Read the latest news about Car Loan in Singapore and the best money saving tips.
How much does a car cost in Singapore?
Owning a car in Singapore is notoriously expensive. Besides the high selling price, you have to consider additional one-off costs such as the Certificate of Entitlement (COE), Additional Registration Fee (ARF), excise duty and more. The high purchase cost is one chief reason why many take up a car loan.
Maintaining the car can also cause a dent in your wallet, with costs such as petrol, parking and ERP to consider. Read this article to find out how much it truly costs to maintain a car in Singapore.
Main considerations when taking a car loan:
What is the loan amount you should consider for your car loan?
You can borrow up to 70% of the car purchase price if the Open Market Value (OMV) of the car is worth S$20,000 or less, and up to 60% if the OMV is more than S$20,000. However, the final loan amount you choose should take into consideration your total debt servicing ratio (TDSR). Your TDSR cannot exceed 60% of your gross monthly income. This includes other loan commitments such as your home loan, personal loans and other loans.
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:
The interest rate differs for new and used cars. Different banks also offer different interest rates based on their current promotions offers.
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:
You can apply for a car loan if you are:
You will require documents:
You can choose your car loan based on factors such as: