Physically disabled exempted from new vehicle loan credit restrictions

Their caregivers also given the same flexibility.

In an announcement over the weekend, the Monetary Authority of Singapore (MAS) said it 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.

On 25 February 2013, MAS announced financing restrictions on motor vehicle loans granted by FIs.

MAS said it 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 person.

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 Programme for the Elderly; or (ii) has been issued a car park label under the Car Park Label Scheme administered by the Centre 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 documents.

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. MAS said 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.