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How to Finance Used Cars in Singapore?

Businessman giving car key over car loan application document
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Maybe you are tired of commuting the same routes every day or maybe you transferred work and now you are not able to use familiar routes you once knew like the back of your hand. 

You might want to consider getting a new car. But is it too expensive that it will create a huge dent in your savings accounts? Well if you are going to buy a brand new automobile, then it will be expensive even when you apply for a car loan. 

The thing is, you should aim for a used car. There are also all sorts of loans for used cars from car dealers to getting your dream car. You can check investments popular investment guides too.

Why Choose Used Cars

The good thing about used cars is that they are not like credit cards especially when you are dealing privately, person to person, you get a huge room to move around your negotiations ergo, a huge advantage if you are going to finance through car loans which can help you increase your budget.

One other thing is most, if not all of the car financing products and car dealers available for you in Singapore requires you to be about 21 years old and should currently possess a job that pays regularly of course, or your own business. So before you ask yourself “How much can I borrow?” you should check first the interest rates available for your credit score, the car loans offered that are within your budget, loan amount, loan tenure, and other factors regarding car financing.

Unlike credit card guides, here is how to afford your very own car in Singapore, a guide to your future car ownership.

How to Finance a Used Car

  • Know your Credit Score

First, you have to check out your credit score. Your credit score should be easily accessible through the Credit Bureau of Singapore (CBS) which usually costs SGD 6.

Your current credit score will determine the amount that the bank or financial institution will loan you. A low credit score will of course get you a lower amount that the bank or lending institution will be willing to loan you.

Take care of your credit score as it will be the main determiner for financial products such as home loans, personal loans, and the one you need right now, the best car loan.

  • Research Loan Providers

Check out banks and lending institutions that offer loan products suitable for your credit score and is within your budget. Most of the best car loans usually offer 2 to 3% interest rate per annum. 

Compare each one and find the offer that best suits your financial capabilities as loans usually stick around for a long time. Be sure to also check out the loan tenure and even reviews of each bank or financial institution you are about to commit with, customer feedback is very important.

  • Applying for a Used Car Loan

If you were able to check out most loan providers, they will usually ask for the same requirements upon your loan application, generally of course, you should be above age 21 and are currently employed. 

You should also check the car purchase price and the open market value (OMV) or its valuation price as they will definitely make a difference with any loan you are about to avail.

  • Compare Financing Offers

Car loans in Singapore have been less restrictive since 2016 since the Monetary Authority of Singapore eased out on car loans. They previously only allowed 60% to be borrowed of the total car price if the open market value (OMV) is at SGD 20,000 and 50% otherwise. Now they have increased by 10%. There are three types available for used car loans and each have their own edge to the other. Check out these three before you begin your loan journey and afford your very own automobile.

There are three main types of financing options for used car loans other than the usual bank loans:

1. Fixed Interest Rate Financing

This type of financing charge flat rate interest. The interest rate will continually be paid throughout the loan tenure. You should also check if the used car you are about to purchase is eligible for this type of loan as the interest would significantly depend on the age of the car and its total purchasing price.

2. In-house Financing

If your credit rating would get you difficulty in standard loan approvals, you should check out in-house financing. These types of loans are sought after by those who are having difficulties in loan approvals. As they are available for those who cannot easily squeeze through standard loan criteria, these loans offer higher interest rates compared to those typically offered.

3. Balloon Scheme Financing

This one works better if you are getting a used car. Although considered risky as it excludes the PARF rebate fee, it offers significantly lower monthly payments. The PARF rebate is a sum of money that the Land Transport Authority or LTA will give you when you deregister and or scrap your car thus, you should only opt for this type of financing if you have zero plans of reselling the car in the future.

Main Considerations When Taking a Car Loan

1. Interest Rates

Any kind or any type of loan or long term financial engagement is bundled with a loan interest rate. Be sure to seep through every offer available for you to maximize your chances of getting a car loan that is truly a great deal for your time and money. The interest rate is also the first thing you should check as it will determine the loan’s feasibility for your very own convenience.

2. Minimum Loan Amount

As we have mentioned earlier, the Monetary Authority of Singapore eased restrictions on car loans by raising 10% of the maximum amount of loan. Typically, banks and lenders will offer you 70% of the car purchase price if the market value of the car is worth SGD 20,000 or less. Other cars above the said amount will be offered 10% less or 60% of the purchase price of its open market value.

3. Maximum Loan Tenure

Unlike other loans that can offer up to 10 years of tenure per loan, the Monetary Authority of Singapore capped the maximum tenure of motor vehicle loans at 7 years. A two year increase from the former 5 years. Used cars lower than 10 years can be provided with 10 years of tenure minus the age of the car or 7 years whichever is lower. The age of the car will always be significant to the lender as it will determine the car’s risk as an asset, so older cars tend to get less approval from financial institutions and banks.

4. Other Fees

Depending on which bank you are about to apply for your loan, you should be wary of other fees. Scrutinize the lender well to be in the know if there are any other fees you need to be aware of because the last thing you need is a fee that will blindside your finances, especially when dealerships often include “administrative fees” and other charges that are offered on top of your actual fees. Inquire also for flexibilities such as lump sum payments, and other repayments.

5. Ease of Application

What else should you prioritize after knowing the amount of loan, other fees, and the tenure of your loan? Of course your very own convenience! Other than the fees and amount of loan, you should also take into account the ease of application you would be going through plus the ease of your loan approval because after all, time is the most expensive thing you will be able to invest.

Here is a list of the best car loan interest rates, minimum loan amount, maximum loan tenure, and other information currently available in some banks:

Banks Interest Rate Min. Loan Amount Max. Loan Tenure Monthly
Hong Leong Finance 2.28% SGD 10,000 7 years SGD 557.00
DBS 2.28% SGD 10,000 7 years SGD 557.00
Maybank 2.28% SGD 10,000 7 years SGD 557.00
OCBC 2.28% SGD 15,000 7 years SGD 557.00
Standard Chartered 2.28% SGD 10,000 7 years SGD 557.00
UOB 2.28% SGD 10,000 7 years SGD 557.00
Tokyo Century 2.78% SGD 20,000 7 years SGD 569.50
Hitachi 2.78% SGD 15,000 7 years SGD 569.50

 Here are the usual requirements necessary for applying for a used car loan in Singapore:

  • NRIC (front and back) OR
  • Passport
  • Work permit (for non-resident or foreigner)
  • Utility bill to serve as proof of address (for non-resident or foreigner)
  • Copy of latest Income Tax Notice of Assessment (2 years for Self-employed)
  • Copy of 1 to 3 months of computerized pay slip from current employer
  • Copy of latest 6 to 12-month CPF Contribution Statement
  • Copy of the bank statements dating back at least 6 to 12 months.
  • Employment information and employer’s contact details
  • Details of properties or large assets (such as a car) you own
  • Your Credit Score
  • Details of existing financial commitments such as housing loan, personal loan, credit cards


In everything we have listed here and mentioned, the best thing to do when applying for a car loan or any type of financial commitment for that matter, is never to rush into things. 

Research, scrutinize, and crowdsource. Customer feedback is one of the most important factors when choosing a bank or financial institution as a lender.

Then again, research is very time consuming and for some of us who are not very savvy when it comes to finances and financial engagements, good thing is there are loan comparison tools and loan guides available online!

For easier loan research, you can check out Loan Advisor’s car loan comparison suitable to your every needs.

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