It appears that the sudden implementation of the car loans restrictions was too hard for the industry to swallow and MAS has to give some concessions now.
As a result of the appeal by used car dealers, MAS has decided to lift the loan restrictions on car loans for a period of 60 days for the purchase of used cars that were part of car dealers’ inventory before the restrictions were introduced on 25 February 2013.
This will help give some reprieve to used car dealers who stand to get stuck with their inventory under the current loan restrictions.
In addition, the scope of the financing restrictions will now be extended to all entities that finance car purchases, including those that are not regulated by MAS. While in principle it’s good to plug this loophole, how this ruling can be enforced is another matter altogether.
Actually, I feel that there can be a neater way of doing this.
Instead of imposing restrictions on car loans, draw a clear distinction between the price of the COE and the car. Disallow any loan for the COE component. The COE bidding can be changed to a system where only the buyers of vehicles bid for it and when they bid, they have to pay full cash for it upfront. This might also help to reduce the CEO prices.