The impact of accessibility of vehicle loans on vehicle ownership in Singapore

Abstract

In recent years, consumer loans have steadily become one of the largest types of loans made in the financial market, and amongst the types of consumer loans available, vehicle loans have gained considerable attention due to the increase in demand for vehicles as the vehicle becomes a mass consumer item with rising affluence and growth of economies. In addition, the rising prices of new and used vehicles due to the increased demand have made vehicle purchases more difficult based on the consumer's income alone. As a result, demand for vehicle loans have seen a complemented growth.

Accessibility to vehicle loans has therefore become a major consideration in the consumer's vehicle purchase decision. This is especially important in Singapore where the rising demand for vehicle ownership is countered by the government in a concerted effort to decrease traffic congestion using vehicle demand management schemes. Past research on the vehicle market in Singapore have often focused on discussing the effects of such vehicle management schemes on vehicle ownership in Singapore. Some have attempted to determine the effects of vehicle price and household income on vehicle ownership and suggested that vehicle ownership was more income than price elastic. Very few have attempted to determine not only the effect of accessibility of vehicle loans on vehicle ownership, but also the socio-economic determinants of vehicle ownership in Singapore. This research therefore addresses the vehicle ownership issues from this perspective.