People falling in debt due partly to car ownership costs: CCS

People falling in debt due partly to car ownership costs: CCS
04 March 2013 2222 hrs (SST)
URL : http://www.channelnewsasia.com/stories/s...25/1/.html

SINGAPORE: Credit Counselling Singapore (CCS) said the costs involved in maintaining ownership of a vehicle is one of the reasons cited for car owners falling into debt.

With some credit companies offering higher loans and repayments beyond five years, CCS is reminding the public to be more mindful of their finances.

CCS said 54 per cent of some 1,500 car owners it counselled in the past four years cited a combination of costs like monthly payments, parking and ERP charges as factors that have resulting in them being in debt.

This revelation comes amidst the Monetary Authority of Singapore announcing that car buyers can take loans of up to 60 per cent of purchase price, with a repayment duration of five years.

But some credit companies that do not fall under MAS regulations are continuing to offer car loans of up to 90 per cent of the purchase price, although at interest rates of up to 3.88 per cent -- up from an average of about 1.88 per cent before the new rules kicked in last week.

Tan Huey Min, general manager of CCS, said: "To maintain a car in Singapore, on a monthly basis, we're talking about close to S$1,800 or so, if you really take into consideration the road tax, insurance and petrol and everything, on top of the monthly instalment payment. Over the long run, if you pay off the loan in eight years, the amount you have paid is much more than if you had paid the loan off in five years.

"So that means the cost of owning and maintaining the car again is higher -- so it's something as a consumer we have to be very mindful and very careful about... You have to think of how you're going to maintain it over the next few years -- the monthly expenses you need to pay."

-CNA/ac

since now the soft spot for men (Cars) has been addressed, what about the soft spot (LV bags, chanel) for women?
seems like the MAS has not addressed this part? doesn't seem right..look at the ladies' cards from some banks, i think is killing them sliently as well

(04-03-2013, 11:08 PM)pianist Wrote: since now the soft spot for men (Cars) has been addressed, what about the soft spot (LV bags, chanel) for women?
seems like the MAS has not addressed this part? doesn't seem right..look at the ladies' cards from some banks, i think is killing them sliently as well

The Govt will be at risk of over-regulation if they were to start clamping down on purchases of luxury bags and shoes! Cars are a major capital item running into 6-digits; I know of Birkin bags costing that much but most women go for bags in the 3 or 4-digits. Hence I do not see a need for any regulation.

I just wonder about the whole idea of saving people from themselves. Is there a middle ground?

I see the same people who call for loan cuts for property/cars/bags reject the idea of a limited save as u go program (cpf). I am not entirely sure which of those proposals are more restraining on the liberty of an individual... Imo neither are great but we dont live in a perfect world!

We live in a nanny state so the govt will just continue to be the stern father.

But i do agree with the policy in some ways, because i have heard of someone who earns slightly less than 2k with 3 kids and bought a car. This person has money to buy petrol for the car but not milk for the baby. Think this obsession that singaporeans have with cars must end.

It seems people are buying things more than they can afford without realizing the consequences.

It may be good if financial planning education can be implemented in the school curriculum. Financial planning is a crucial part in everybody life and if parents nowadays do not realize the importance of this, it is likely that their children will follow their foot steps.

The cycle will then continue....

My bank is actually implementing this "money minded series" in ITEs to teach kids about money in general. Trainers are employee volunteers. Guess this is what the
Govt is talking about that the private sector should do something about social problems rather than waiting for the govt to do everything. Foreigners are much better at these cos in their countries, they can't count on their govt.

We are really too dependent on this too efficient for our own good govt.

Cars ie transport has far reaching impact on productivity vs other luxury goods like handbags

That is why the government needs to step in to prevent the "blood vessels" from choking up. Not only are they worried about overstretched citizens, they are also worried about runaway bad debts in the banks. So it's not just a paternalistic issue.

OTOH when crap happens, the same people who think government should hands off are the same people who say govt should rescue the people. Just see US Republican propaganda. I think it is wise to nip the trouble in the bud before policy makers get caught in a catch 22.

I also think it might be prudent to slowly scale back CPF use in housing and loan tenor, and to further restrict foreign buying in our properties. The Finance 101 ABSOLUTE free market dogma is based on utopian and unrealistic premise. It is useful but like all things, need to be restrained and "consume" in moderation.

(05-03-2013, 09:32 AM)specuvestor Wrote: I also think it might be prudent to slowly scale back CPF use in housing and loan tenor, and to further restrict foreign buying in our properties. The Finance 101 ABSOLUTE free market dogma is based on utopian and unrealistic premise. It is useful but like all things, need to be restrained and "consume" in moderation.

I believe this is as much as political issue as it is an economic one, so the chances of it happening soon (albeit slowly) are not high, unless there is a political shake-up, of course.

800 people in the past four years is a small number for the government to react so much. There must be other reasons why the government to implement this.

Regardless, I welcome this move, and I hope that prices will go down soon.

(Vested. I have no car but I am intending to buy one in the near future.)