Best Car Loan Interest Rates in Singapore (2023)

A car loan (also known as an auto loan) is a loan that helps you to pay for the cost of your car, up to 70% of the total car price. Car loans have loan tenures of up to 7 years.

There are four different types of car loans:

• Car loan for a new car: When you buy a new car, you can either take a loan from the bank or from the dealer. The loan tenure varies between 1 and 7 years.
• Car loan for a used car: Used car loans can also be obtained either via banks or car dealers. However, car loans for used cars also have higher interest rates and loan tenures could differ depending on the age of the car.
• Commercial car loan: Buyers who are buying a vehicle for commercial purposes can apply for this loan. This includes taxis, vans, company cars and cars bought by ride-hailing companies.
• Car loan refinancing: Similar to refinancing your home loan, you can 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.

The interest rate differs for new and used cars. Different banks also offer different interest rates based on their current promotions offers.

• New car: interest rate ranges from 1.99% to 2.78% p.a.
• Used car: interest rate ranges from 2.78% to 2.98% p.a.

You can check out this article on the best car loans in Singapore.

Yes, most banks require a minimum loan amount for a car loan. This minimum loan amount ranges from S$10,000 to S$30,000 depending on the bank’s terms and conditions.

You can borrow up to 70% of the total car price, depending on the Open Market Value of the vehicle. This car price refers to the purchase price or the valuation price, whichever is lower. How much you can borrow also depends on your current debt servicing ratio.

In Singapore, your Total Debt Servicing Ratio (TDSR) cannot exceed 60%. This means that your total monthly debt obligations cannot be more than 60% of your gross monthly income.

These monthly debt obligations include all the loans you take up, such as your home loan, renovation loan and other secured or unsecured loans. Depending on the loans you are currently servicing, taking a car loan could increase your debt ratio to 60%.

Car loans could be a means to fulfill a need for a car, even if you do not have the cash on hand to pay for it. With a car loan, the bank or car dealer will help to pay for the cost of the vehicle, while you pay off the loan in monthly installments with interest over the specified loan tenure.

There are 3 options when it comes to applying for a car loan. Whichever option you prefer, do keep a lookout for the interest rate charged.

Option 1: Apply directly with a bank, submitting all documents required and follow through the entire process.

Option 2: Take a loan from the car dealer. Car dealers work with banks to provide car loans for buyers.

There could be differences in the interest rate charged. There could also be a processing fee charged by the car dealer to help you with this application. When you apply for a car loan with a bank, you will have to submit all the documents on the bank’s website and follow up on the status of your application with the bank directly. When you apply through a car dealer, they will be able to help you with the entire process and take care of the paperwork.

While there is no stated credit score required for you to buy a car, your credit score could affect your eligibility when applying for a car loan. Generally, the better your credit score, the easier it is to be approved for a loan. If you have a poor credit score, you might be granted a smaller loan quantum or face higher interest rates.

Besides paying the interest for your loan, there are also other fees you should take note of:

• Late fee: S$80
• Early repayment fee: 1% of outstanding loan amount

You can apply for a car loan if you are:

• Above 21 years old
• A Singaporean, Singapore PR or foreigner who is looking to purchase a new car or used car

You will require documents:

• Loan application form
• NRIC
• Income documents
• Vehicle sales agreement

You can choose your car loan based on factors such as:

• Interest rates
• Minimum loan amount
• Provider
• Ease of application (e.g. using MyInfo)