Cars are now a luxury item in SG

                                        

        The recent measures passed in Parliament during the recent Budget announcement by our Finance Minister, includes new taxes on cars whose Open Market Value exceeds S$ 50,000. There will be an additional 180% or $18,000 for every $10,000 increment above $50,000 Open Market Value for the car. This will mean easily tens of thousands more for the big CC cars such as above 3 litres, as well as the branded European marques such as the BMW 5, 6, 7 series to hundreds of thousands more  for the SuperCars such as the Ferraris, Lamboghinis and all those fancy -nini name ending cars from Italy.

     Additionally, the 2 additional items which the car buyer has to be concerned, has halved. That is the tenure of the loan (how long the loan period is allowed) and the percentage of the car's price which the prospective buyer can take a loan from the bank or finance company. The tenure is now dropped from 10 years to 5 years, hence this means that the buyer has to cough up much more in that shorter period of time. The loan amount is now at most 50% of the car's purchase price. So for the Toyota Corolla Altis with the recent COE of $70,000, the sell price is S$ 120,000. Hence, the buyer now has to fork out $60,000 in upfront monies and take the remaining $60,000 in loan repayable over 5 years. So that works out with compound interest to S$ 1,400 for 60 months or 5 years. The interest rate will effectively double to about 3.5 to 3.88 % from the current 1 to 1.3 % as the lenders (banks or finance houses) have to make the money they loaned to the buyer (in interest) in half the allowable time. From 10 to 5 years.  

      Well and good is my initial reaction, the Certificate of Entitlement will definately drop, in reaction to this latest measure to cool COE prices. Its so expensive to own a car in S'pore nowadays I wonder and sympathise for the new family who aspire to their set of wheels. Perhaps they will need to take Public Transport or the taxes occasionally, like in the past. If one has plenty of funds then it is in fact good for them, as the COE prices will come crashing down, or will they stay up ? Many people have been waiting to change their cars and they may still be able to plonk out cash to buy their 'dream' cars.

      Cars will be a luxury item, and hopefully the COE prices will come down. Its silly to spend so much on cars anyway.