Physically Disabled Exempt from Financing Restrictions on Motor Vehicle Loans - Singapore
Author: Monetary Authority of Singapore (MAS)
Synopsis and Key Points:
MAS announce flexibility for physically disabled and their caregivers by exempting them from credit restrictions for purchase of motor vehicle.
Main DigestThe Monetary Authority of Singapore (MAS) will exempt borrowers who are physically disabled or who are caregivers of the physically disabled from the financing restrictions on motor vehicle loans granted by financial institutions (FIs). MAS will also take into account the depreciation in the value of a used motor vehicle in determining the applicable loan-to-value ratio limit.
Exempting the Physically Disabled
On 25 February 2013, MAS announced financing restrictions on motor vehicle loans granted by FIs.1 MAS has carefully considered the feedback received from different groups and has decided to exercise flexibility for the physically disabled and their caregivers, by exempting them from the credit restrictions for the purchase of one motor vehicle.
To qualify for this exemption, the motor vehicle purchased must be registered in the name of the borrower, who can be the physically disabled person or the caregiver of a physically disabled person2.
The exemption will take reference from the criteria in existing assistance schemes for the physically disabled. A person will be considered a physically disabled person if he meets one of the following three criteria:
(i) qualifies for payout under the ElderShield Scheme or the Interim Disability Assistance Program for the Elderly; or
(ii) has been issued a car park label under the Car Park Label Scheme administered by the Center for Enabled Living; or
(iii) has been certified by a physician appointed by the Ministry of Health (MOH) to be physically disabled and incapable of commuting by bus and Mass Rapid Transit. The list of MOH-appointed physicians for this purpose will be available from 15 April 2013 onwards.
A FI can apply to MAS for an exemption from the financing restrictions for a motor vehicle loan to be granted to an eligible borrower. The exemption will be for a loan for the purchase of one motor vehicle per disabled person. To support the application, the borrower will be required to provide the relevant documents3.
Allowing Depreciation of Used Motor Vehicles to be Taken into Account
MAS will allow the open market value (OMV) of a used motor vehicle to be adjusted in accordance with its age, for the purpose of determining the appropriate loan-to-value (LTV) ratio allowable under the financing restrictions. MAS will adopt a straight-line depreciation in the value of the original OMV over 10 years (120 months) to derive an "applicable OMV" for purpose of determining the appropriate LTV ratio.4 This will address feedback received that the OMV recorded in the original vehicle registration documents does not reflect the depreciated value of a used motor vehicle.
The financing restrictions are as follows:
(i) For a motor vehicle with open market value (OMV) that does not exceed $20,000, the maximum loan-to-value (LTV) is 60% of the purchase price, including relevant taxes and the price of the Certificate of Entitlement, where applicable; and (ii) For a motor vehicle with OMV of more than $20,000, the maximum LTV is 50%. In addition, the tenure of a motor vehicle loan will be capped at 5 years.
A person will be considered a caregiver of a physically disabled person if he:
(i) has the same address on his National Registration Identity Card (NRIC) as the physically disabled person; (ii) is the parent, child, grandparent, grandchild, spouse or sibling of the physically disabled person; or (iii) is a deputy appointed by the court under section 24 of the Mental Capacity Act (Cap. 177A) for the physically disabled person.
Documents required are:
(i) a written declaration that the physically disabled person and his caregivers have not been granted an exemption from the financing rules for the purchase of an existing motor vehicle. (ii) a front and back copy of the NRIC of the disabled person; (iii) a front and back copy of the NRIC of the caregiver of the disabled person, where the caregiver is applying for the exemption; (iv) a copy of one of the following: (a) a letter certifying payment of claims to the disabled person under a severe disability insurance policy taken out with an approved insurer under the ElderShield Scheme; or (b) a letter certifying payment of claims to the disabled person under IDAPE; or (c) a copy of a valid car park label issued to the disabled person under the Car Park Label Scheme administered by CEL; or (d) a certificate issued by a physician appointed by the MOH certifying that the disabled person is physically disabled and incapable of commuting by bus and Mass Rapid Transit (The list of MOH-appointed physicians for this purpose will be available from 15 April 2013 onwards); and (v) a copy of the agreement to purchase the motor vehicle and, once the vehicle is registered, the Vehicle Registration Details which can be printed from the website www.onemotoring.com.sg.
The "applicable OMV" of a motor vehicle will be obtained by dividing its OMV over 120 months and multiplying it by the age of the motor vehicle and deducting the resulting figure from the OMV. Please refer to the FAQs for illustrations.
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