Owning a car in Singapore is expensive. It costs a minimum of $ 50,000 for sedan-type vehicles, and it can cost almost $ 200,000 for luxury-type vehicles. These rates make it impossible for a regular employee to afford a brand new car.
Applying for car loans can be the only way to get a car in Singapore. However, not all car loans are the same. Here is the information you need to help you assess which car loan would best fit your situation.
This article will learn the top 8 car loans in Singapore, the different types of car loans, and alternatives to car loans. Getting your dream car is no longer impossible. The first step is choosing your car loan.
Top 8 Car Loans in Singapore
There are top 8 car loans in Singapore. To help you evaluate, we provide the minimum loan amount, maximum loan period, and payment per month of each car loan. These loan details could help you decide which car loan may be best for you.
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DBS Car Loan
Minimum loan amount: S$10,000
Max loan tenure: 7 years
Monthly payment: S$ 557 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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Hong Leong Finance Car Loan
Minimum loan amount: S$10,000
Max loan tenure: 7 years
Monthly payment: S$ 557 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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Maybank Car Loan
Minimum loan amount: S$10,000
Max loan tenure: 7 years
Monthly payment: S$ 557 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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OBCB Bank Car Loan
Minimum loan amount: S$15,000
Max loan tenure: 7 years
Monthly payment: S$ 557 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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Standard Chartered Auto Financing
Minimum loan amount: S$10,000
Max loan tenure: 7 years
Monthly payment: S$ 557 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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UOB Car Loan
Minimum loan amount: S$10,000
Max loan tenure: 7 years
Payment per month: S$ 557 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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Tokyo Century Leasing Car Loan
Minimum loan amount: S$20,000
Max loan tenure: 7 years
Payment per month: S$569.50 (For a principal loan of S$ 30,000 with a loan tenure of 5 years)
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Hitachi Capital MYHP
Minimum loan amount: S$15,000
Max loan tenure: 7 years
Payment per month: S$569.50(For a principal loan of S$ 30,000 with a loan tenure of 5 years)
From this list, the minimum amount loan among these 8 car loans is S$10,000. The longest loan tenure is 7 years. As for the higher payment per month, it amounts to S$569.50.
Example Computation
Here’s a sample computation of a car loan. Assuming the car loan is valued at $50,000, which is the average price of a car in Singapore. For this computation, the loan has a tenure period of 5 years and an annual interest rate of 1.99%.
Loan Tenure: 5 Years (60 months)
Loan Amount: S$50,000
Interest Rate: 1.99% p.a.
Total Interest Owed: S$4,975
Monthly Instalment: S$916.25
How to Choose a Car Loan
Choosing a car loan is as important as choosing the car model itself. In this regard, there are factors that you have to consider. It would be best to look at the interest rate, minimum loan amount, provider, and the ease of the application process.
These factors should be your primary considerations in choosing a car loan. There’s nothing more unfortunate than getting stripped off of your car just because you failed to finish paying your loan. To determine the best car loan for you, you must pay attention to these factors.
How Much Can You Borrow?
Another consideration is the amount that you can borrow. The amount will depend on the Open Market Value (OMV) of the car. If the car is worth S$20,000 or less, you can borrow up to 70% of the purchase price. If the car’s OMV is worth more than S$ 20,000, you can borrow up to 60%.
Another factor that affects the amount to be borrowed is your total debt servicing ratio (TSDR). It is discouraged that your TDSR exceed 60% of your gross monthly income. You have to include other loan obligations like your home loan, personal loans, and other loans.
Different Types of Car Loans
There are three common types of car loans in Singapore that may affect your decision making. Interest rate and the loan term differ among the types of loan. Depending on your resources, always choose the loan that will not be burdensome to you.
Car Loan for a New Car:
Either offers this type of loan by the bank or the car dealer. Loan tenure may vary between 1 and 7 years. A new car loan interest rates go between 1.99% to 2.68%.
Car Loan for a Used Car:
For car loan of a used car, banks or car dealers offer them. However, interest rates are higher, and the tenure would depend on the age of the car. Most used car loans charge a 2.78% interest rate, which is .10% higher than the highest interest rate for a new car loan.
Car Loan Refinancing:
In this type of car loan, you are given the option to switch from your current lender to a new lender. This is an option when you wish to enjoy a lower car loan interest rate. Your new lender will pay off your previous loan in full and provide you with a new interest rate and tenure for the new loan.
Getting a Car Loan Through Banks Vs. Auto Dealership
Car loans may be obtained either through banks or car dealers. The application process, documents, interest rate, and other fees are different in banks and auto dealerships.
Bank usually posts its process and requirements on its website, and once you apply, you need to make the follow up of your application. It will help you with the entire process for a car dealer and take care of the documents required.
Banks and auto dealers also charge interest rates differently. Since a car dealer helps you with your entire process of getting your car, they usually charge processing fees. After deciding what car loan is best for you, you may also want to consider whether to get it through banks or an author dealership.
Alternative to Car Loan
In Singapore, an alternative to a car loan is a personal loan. Depending on the bank, there will be a different interest rate, loan period, and minimum loan amount. The terms and conditions for a personal loan will also depend on the credit score of the borrower.
The amount obtained from a personal loan may be used with the full discretion of the borrower. Since it is not exclusively for the car’s purchase, the loan amount may even be higher than the price of the car you intend to buy. This contrasts with car loans that use the car cost as a basis for the amount of loan.
Personal loans may be secured or unsecured. There is a higher interest rate if the loan is unsecured. Unlike in a car loan, any property of the borrower may use as the security for the loan obtained. So in case of default, it is not the car purchased from the loan fund that would necessarily be seized.
Bottom Line
While getting your own car is expensive, there are plenty of ways to help you buy one. You have to consider what kind of financial aid is best suited for you. The best car loan is always the loan that is best suited for you.
In Singapore, most customers would prefer a car dealer-financed loan because of its convenience. Others would prefer to obtain car loans from banks. However, given the requirements and process of car loans, others opt to get personal loans instead.
Perhaps to make an informed choice, you may start asking yourself the following questions:
- Do I have collateral with which to secure the loan?
- What interest rate (and associated repayments) can I genuinely afford?
- Is my credit in good enough shape?
If you are considering obtaining a personal loan for your car purchase, visit 365 Credit Solutions, for more loan options and other information. Credit Solutions is a licensed money lender in Singapore. It offers personal loans that are personalised to your needs.
