,665 over 7 yrs

 

 

akin to selling people a rope to hang themselves with.

Willing buyer willing seller I suppose. 

Alot of younger people I spoke to willing to spend more than 60% a month for car nowadays too.. they say no choice, their job need face lolzzzz. Their watches all also pay by installment, sigh 


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#10

Posted 04 August 2019 - 03:12 PM

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Both sides are taking a risk. Buyer take the risk that he can continue to service the monthly installment, seller take the risk that they can collect the money. 


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#11

Posted 04 August 2019 - 03:23 PM

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I’m sure MAS knows but with the slow economy, ignorance is bliss
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#12

Posted 04 August 2019 - 03:30 PM

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seller happy
buyer happy
bank / finance company happy
since everyone happy, ah gong is happy ... no question asked
who is not happy here? [laugh]

Edited by Wt_know, 04 August 2019 - 03:31 PM.

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#13

Posted 04 August 2019 - 03:39 PM

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Once I was at a major big AD (will not mention name) with a friend who is collecting his car. The SE basically told us you can buy their car with 0-100% loan and there are various ways to bypass the regulations. The only thing is that the interests will be higher with more loan. Seems like all these loan curbs just make life harder for poorer people. 


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#14

Posted 04 August 2019 - 04:09 PM

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even ADs also play this game mah...

 

else, take bridging loan for the DP... via in house finance


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#15

Posted 04 August 2019 - 04:53 PM

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"For a loan of $268,000 - about 90 per cent of the price - at an annual interest rate of 3.98 per cent over a maximum loan tenure of seven years, the monthly instalment worked out to just $4,080, he said."

principal sum = $268,000
interest amount = $74,665 over 7 yrs


akin to selling people a rope to hang themselves with.


LOLOLOLOLOL, there is a saying, money easy come, easy go! Many people carry LV Gucci Bottega wallet with many cards but bank account in hundreds every month end.
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#16

Posted 04 August 2019 - 05:08 PM

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Previously , most of the 2 to 5 year old Ferrari / Lambos / Aston are sold mainly to those European Bankers . As a lot of these Bankers were sent back , lose their jobs or retrenched Liao , the secondhand market for these cars had been very very bad .

So this is a godsend Lor , no need to lose so much money when changing these cars Liao ....

Understands that these buyers , most cannot come out with a couple of hundred thousand for the deposit as a most dun have monthly income , but they can easily pay 8-15 k for monthly instalments . So no need worry about them la ...

Edited by Hubwee, 04 August 2019 - 05:11 PM.

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#17

Posted 04 August 2019 - 05:29 PM

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the more you regulate, the more things go underground.


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#18

Posted 04 August 2019 - 05:39 PM

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"Mr Eddie Loo, 56, president of the Singapore Vehicle Traders Association and founder of CarTimes Group, said he was not aware of such schemes."

 

 

 

Then this article in The Straits Times must be fake news.


Willing buyer willing seller I suppose. 

Alot of younger people I spoke to willing to spend more than 60% a month for car nowadays too.. they say no choice, their job need face lolzzzz. Their watches all also pay by installment, sigh 

 

That's why the Audi A3 (1 litre, 3 cylinder, 12V engine) promo at $107K sold like hot cakes, when it's no larger in interior space than a $57K Perodua Bezza (1.3l, 4 cylinder, 16V engine).

 

It must be terribly disgraceful and shameful to be seen driving in a Perodua  [laugh]


Once I was at a major big AD (will not mention name) with a friend who is collecting his car. The SE basically told us you can buy their car with 0-100% loan and there are various ways to bypass the regulations. The only thing is that the interests will be higher with more loan. Seems like all these loan curbs just make life harder for poorer people. 

 

I disagree. You simply buy within your means and budget. 

 

Don't wear a hat bigger than your head.


Edited by Vinceng, 04 August 2019 - 05:37 PM.

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#19

Posted 04 August 2019 - 06:20 PM

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Buy buy buy

 

But don't complain when shit happens. 


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#20

Posted 04 August 2019 - 08:54 PM

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"Mr Eddie Loo, 56, president of the Singapore Vehicle Traders Association and founder of CarTimes Group, said he was not aware of such schemes."

You think i believe meh??

those PHV route oso similar to such Helpful scheme like?

President have to ensure they don't know what happens below, so they can remain truly ignorant.


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