In Parliament
Written Reply to Parliamentary Question on Discouraging Excessive Sale of Cars by Disallowing Conversion of Rental Cars to Private Cars and Practices to Bypass Car Loan Kerbs
29 November 2022
This article has been migrated from an earlier version of the site and may display formatting inconsistencies.
Mr Yip Hon Weng asked the Minister for Transport
a. with COE premiums at a record high, whether the Ministry will consider disallowing the conversion of rental cars to private cars and vice versa to discourage excessive fleet sales;
b. whether the Ministry is aware of practices to bypass car loan curbs and what penalties have been meted out to those who engage in it; and
c. whether car loan curbs will be extended to rental, leasing and commercial vehicles.
Reply by Minister for Transport S Iswaran:
1. Certificates of Entitlement (COEs) are allocated via a market-based bidding system and COE prices reflect the demand and supply for vehicles. The overall demand for cars has remained resilient while the COE supply has decreased due to a lower number of car deregistrations. COE prices have thus been increasing.
2. Cars can be converted in and out of the private hire car (PHC) scheme, which includes rental cars. This provides flexibility for the PHC market to respond more easily to changes in consumer demand. To disallow the conversion will add to the compliance cost for PHC operators, drivers and ultimately, affect the cost and availability of Point-to- Point services for commuters.
3. The loan-to-value ratio and loan tenure limits for purchases of new or used cars were introduced in 2013 to encourage financial prudence. Financial institutions and car dealers who provide loans in the form of hire purchases or conditional sales agreements are required to apply these loan limits to eligible borrowers. Borrowers who provide false or incomplete declarations may have their motor vehicle loan rescinded or face a reduction in loan amounts. Commercial vehicles, including PHCs, are excluded from loan limits to avoid constraining the extension of credit to companies and individuals who rely on the use of such vehicles for their business and livelihood.