Cars in Singapore Have Been Getting More Expensive. Here's How You Can Be Smart About Financing One

Alevin Chan

Alevin Chan

Last updated 15 November, 2022

COE premiums are hitting all-time-highs, and look to remain that way. Here’s why car prices have been getting higher, and some low-cost car loans to help you finance your vehicle purchase.  

It’s no secret that car prices in Singapore are among the highest in the world. Despite this, if you’re thinking of getting a car, be warned that things are only getting worse. 

You’re not imagining things — car prices really have been spiking up in recent years. The biggest and most obvious culprit is an increase in Certificate of Entitlement (COE) premiums.

COE prices are near all-time-highs

COE Prices Over The Past 4 Years

Here’s a chart of COE premiums, sorted according to category. We’re interested mainly in Category A (cars up to 1,600cc and 97kW), and Category B (cars above 1,600cc and 97kW) here, which are represented by the blue and red lines respectively.

It doesn’t take a genius to work out that with COEs being at such high levels, the prices of cars will also follow an upward trajectory. The most important thing for car owners is to ensure that you are protected with the best car insurance for you.

What influences COE prices?

COE Results (Current)Source:

Since COE runs on an open-bidding system, dealers and car owners should logically work together to bring COE prices down. After all, nobody wants to pay high prices, and if everyone submits low bids, this should exert downward pressure on COE prices. 

The thing is, there is only a limited number of COE slots being released each round. When the number of COE slots is lower than the number of bidders (as happens the majority of the time), drivers and car dealers are incentivised to put in higher bids in order to secure a COE slot. 

COE bidding exercises are held twice a month and the number of COE slots available each round are not fixed. Instead, they are adjusted in accordance with the Vehicle Quota System (VQS), introduced in 1990 for the purpose of controlling the number of private cars on Singapore’s roads.

In 2018, the VQS’ new growth cap for private cars was brought down to zero and is slated to stay that way until 31 Jan 2025.


What does zero growth mean for private car owners?

A growth cap of zero means that the total number of private cars will be maintained at current levels, with no increases allowed. 

As such, new drivers who need a COE will have to wait for existing drivers to give theirs up. They can’t simply pay for one and be on their merry way. 

Also, once existing slots open up, only those willing to pay the highest premiums will be successful in getting their COEs.

So it seems that sky-high COE prices aren’t going to come down in the immediate future. That’s a sobering thought for anyone looking to buy a car right now. 


Use the right car loans to help pay for your new car

So, COEs are expensive and will remain so for the next few years. 

But for those who really need to own a private car, high COE premiums is just one roadblock you’ll just have to get around. There are also other factors and taxes to include such as Additional Registration Fee (ARF), Open Market Value (OMV), and Vehicle Emission Scheme (VES), to name a few.

Hence, picking the right car loan is even more important; you’ll want to get the lowest interest rate you can find. 

Given that your car now costs that much more, even a slight difference in interest rates can result in a significant difference in dollar terms. 

Car loans with lowest rates in Singapore 2022

Car loan New car Used car Tenure and loan-to-value
UOB Carousell Car Loan Package n/a 2.08% per annum
EIR: not stated
1 to 7 years, up to 70%
OCBC Eco-Care Car Loan (Electric cars only) 2.48% per annum
EIR: 4.65% per annum based on 7-year tenure
2.48% per annum
EIR: 4.65% per annum based on 7-year tenure
1 to 7 years, up to 70%
DBS Green Car Loan (Electric cars only) 2.48% per annum
EIR: 4.65% per annum, based on 7-year tenure
2.48% per annum
EIR: 4.65% per annum, based on 7-year tenure
1 to 7 years, up to 60%
OCBC Car Loan (Petro/Diesel cars) 2.78% per annum
EIR: 5.09% to 5.19% per annum (from 1 to 7-years)
2.78% per annum
EIR: 5.09% to 5.19% per annum (from 1 to 7-years)
1 to 7 years, up to 70%
Hong Leong Finance Car Loan 2.78% per annum
EIR: 5.32% per annum, based on 7-year tenure
3.08% per annum
EIR: 5.86% per annum, based on 7-year tenure
1 to 7 years, up to 70%

UOB Carousell Car Loan Package - 2.08% per annum

If you’re looking for a second-hand car, give Carousell a try. Buying a used car from their car marketplace entitles you to preferential rates on a car loan from UOB.

You can enjoy a car loan at just 2.08% per annum (EIR not stated, do find out before you take up the loan), which is the lowest rate we’ve seen so far. 

Do note that this is a special promotion, not a permanent collaboration, and possibly only available for a limited time.   


OCBC Eco-Care Car Loan - 2.48% per annum

Electric vehicles are costlier than their petrol-guzzling cousins, but with the currently inflated car prices all around, it might be worthwhile to go with the greener option.

To help you manage the costs of owning an electric car, consider the OCBC Eco-Care Car Loan. Not only does it have a low-interest rate of 2.48% per annum (EIR up to 4.6% per annum for 7 years), but you can also claim up to 12 months of free charging. 

Additional benefits are also available if you purchase an Audi e-Tron, Jaguar I-PACE or Tesla.


DBS Green Car Loan - 2.48% per annum

Another good loan option for those getting an electric vehicle is the DBS Green Car Loan, which comes with interest rates of 2.48% per annum (EIR up to 4.65% per annum). 

You can use this loan for both new and used electric vehicles, making it a flexible and convenient choice. 

However, do note that you can only loan up to 60% of the value of the car (compared to a maximum of 70% in other loans).


OCBC Car Loan - 2.78% per annum

For those looking to buy a petrol car instead, have a look at the OCBC Car Loan.

This loan has one of the lowest interest rates for petrol cars, at 2.78% per annum (EIR up to 5.19% per annum).

You can use this loan for both new and used vehicles and can borrow up to 70% of the value of the car. You can also choose a loan tenure of one to seven years.


Hong Leong Finance Car Loan - from 2.78% per annum

Our fifth spot goes to Hong Leong Finance’s Car Loan package, which is available for new and used cars.

Loans for new cars are available at 2.78% per annum (5.32% per annum, based on 7-year tenure), which is pretty close to what’s being offered by the banks. 

Meanwhile, for used cars, you can access financing at 3.08% per annum (5.86% per annum, based on 7-year tenure). 

With Hong Leong Finance, you can borrow up to 70% of the cost of your car and take up to seven years to repay your loan. 


Read these next:
Best Car Loans in Singapore: Interest Rate And Features Comparison
New Year, New Car: 7 Cheapest New Cars Under S$100,000 You Can Buy in Singapore 2022
How Much Does It Truly Cost To Maintain A Car In Singapore?
Car Sharing Options In Singapore
Is S$0 Down Payment Car Purchase A Good Idea?


An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.


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