You need to earn at least $8,850 to own a car in Singapore.
If you’re looking into buying a car, you will need to pay the Certificate of Entitlement (COE), road tax, the Additional Registration Fee (ARF), car insurance and… Goods and Services Tax (GST).
Unless you can pay in full cash, most car owners will take up a car loan to finance their vehicle.
But, this would also mean you will need to consider the interest rates, loan amount and tenure etc.
Let’s take a look at the best car loans in Singapore!
TL;DR: Best Car Loans in Singapore Based on Car Type (2022)
We’ve shortlisted the top three car loans for you.
| New Cars | Interest Rate (p.a.) | Loan Tenure (Years) | Min. Loan Amount |
|---|---|---|---|
| Hong Leong Finance New Car Loan | 2.48% | 1 to 7 | $10,000 |
| OCBC New Car Loan | 2.48% | $15,000 | |
| DBS Online Car Loan | 2.68% | $10,000 | |
| Used Cars | Interest Rate (p.a.) | Loan Tenure (Years) | Min. Loan Amount |
| DBS Online Car Loan | 2.68% | 1 to 7 | $10,000 |
| Hong Leong Finance's Used Car Loan / UOB Used Car Loan | 2.78% | $10,000 | |
| Standard Chartered Auto Financing Loan / Tokyo Century | 2.78% | Not stated | |
| Electric Vehicles | Interest Rate (p.a.) | Loan Tenure (Years) | Min. Loan Amount |
| DBS Green Car Loan | 2.08% | 1 to 7 | $10,000 |
| Hong Leong Finance's Vehicle-Green Loan | 2.08% | $10,000 | |
| OCBC Eco-Care Car Loan | 2.18% | $15,000 |
Click here to teleport:
- How much loan can you get and how much downpayment do you need to pay?
- Best car loans for new cars
- Best car loans for used cars
- For cars with a renewed COE
- Best car loans for electric vehicles
- Can you get a car loan with a poor credit rating?
- Should you get a car loan from a bank or a car dealer?
What’s The Loan Amount And Downpayment For Cars?
Loan-to-Value ratio (LTV) is the amount of loan expressed as a percentage of the purchase price of the motor vehicle.
When you’re determining the loan amount, you will need to look at the car’s Open Market Value (OMV).
In Singapore, a car owner can get a maximum LTV of 70% if the car has an OMV less than or equal to $20,000.
Similarly, if the vehicle has an OMV of more than $20,000, the maximum LTV is 60%.
| Open Market Value (OMV) | Maximum Loan Amount |
|---|---|
| ā¤$20,000 | 70% of the purchase price or valuation price, whichever is lower |
| >$20,000 | 60% of the purchase price or valuation price, whichever is lower |
Once you’ve determined your LTV, the rest of the 30 to 40% will be the downpayment you need to make in cash.
Total Debt Servicing Ratio (TDSR)
The Total Debt Servicing Ratio (TDSR) is a lending metric set by the Monetary Authority of Singapore (MAS) to ensure borrowers do not over-leverage when it comes to property purchases, where the borrower’s TDSR has to be less than or equal to 55%.
The TDSR is calculated based on the borrower’s debt obligations, including car loans.
Hence, when taking up a car loan, keep in mind that the TDSR limits your total monthly debt obligations to 60% of your gross monthly income.
How Long Is The Loan Tenure?
Most banks will offer a loan tenure of up to 7 years (or 84 months).
As with other loans, if you intend to take up a shorter tenure as you can pay less for the interest, you will have to balance this with your personal expenses and commitment.
Essentially, a longer tenure may help make your monthly car loan instalments more affordable.
How to Calculate Monthly Installment?
Use a loan calculator – you can find them on various financial institutions’ websites.
If you want to calculate by yourself, this is the formula you need to use:
Monthly Installment = [Loan Amount x Interest Rate x Loan Tenure (no. of years)] + Loan Amount / Loan Tenure (no. of months)
Remember to round up to the nearest value!
What is COE Loan And Can I Get One?
For the uninitiated, yes, you can apply for a full 100% loan for COE renewal.
If you are renewing your COE for 10 years, the maximum repayment term is seven years. For a five-year COE renewal, the maximum repayment term is five years.
Pro-tip: If you want a one-stop place where you can compare COE loan rates, Motorist.sg is the place to go. As of the time of writing, Motorist arranges a complimentary Pre-COE inspection at their workshops.
Best Car Loans for New Petrol or Diesel Cars
When picking the best car loans for new cars, we’ve shortlisted loans with the most competitive rates.
Here’s a list of the best ones in the market:
| Car Loans | Interest Rate (p.a.) | Loan Tenure (Years) | Min. Loan Amount | Min. Monthly Income |
|---|---|---|---|---|
| DBS Online Car Loan | 2.68% | 1 to 7 | $10,000 | $2,000 ($4,000 for foreigners) |
| Hong Leong Finance New Car Loan | 2.48% | $10,000 | Not stated | |
| Maybank New Car Loan | 2.78% | $10,000 | $1,500 | |
| OCBC New Car Loan | 2.48% | $15,000 | Not stated | |
| Standard Chartered Auto Financing Loan | 2.78% | $10,000 | Not stated | |
| Tokyo Century | 2.78% | $20,000 | Minimum monthly income of at least 3 times your monthly instalment | |
| UOB Car Loan | 2.68% | $10,000 | Not stated |
Best Car Loans for Used Cars
Generally, the loan interest rate for a used car is slightly higher.
| Car Loans | Interest Rate (p.a.) | Max. Loan Tenure (Years) | Min. Loan Amount (SGD) |
|---|---|---|---|
| DBS Online Car Loan | 2.68% | 1 to 7 | $10,000 |
| Hong Leong Finance's Used Car Loan | 2.78% | $10,000 | |
| OCBC's Used Car Loan | 3.18% | $15,000 | |
| Standard Chartered Auto Financing Loan | 2.78% | Not stated | |
| Tokyo Century | 2.78% | Not stated | |
| UOB Used Car Loan | 2.78% | $10,000 |
Best Car Loans With A Renewed COE
There are two banks that offer loans for cars with renewed COE:
- OCBC is offering an interest rate of 3.18% with a tenure of up to seven years
- UOB is offering an interest rate of 3.25% with a tenure of up to seven years (age of car should be more than 10 years and not exceeding 11 years old)
Best Car Loans for Electric Vehicles
There are car loans specifically for electric vehicles!
To encourage car owners to go green, banks are offering loans that allow you to enjoy free charging of your electric car, at a more competitive rate than diesel or petrol car.
| Car Loans | Interest Rate (p.a.) | Max. Loan Tenure (Years) | Min. Loan Amount (SGD) |
|---|---|---|---|
| DBS Green Car Loan | 2.08% | 1 to 7 | $10,000 |
| Hong Leong Finance's Vehicle-Green Loan | 2.08% (locked-in) | $10,000 | |
| OCBC Eco-Care Car Loan | 2.18% | $15,000 |
Read more: Electric Car Guide: How Much Does It Cost To Own One in Singapore
Can You Get a Car Loan If You Have a Poor Credit Rating?
If you’re wondering if having a poor credit score means you can’t get a car loan?
The answer is… you might still be able it. However, the catch is that you would need to go through a car dealership or a licensed moneylender.
Do note that the interest rates offered by car dealers may be higher, while banks’ interest rates range from 2.48% to 2.78%.
Read more:
- For a World That Runs on Debt Your Credit Bureau Report (Credit Score) Matters
- 5 Things I Learnt From Dealing With Loan Sharks in Singapore
Should You Get a Car Loan From a Bank or a Car Dealer?
Here’s the thing. This will depend on the total cost of the loan and the loan duration.
This is because you might end up paying more for a longer tenure even though your loan is of a more competitive interest rate.
Car dealerships might charge a higher interest rate, but borrowing from them can be much easier as compared to borrowing from a bank, especially when you have a poor credit score.
Similarly, processes-wise, it’s more convenient as you don’t have to handle the paperwork.
Do note there will be administrative and processing fees, and there might also be early repayment fees, which are chargeable for some bank loans such as personal loans.
Afterthoughts
Being a car owner is a dream for many, but the decision to own one should not be rash as it has a significant impact on our finances.
Our cost of living has increased, and owning a car means you will also need to think about travelling on road (i.e. Electronic Road Pricing), parking and car maintenance.
At Seedly, we encourage our readers to make smarter personal finance decisions, and that includes living within your means and repaying any debts they have asap.
What are your thoughts?
Start a discussion with the Seedly Community today!
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