Singapore is known to have extremely high car prices, making it challenging for average Singaporeans to afford one without financial help. Here’s where a car loan from banks and financial institutions comes in handy.
Most car loans in Singapore have similar features. You can borrow up to 70% of your car’s Open Market Value (OMV) and choose between a loan tenure of between 5 to 7 years. The biggest difference is the interest rates. Remember, a difference of 0.5% in interest rate can amount to thousands of dollars in additional interest paid.
But what is a good interest rate on a car loan? Car loan interest rates in Singapore typically range between 2.28% and 2.88% and may vary for new and used cars. Let’s take a look at the top car loans in Singapore.
Top 6 Car Loans in Singapore
Before signing over the dotted line, it is always smart to determine your best car loan options and see which term and car loan interest rates are the most competitive to make your car purchase as comfortable as possible.
Best Bank Car Loans
| Car Loan | Minimum Loan Amount | Maximum Principal (% of car valuation) | Maximum Loan Tenure | Annual Interest Rate (+ EIR pa) | Best For |
|---|---|---|---|---|---|
| OCBC Car Loan – New Car | $15,000 | Up to 70% | 7 Years | 2.28% (EIR 4.18% – 4.29% pa) | New Car Purchase |
| DBS Car Loan – Used Car | $10,000 | Up to 70% | 7 Years | 1.99% (EIR 3.67% – 3.82% pa) | Used Car Purchase |
Runners Up
Car Loans | Minimum Loan Amount | Maximum Principal (% of car valuation) | Maximum Loan Tenure | Annual Interest Rate (+ EIR pa) |
|---|---|---|---|---|
| UOB Hire Purchase Car Loan – New Car | $10,000 | Up to 70% | 7 Years | 2.68% (EIR 4.91% -5.01% pa) |
| Maybank Car Loan – New Car | $10,000 | Up to 70% | 7 Years | 2.78% (EIR not listed but may range from 4.18% – 4.29% pa) |
| OCBC Car Loan – Used Car | $15,000 | Up to 70% | 7 Years | 2.28% (EIR 5.54% -5.46% pa) |
| Hong Leong Finance New Car Loan | Not listed | Up to 70% | 7 Years | 2.48% (EIR 4.77% -5.38% pa) |
In our analysis, we compared the most popular banks in the country and these car loan products managed to offer the best loans in terms of interest rate competitiveness, loanable amount, ease of application, and repayment terms. Let’s discuss what made each attractive.
1. Best Loan To Purchase New Cars: OCBC Car Loan – New Car
At an interest rate of 2.28%, OCBC Car Loan for new car purchases easily made it the most competitive bank financing in Singapore. OCBC also stands out with its premium service of instant approval (within 1 minute) and customers can apply for a car loan even before selecting the car of their choice; which you won’t easily find in other competitors.
Key Features
- Maximum Loan amount: up to 60% or 70% per vehicle price
- Exclusive package of 1.68% pa interest rate if borrowers opt for ECO-Car Care Loan
- Loan approval within 60 seconds before visiting the showroom
Other Fees and Charges
- Early Settlement Fee: 1% of outstanding loan amount and 20% interest rebate
- Late Payment Fee: $80
2. Best Loan to Purchase Used Cars: DBS Car Loan – Used Car
DBS offers the lowest interest rate for pre-owned car purchases in Singapore at 1.99% plus borrowers can enjoy interest savings from their 6-month interest rebate promotion. To qualify for this promo, customers must meet the minimum loan amount of $10,000 and loan duration of at least 3 years.
Key Features
- Maximum Loan amount: up to 60% or 70% per vehicle price
- Significantly lower interest rate at 1.68 if customers will opt for DBS Green Car Loan
- Lowest Interest rate and EIR in Singapore for a used car purchase
Honorable Mentions
In case borrowers could not qualify for OCBC and DBS car loans, the following banks are worth considering for their competitive car loan interest rates and terms.
3. Most Competitive Car Loan: UOB Hire Purchase Car Loan – New Car
With a close percentage difference from OCBC’s offer for new cars, UOB’s Car Loan interest rate at a fixed 2.68% makes it an attractive financing option. Suppose you take out a loan of $30,000 payable in a maximum of 7 years, a $427 of monthly payments remain competitive.
Key Features
- 2.68% Interest rate for new cars
- 2.78% interest rate for used cars
- Loan quantum up to 70% of purchase price
4. Best Backup Car Loan: Maybank Car Loan – New Car
It may not be the best car loan in terms of its interest rate, but at 2.78%, it is about average and may be a suitable backup if you don’t get approved by other car loan lenders. They share the same loan tenure and loan quantum with other top banks on the list.
Key Features
- Flat rate of 2.78% interest for loan tenures of 1 to 7 years
- Convenience of GIRO payments
5. Fast 1-Minute Approval For Car Loan: OCBC Car Loan – Used Car
It could’ve been a double win for OCBC for new or used car loans had they matched or offered more competitive interest rates than DBS. Still, OCBC offers the next best option at 2.28%, and the fast 1-minute approval service makes the car loan experience as easy as possible.
Key Features
- Customers can apply for a car loan even before visiting the car showroom
- Loading fee of $200 if the loan amount is less than $15,000
- Enjoy significant savings with a 1.68% interest rate pa for Eco-Care Car Loan
6. Cheapest Car Loans For New Cars: Hong Leong Finance New Car Loan
If OCBC’s new car loan didn’t work for you, Hong Leong Finance should be your next best choice. Compared to other top banks, Hong Leong Finance offers one of the lowest interest rates at 2.48% pa for new car purchases and is a fixed interest rate for any loan tenure.
Key Features
- 2.48% for new car purchase
- 2.68% for used cars
- 60% – 70% financing of vehicle’s OMV
Now that we have discussed your best auto loan options, let’s talk about the other important things that you should know when taking out a loan.
Minimum and Maximum Amount You Can Borrow
One of the biggest factors that affect the maximum car loan amount is the Open Market Value (OMV) of the car. OMV is the purchase or valuation price of the car, excluding Singapore-specific taxes and duties.
Based on the updated regulations, here’s the maximum amount you can borrow based on your car’s OMV:
Open Market Value (OMV) | Maximum car loan approved amount you can borrow |
|---|---|
| Up to $20,000 | 70% of the purchase or valuation price |
| More than $20,000 | 60% of the purchase or valuation price |
This only indicates the maximum you can borrow. Banks and other financial institutions will take into account other factors that may affect your principal loan amount. As such, the bank will assess your income, other financial commitments, and credit score.
So How Much Down Payment Should You Pay?
The down payment is how much that’s left from the maximum car loan you get from the bank. This will be paid in cash.
Say you are approved of the 70% financing for a new car priced at S$80,000. This means you’ll need to pay the remaining 30% deposit, which amounts to S$24,000, in cash.
How Long Should Your Car Loan Tenure Be?
According to MAS, the maximum loan tenure for cars is 7 years. Note that the longer the loan tenure, the more expensive your interest will be in the long run.
That said, you can opt for a shorter tenure. Doing so will lead to a lesser total interest paid. Just make sure that the monthly car loan instalments are manageable.
Is the 7-year loan tenure applicable for both new and second-hand cars?
If you’re getting a loan for a second-hand, old car, your maximum car loan period is determined by the registration date of the car.
In Singapore, car loans are usually available for cars less than 10 years old from the original date of registration. So, if you’re buying a 7-year-old car, your maximum loan tenure is 3 years since the car only has 3 years of life left.
What Are Your Other Financing Options?
1. In-House Car Loan Package
One of the easiest ways to get financing is through the car dealer’s in-house financing package. With this option, you’ll get to buy the car and finance it under one roof. Plus, you might be able to negotiate the sale price.
The catch? It’s not the lowest interest rate in the market.
The car dealer might offer you a deal where you can borrow 70% of the car’s OMV even if it is worth more than S$20,000. This means you’ll only have to pay a 30% downpayment.
However, you need to take into account whether you can afford to pay off the principal loan amount plus interest.
Eligibility
- At least 21 years old and above
- Annual income of at least S$30,000
Requirements
- Loan application form
- Photocopy of NRIC (front and back)
- Proof of income
For Foreigners
- Loan application form
- Photocopy of passport
- Copy of Employment Pass (front and back)
- Employment Agreement
- Sales and Purchase Agreement
2. Bank Loan Through Car Dealers
Car dealers also offer bank loans through the top banks in Singapore, such as DBS, OCBC, and UOB. This option may be more convenient since the car dealer will make the transaction seamless and fuss-free.
So what will car dealers get from this financing option? Banks pay car dealers a commission if you sign up for a bank loan through them.
The eligibility and requirements will vary depending on which bank you chose.
3. Licensed Moneylenders
Another option is to take out a personal loan from a licensed moneylender. Rest assured that legal lenders in Singapore are regulated by the Registry of Moneylenders. You can verify the money lender’s license and credibility by checking the complete list of licensed moneylenders on MinLaw’s website.
But how much can you borrow from a legal lender?
Unlike banks where you can borrow up to 70% of the car’s OMV, you can borrow up to 6x your monthly income with a legal lender. Take a look at the table below:
| Borrower’s annual income | Singapore Citizens and Permanent Residents | Foreigners residing in Singapore |
|---|---|---|
| Less than $10,000 | $3,000 | $500 |
| At least $10,000 and less than $20,000 | $3,000 | |
| At least $20,000 | 6 times monthly income | 6 times monthly income |
However, the moneylenders in Singapore can charge an interest rate of up to 4% per month. Plus, they will also charge the following expenses:
- Late payment fee of not more than S$60 for each month the loan is repaid late
- Administrative fee of not more than 10% of the principal loan amount
Eligibility
- At least 21 years and above
- Minimum income:
- Singaporeans or Permanent Residents: S$2,000
- Foreigners: S$3,000
Requirements
Singaporean or Permanent Residents
- Identity card / NRIC
- Proof of residence (utility bill, a letter addressed to you, and/or tenancy agreement)
- Proof of employment (certificate of employment or 3 months recent pay-slip)
- SingPass to log into CPF, HDB, IRAS website
Foreigner
- Passport
- Work Permit / S-Pass / Employment Pass
- Proof of residence (utility bill or tenancy agreement)
- Proof of employment (certificate of employment or 3 months recent pay-slip)
- Proof of income (bank or account statement)
- SingPass (to log into the IRAS website)
Additional Tips for Buying a New Car
1. Set A Budget
Found the car of your dreams? Great! But can you afford it?
Singapore is notorious for having one of the most expensive car prices in the world. That’s why most buyers turn to financial assistance to purchase one. And even if you are approved for a car loan with 70% financing, you still need to arrange a substantial sum for the down payment.
On top of the down payment, you also need to take into account if you can afford the monthly installments for the duration of the loan.
2. Negotiate the Price at the Car Dealership
Most car dealers in Singapore can offer discounts, all you have to do is ask. You may get free service credits or substantially discounted accessories.
Here are a few things to keep in mind when negotiating with the car dealer:
- Check the year and month in which the car was manufactured. If the manufacturing date was a year ago or more, you can ask for a discount.
- Consider buying the car that the dealer has been using to provide customers a test drive. The car may still be in excellent condition but you could get a discount.
3. Be Careful When Signing Documents at the Dealership
- Read the contract properly.
- Ask for clarifications when you need them.
- Check out the guide provided by the Singapore Motor Traders Association regarding the sales contract.
The contract must have detailed information about the car, including the model, engine capacity, color, year of manufacture, and more.
Additionally, the price stated on the contract should be the same as the price you have negotiated.
4. When Taking Out A Car Loan Consider Additional Costs
Aside from the interest rate, you must also take into account the following additional costs:
- Processing or administrative fees may cost at least S$200. Other banks or car dealers may waive this fee if the loan amount is above S$20,000.
- Early settlement fee of at least 1% of the outstanding loan. This is a penalty if you pay off the loan early.
- Unpaid interest fees are usually 20% of the unpaid interest. This is an additional penalty for early settlement.
Closing
Ready to purchase your own car? There are different financing options available from banks, to in-house car loan packages, to licensed moneylenders. But before you decide which car loan to get, compare different interest rates, tenure, and other loan terms.
Key takeaways
- Car loan interest rates in Singapore typically range between 2.28% and 2.88% and may vary for new and used cars.
- One of the biggest factors that affect the maximum car loan amount is the Open Market Value (OMV) of the car.
- You can get a maximum of 70% car loan amount if the car’s OMV is more than S$20,000.
- What’s left of the maximum car loan will be paid in cash as a down payment.
Want to compare loans before making a decision? Loan Advisor is a finance directory comparison website trusted by more than 1,000 Singaporeans. They offer free, unbiased, and up-to-date information on the best loans with the lowest interest rates from the top licensed moneylenders. Request up to three loan quotes today!
