Govt to plug private-hire car loan loophole
CAR buyers who take up larger loans through private-hire purchase agreements as a way around the Government's loan restrictions will be investigated.
Acting Minister for Education Ong Ye Kung, who is on the board of directors at the Monetary Authority of Singapore (MAS), served this notice in Parliament yesterday when responding to Pritam Singh (Aljunied GRC).
The Workers' Party MP had raised concerns that private-hire purchase agreements created a "loophole" or "work-around" to existing curbs.
The MAS rules currently allow buyers to borrow up to 70 per cent of the purchase price, with a loan tenure of seven years. However, some buyers are taking loans of up to 90 per cent of the car price, and paying it back over 10 years.
They do so through private-hire purchase agreements, in which they buy and register their car under a company, to be used for chauffeuring under ride-hailing apps such as Uber and Grab.
The MAS has previously said that loans taken to purchase private-hire cars do not fall under its car loan restrictions.
But Mr Singh pointed out that some people could take advantage of the system.
"There is also the prospect of not running it for that purpose at all, as when you register a company for private hire under the Uber or Grab framework but in actual fact what you're doing is you're owning a vehicle."
Mr Ong replied that both the MAS and Ministry of Trade and Industry Singapore (MTI) will look into such cases, which would be "in violation of the spirit of the policy".
"I don't think it's correct for this to proceed," said Mr Ong, who is Acting Minister for Education (Higher Education and Skills) and Senior Minister of State for Defence.
He also said the MAS has not had to take action against any financial institutions since the car loan restrictions were introduced three years ago.