SINGAPORE – Car loan curbs will be extended to individuals who buy cars for private-hire from Oct 30, in a move to ensure such purchases cannot be used to circumvent financing restrictions.
This group of buyers will face the same curbs as other private car buyers, including a loan tenure of up to seven years.
For cars with an open market value (OMV) of $20,000 or less, buyers can borrow up to 70% of the purchase price. The maximum loan is reduced to 60% for cars with an OMV of more than $20,000.
The OMV is the base cost of the car before taxes.
In a joint release on Oct 29, the Ministry of Transport, Monetary Authority of Singapore (MAS), Ministry of Energy, Trade and Industry and Ministry of Law said there have been more instances of individuals registering private-hire cars with no intention of using them for ride-hailing services.
A recent surge of around 500 such registrations a month suggests that some may be doing so primarily to “access more permissive financing terms”, the authorities said.
Besides closing this loophole, the authorities said the move will also ensure that new private-hire car drivers will exercise the same financial prudence as other private car owners.
Individuals who register a vehicle as a private-hire car have until now been exempted from loan curbs, as the cars were meant for commercial use. This meant such car buyers could take a larger loan, for a longer period.
The authorities noted that the private-hire car fleet in Singapore has expanded and stabilised. There are 98,621 private-hire cars in Singapore as at the end of September, up from 71,147 cars at the end of 2020 when the industry was affected by the Covid-19 pandemic.
Private-hire cars consist of vehicles that can be used to offer ride-hailing or limousine services, as well as those that can be rented out to individuals.
Motor dealers saw the change as a move to cool certificate of entitlement (COE) prices, which have been high. At the most recent tender exercise, the price of a COE to register a mass-market car was $132,004, compared with $102,009 at the beginning of 2026.
In 2013, MAS had tightened car loan restrictions to curb escalating COE premiums and consequent inflationary pressures. These rules were eased in 2016 to the current limits.
The loan curbs will apply to individuals – including sole proprietors – getting car loans from financial institutions and licensed or exempt moneylenders. It will also cover hire–purchase or conditional sale agreements.
The curbs will apply to purchases where sales agreements are signed on or after Oct 30. Where there is no sales agreement, the rules will apply if the COE is obtained on or after that date.
Commercial vehicles, private-hire cars owned by businesses, and motorcycles will continue to be exempt from the loan curbs, said the authorities.
The Land Transport Authority (LTA) began allowing individuals to register private-hire cars in 2017.
On Oct 29, the authorities said the Government had considered other measures, like creating a separate COE category for private-hire and car-leasing companies.
But this would likely cause private-hire car (PHC) drivers to pay higher rental rates and users to pay higher fares, they said, adding: “It will also require more prescriptive rules on PHC drivers and cars, thus reducing the flexibility to meet the commuting demand of PHC users.”
The Government will monitor market developments and take further steps to apply the same restrictions consistently across financing arrangements, including in-house loans, they said. It will also work closely with platform operators to implement these measures.
“We advise all prospective car buyers to borrow within their means and avoid unregulated financing schemes.”
In a statement after the announcement, LTA reiterated its reasons for not carving out a separate COE category for private-hire cars. LTA also gave its rationale for not banning motor dealers from bidding for COEs and not imposing an additional surcharge for multiple vehicle ownership – these were suggestions to bring down COE premiums that it had received.
Chong Kah Wei, managing director of BMW Eurokars, said the current high car prices make it difficult for some buyers to come up with the minimum 30% or 40% down payment for a car.
Another reason why individuals resort to registering private-hire cars is to stretch the loan tenure and lower their monthly instalment, he added.
A motor dealer told The Straits Times that it is a common practice for authorised distributors to use third-party dealers when individual buyers want to use the “private-hire car loan” route.
The industry insider, who has various automotive businesses and declined to be named because of commercial sensitivities, said that parallel importers and used car dealers will be more badly impacted because they are more likely to rely on such tactics.
Ng Choon Wee, the commercial director of Komoco Motors which distributes Hyundai, said the move will affect individuals who are genuine private-hire car drivers.
This was also a concern raised by labour MP Yeo Wan Ling, adviser to the National Private Hire Vehicles Association.
In a Facebook post, Yeo said changes to the way that drivers finance their vehicles directly affect their ability to make a living. The association will need to closely monitor if the change unintentionally makes sustainable vehicle ownership inaccessible to genuine drivers, she added.