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Car Loan FAQs

The first way is to take a loan directly from the bank. Submit all the documents and follow up with the bank yourself. The second option is to take an in-house loan from the car dealer. Lastly, you can apply to the bank via the dealer and the dealer will take care of all the paperwork for you. Whichever option you choose, you have the flexibility of choosing the car loan that suits you best.
There are four different types of car loans:

New car loan – When you buy a new car, you can either take a loan from the bank or from the dealer. The loan tenure usually varies between one and seven years depending the downpayment amount. Note that you must meet certain basic criteria and need a good credit score from the Credit Bureau Singapore to get the loan approved.

Used car loan – Used car loans can also be obtained via either banks or through car dealers. But loan tenures will be different and depend on the age of the car. The car loan interest rate for used cars is also slightly different from new cars.

Commercial car loan – Buyers who are buying a vehicle for commercial reasons can apply for this loan. This mostly applies to taxis, vans, company cars and cars bought by ride-hailing companies.

Car loan refinancing – This is pretty similar to refinancing your home loan. You switch from your current lender to a new lender to enjoy a lower car loan interest rate. The new lender will pay off your previous loan in full and offer you revised interest rates and tenure for the new loan.
A PARF car is a car that has not reached 10 years of age. So, it’s eligible for both the PARF and COE rebate. The PARF depends on the car model and engine capacity and varies between 50% to 75% of the Additional Registration Fee (ARF) paid.

A COE car, on the other hand, is no longer eligible for the PARF rebate as its COE has been renewed. The owner would have paid the Prevailing Quota Premium (PQP) to renew the COE for another five or 10 years. When you de-register the car, you’re only eligible for the COE rebate.
The interest rate is different for new and used cars. The current car loan interest rate in Singapore is 2.78% for new cars and 2.98% for used cars. But different banks will offer slightly lower rates as part of promotional offers.
The expense ratio of the car is the cost of maintaining the car in relation to your monthly salary. It’s recommended that car-related costs don’t exceed 20% of your salary. If you earn $5,000 per month, expenses for your car should not exceed $1,000. The costs include your car loan plus interest payments, petrol, ERP, insurance, maintenance and road tax. If the total cost exceeds 20%, hold off on getting a car and buy one only when you aren’t so stretched financially.

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