Owning a car in Singapore can be quite expensive due to the requirement of bidding for a certificate that now costs $106,000. This cost is equivalent to four Toyota Camry Hybrids in the U.S., making it crucial for you to find the best car loan option available. As the cost of owning a vehicle rises, it’s important to consider different loans that can help you manage these expenses.
Take the example of Jason Guan, who bought his first car, a Toyota Rush, for S$65,000 in 2008, including the price of the Certificate of Entitlement (COE). However, now Guan lives without a car and focuses on other perks for his family that Singapore offers. He said in an interview with Reuters, “As a family man, it doesn’t affect me much as Singapore still has a good and stable education system. In terms of security, it’s still one of the safest countries.“
With situations like this becoming the norm, having a car loan with favorable interest rates is essential for affording a vehicle in Singapore. To navigate this market, it’s crucial to explore the leading car loans available in the country. By carefully researching and comparing options, you can identify the best loan that fits your specific needs and budget, ultimately making car ownership more financially manageable.
Maximum Amount You Can Get From A Car Loan
The Monetary Authority of Singapore or MAS sets the maximum limits on the loan amount an individual can receive to purchase a new or used motor vehicle. The amount you can get depends on the open market value (OMV) of the car you’re planning to purchase.
If the car’s OMV is less than or equal to S$20,000, you can apply for a loan with a maximum loan-to-value (LTV) of 70%. On the other hand, if the OMV is greater than S$20,000, the maximum LTV drops to 60%.
| OMV of motor vehicle | Maximum LTV | Maximum Loan Tenure |
|---|---|---|
| Less than or equal to S$20,000 | 70% | 7 years |
| More than S$20,000 | 60% | 7 years |
Keep in mind that these percentages are the maximum limits and you may not always receive the full amount you’re hoping for. Banks and financial institutions will assess your credit score, income, and other factors before determining the loan amount they’re willing to provide.
Comparison of Car Loans in Singapore
| Car Loan | New Car Interest Rate (p.a.) | Used Car Interest Rate (p.a.) | EV Interest Rate (p.a.) | Renewed COE Interest Rate (p.a.) |
|---|---|---|---|---|
| DBS | 2.78% | 2.78% | 2.48% | N.A. |
| OCBC Bank | 2.78% | 2.98% | 2.48% | 2.88% |
| Standard Chartered | 2.78% | 2.78% | N.A. | N.A. |
| Maybank | 2.99% | N.A. | 1.98% | N.A. |
| UOB | 2.78% | 2.78% | N.A. | 2.88% |
Best Car Loans For New Car
| Car Loan | Car Loan Interest Rates | Loan Tenure | Loan Amount | Monthly Income |
|---|---|---|---|---|
| DBS | 2.78% | Up to 7 years | Up to 60% or 70% Loan-To-Value, depending on the Open Market Value (OMV) | Singaporean/PR: S$2,000 Foreigners: S$4,000 |
| OCBC Bank | 2.78% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not stated |
| Standard Chartered | 2.78% | Up to 7 years | S$10,000 (minimum loan amount) | Not Stated |
| Maybank | 2.99% | Up to 7 years | Up to 60% or 70% Loan-To-Value, depending on the Open Market Value (OMV) | S$1,500 per month |
| UOB | 2.78% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not Stated |
Best Car Loans for Used Cars
| Car Loan | Car Loan Interest Rates | Loan Tenure | Loan Amount | Monthly Income |
|---|---|---|---|---|
| DBS | 2.78% | Up to 7 years | Up to 60% or 70% Loan-To-Value, depending on the Open Market Value (OMV) | Singaporean/PR: S$2,000 Foreigners: S$4,000 |
| OCBC Bank | 2.98% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not stated |
| Standard Chartered | 2.78% | Up to 7 years | S$10,000 (minimum loan amount) | Not Stated |
| UOB | 2.78% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not Stated |
| Hong Leong Finance’s Used Car Loan | 3.08% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not Stated |
Best Car Loans for EV
| Car Loan | Car Loan Interest Rates | Loan Tenure | Loan Amount | Monthly Income |
|---|---|---|---|---|
| DBS Green Car Loan | 2.48% | Up to 7 years | S$10,000 (minimum loan amount) | Singaporean/PR: S$2,000 Foreigners: S$4,000 |
| OCBC Eco-Care Car Loan | 2.48% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not stated |
| Maybank | 1.98% | Up to 7 years | Up to 60% or 70% Loan-To-Value, depending on the Open Market Value (OMV) | S$1,500 per month |
| Hong Leong Finance Green Car Loan | 2.48% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not stated |
Best Car Loans For Renewed OEC
| Car Loan | Interest Rate | Loan Tenure | Loan Amount | Monthly Income |
|---|---|---|---|---|
| OCBC Bank | 2.88% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not stated |
| UOB | 2.88% | Up to 7 years | Up to 70% of the purchase price or our valuation of the car, whichever is lower | Not Stated |
Read Also: COE Renewal or Purchasing a New Car?
Should You Get A Car Loan From A Bank Or A Car Dealer?
When considering a car loan in Singapore, you have two primary options: obtaining a loan from a bank or securing financing through a car dealer. Each option has its advantages and disadvantages, so let’s explore them to help you make an informed decision.
Banks
- Applying for a car loan from a bank gives you the opportunity to compare interest rates from different financial institutions. This increases your chances of finding a competitive rate, potentially saving you money over the life of the loan.
- With a bank loan, you can secure pre-approval before car shopping, giving you a clear budget and stronger negotiating power with dealers.
- Being an existing customer of a bank could increase your chances of approval and may get you preferential rates.
Car Dealerships
- Car dealership financing is often more convenient, as you can complete the process in one visit while purchasing your car.
- Dealers may offer incentives or promotions for signing up for their in-house financing, such as cash rebates or lower interest rates.
However, there are a few factors to consider when weighing your options:
- Interest rates: While dealerships might have promotional rates, banks could still provide lower interest rates. It’s crucial to compare your options from both sources before making a decision.
- Flexibility: Dealership financing might limit you to certain car brands or models, whereas bank loans can be used for a wider range of vehicles, even from private parties.
- Total costs: Assess the total costs of each financing option, including the monthly car loan instalments, fees, and charges, to determine the most cost-effective choice for your situation.
Can You Get A Loan If You Have A Bad Credit?
Yes, it is possible to get a car loan even with bad credit. However, you may need to take some steps to improve your chances of getting approved for a loan that suits your budget.
- First, check your credit before you start looking for a car loan. This will allow you to identify any inaccuracies in your credit reports and dispute them if necessary.
- Fix errors on your credit report to help boost your credit score. This will improve your chances of getting a favorable loan.
- Explore different banks or lenders that accommodate individuals with a less-than-stellar credit rating. There is a network of lenders and car dealers who are willing to work with individuals with low credit scores.
As you research for the right money lender or financial institution, consider the loan terms, interest rates, and other factors to find the best option for your needs.
When looking for a loan, consider making a larger down payment if possible. A larger down payment can help reduce the total amount of your loan and may help you get better loan terms and interest rates. Additionally, lenders may be more willing to approve your loan application if they see you are serious about investing in the purchase.
Lastly, keep in mind that bad credit auto loans often come at a higher cost due to higher interest rates and fees. It’s crucial to carefully review the loan terms before committing to ensure you can afford the monthly payments and avoid falling further into debt.
Conclusion
After comparing various car loan providers, it is clear that Singapore offers a diverse range of options to cater to different needs and preferences – whether you’re purchasing a new or used car or an electric vehicle. By carefully considering factors such as interest rates, repayment terms, and specific loan offerings, you can find the ideal car loan for your situation and enjoy a smooth car purchasing experience.
Key takeaways:
- While searching for the best car loan, familiarize yourself with different providers such as UOB, Hong Leong Finance, OCBC Bank, Maybank, and DBS.
- Keep in mind that some banks offer specialized car loans, like green car loans for eco-friendly vehicles.
- Utilize platforms such as MoneySmart, and SingSaver, or loan comparison platforms, such as Loan Advisor to compare the best car loan rates in Singapore, ensuring that you make an informed decision when choosing a loan.
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