Car Loan Interest Rate | Loan Tenure and Interest Rates in Singapore
Car Loans | Loansby Priyadarshini 16 March 2022
In most cases, you can borrow the money for up to seven years. However, keep in mind that the longer the loan term, the more interest you will have to pay. As with personal loans, you should choose the shortest term possible. Simply ensure that the monthly payments are manageable. In this blog, we tell you about car loan interest rates in Singapore.
How long should I keep my car loan?
The one major exception is if you’re taking a loan for a secondhand car that’s over a year old. Because of the way COE is structured in Singapore, automobile loans are normally only available for the first ten years of a vehicle’s life, after which they are considered “worthless.” As a result, if you buy an 8-year-old car, your maximum loan term is two years because it has only two years of life left.
If you’re buying a “COE car,” that is, a car that is more than ten years old and requires COE renewal, it will be tough to secure a car loan, albeit there are a few exceptions, such as the UOB COE Auto Loan and Maybank’s car loans.
What are my financing alternatives for a car?
There are three alternatives available to you:
- In-house finance offered by a car dealership
- Bank loan obtained through a vehicle dealer
- Direct payment to a bank or financial institution
The vehicle dealer’s in-house financing package is the path of least resistance. As previously stated, your dealer will almost certainly give you a deal that you will find impossible to refuse. He’ll offer sweeteners like “overtrade,” which is essentially a ruse that allows you to borrow 70% instead of 60% even if your car’s OMV is more than $20,000. (This means that your down payment is only 30% rather than 40%.)
Car dealers also provide bank loans through well-known institutions such as DBS, OCBC, and UOB. Your dealer will also make it a smooth and trouble-free experience for you, and will even throw in some extras to boot. But it’s not because you’re intriguing, attractive, or smart. This is due to the fact that banks pay them a commission to sign you up.
The third alternative is to look around for a car loan on your own and go straight to a bank or financial institution. You’ll be able to choose a more favourable interest rate, which will save you money in the long run.
Here are some well-known vehicle loan companies in Singapore:
Hong Leong Finance
Singapore car loan interest rates
So, how much should you budget for a car loan? Currently, most banks offer an annual interest rate of about 2.78 percent. You intend to borrow the remaining $70,000 over a seven-year period. Let’s look at the cheapest vehicle loans available.
Loan for a car
The interest rate payments are made monthly.
- Car loan from Standard Chartered – $990 p.a. 2.68 percent
- Citibank auto loan- $996 at 2.78 percent p.a.
- DBS auto loan – $996 at 2.78 percent p.a.
Car loan interest rates and promos vary all the time, so check for the most recent rates before you commit.
How do I get a car loan?
After you’ve done your homework, you may go back to your auto dealer and ask them to connect you with the bank of your choosing. However, keep in mind that any online-exclusive discount rates may not apply at that time.
If you want to go directly to the bank, you’ll need to fill out an online application or schedule an in-person appointment. It is useful to have the following documents on hand:
Vehicle Purchase Agreement (if you have it)
Income documentation, such as a salary payslip, income tax statement, or CPF statement
Existing financial commitments, such as a mortgage or a personal loan, must be demonstrated.
Details about your job, such as your employer’s name and monthly salary.
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