So, you’re finally ready to get your first car in Singapore — exciting times ahead! But we get it: with COE prices, road tax, loan eligibility, and more in the mix, it can feel a little overwhelming. Whether you’re eyeing a shiny new ride or a reliable used set of wheels, this guide will walk you through the entire process step-by-step — from budgeting to choosing a car and preparing for the dealership.

Owning a car in Singapore is expensive. Before visiting a showroom or browsing listings, it’s crucial to know what you can realistically afford — not just the price tag, but the whole package.

Find out your budget

Start by assessing your income, fixed expenses, and how much you can comfortably set aside each month for your car. A good rule of thumb is to keep all car-related expenses (loan, insurance, maintenance) within 15–20% of your monthly income.

Loan specifics

In Singapore, the loan tenure is capped at 7 years, and the loan-to-value (LTV) ratio depends on the car’s OMV (Open Market Value):

• If OMV ≤ S$20,000: Up to 70% loan

• If OMV > S$20,000: Up to 60% loan

» MORE: How to calculate a car loan payment in Singapore 

COE costs

All cars in Singapore need a Certificate of Entitlement (COE). This is included in the price of a new car, while a used car comes with the remaining validity of the COE, which directly affects its price and future renewal cost.

COE validity and depreciation

If you’re buying a used car, check how many years are left on the COE. The fewer the years, the cheaper the car may seem upfront — but it could cost you more in the long run if you need to renew the COE or scrap the car.

Other ongoing expenses to factor in:

• Fuel: Petrol or EV charging

• Insurance premiums

• Servicing and maintenance

• Road tax: Based on engine capacity

Start with the full cost, not just the sticker price. Your car budget should reflect your lifestyle and long-term financial plans.

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Now that you’ve set a budget, the next step is understanding how car loans work — and what lenders look out for.

Your credit score, monthly income, and existing debts are the key things that determine whether you get a loan — and on what terms. A higher income and lower debt burden usually lead to better loan terms.

Banks and finance companies typically require you to have/be:

• Stable employment with proof of income

• A minimum monthly income (varies by lender)

• A Singapore citizen/PR or foreigner with valid employment pass

• At least 21 years old

Your Total Debt Servicing Ratio (TDSR) — which includes mortgage, credit cards, and personal loans — should not exceed 55%. If your debt load is too high, your car loan application could be rejected. A strong credit score improves your chances of approval and may help you secure a lower interest rate.

Planning to take a loan? Clean up your credit and keep debts manageable for better approval odds.

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Don’t wait till you’re at the dealership to figure out financing. Get pre-approved — it’s like window-shopping for money. Interest rates for car loans typically range from 2.78% to 3.5% p.a., depending on the lender and your credit profile.

Preapproved car loan

You can apply for a pre-approved loan directly with banks or licensed financial institutions. This gives you a clear idea of your borrowing limit and the interest rate you’ll get, which helps when negotiating with dealers.

Documents needed

Pre-approval usually takes 1–2 business days. You’ll need to submit documents like:

• NRIC or Employment Pass

• Latest payslips or CPF contribution statements

• Income Tax Notice of Assessment

You can apply directly with local banks (e.g., DBS, UOB, OCBC) or via car marketplaces like SGCarMart or Carro that compare loan options for you.

Getting preapproved empowers you to walk into a dealership knowing what you can afford — and what you’re not willing to pay.

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This is the most important part — choosing your car!

Start by asking, “Who do I need this car for?” Your lifestyle, commute, and family size all play a role. Buying a car isn’t just about the looks — it’s about finding the right match for your budget, needs, and long-term goals.  Websites like SGCarMart are a big help here. They let you filter by price, engine size, fuel type, and more — great for comparing options.

New vs. used cars

When deciding between a new or used car, it’s important to weigh both the immediate and long-term costs. New cars typically come with the latest features, full warranty coverage, and a fresh COE, giving you peace of mind and fewer maintenance concerns early on. However, they also come with a higher price tag and tend to depreciate more quickly. On the other hand, used cars are generally more affordable upfront, making them attractive for budget-conscious buyers. But they may have a shorter COE validity, signs of wear and tear, and limited or no remaining warranty — all of which could translate to higher costs down the road.

Car type

Choosing the right type of car depends on your lifestyle and driving habits. Small cars like hatchbacks are ideal for city driving as they’re fuel-efficient and easy to park, especially in tight urban spaces. If you have a family or need more space for passengers and luggage, sedans or multi-purpose vehicles (MPVs) provide greater comfort and room. Electric vehicles (EVs) are also worth considering — they may offer savings on fuel and enjoy road tax rebates in Singapore, although they usually come with a higher upfront cost.

Road tax

Road tax in Singapore is a mandatory recurring cost that varies based on your vehicle’s engine capacity or, for EVs, its power rating. The larger the engine or higher the output, the more you’ll pay. It’s important to factor this into your budget, as road tax must be renewed annually and can significantly affect the long-term running costs of owning a car.

COE and depreciation

Cars with a new COE cost more. With used cars, check how many years are left on the COE — this affects both resale value and whether you’ll need to renew it soon (which can be costly).

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Almost there! Before you sign anything, make sure you’re fully prepared. Doing your homework pays off. The better prepared you are, the smoother the final steps will be.

What to expect at the dealership:

• Bring these documents. IC or passport, proof of income, car loan pre-approval letter (if any), and CPF contribution history.

• Negotiate. Don’t be afraid to negotiate on the car price, especially for used cars with shorter COE validity. Ask for discounts, free servicing, or road tax waivers where possible.

• Test drive. Always go for a test drive — it’s the only way to feel how the car handles in real life.

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