Top Car Loan Providers in Singapore

Financing a car in Singapore is an expensive investment

Car owners in Singapore are likely to agree that purchasing a car is a hefty investment. With the rocket-high prices of the Certificate of Entitlement (COE) – which gives you the right to purchase a car – coupled with the actual purchase value of the car, you are better off taking public transportation instead.

However, there are some Singaporeans (and perhaps foreigners) who do see the value in purchasing a car. 

Get a car loan to help offload some of that financial burden

Whether it is for family reasons or work-related reasons, there are various ways in which you can finance the purchase of a car without burning a hole in your pocket.

The easiest and most common method is to get a car loan from a bank or financial institution. 

What is a car loan?

A car loan is a secured loan offered by banks or financial institutions for you to purchase a vehicle of your choice. Very often, the car loan is secured against your purchased vehicle. This essentially means that if you are unable to repay your car loan, the lender (be it the bank or financial institution) has the right to seize your vehicle. The lender typically holds ownership of your vehicle until the loan amount is fully paid off.

Where can I get a car loan in Singapore? 

If you have done your due research and would like to go ahead in getting a car loan, here are some banks and financial institutions that offer car loans in Singapore.

What are the factors that contribute to the cost of purchasing a car?

Many of us are aware that the crazy high COE prices tend to jack up the cost of purchasing a car. However, did you know that there are other factors that contribute to the overall cost of purchasing a car as well?

Here is a list of components that could possibly contribute to the hefty price tag on your choice of car:

Open Market Value (OMV)

Open market value is the actual value of your car excluding local-specific taxes and surcharges, such as Goods and Services Tax (GST) and COE. 

The car’s OMV is inclusive of the purchase price, insurance, and freight and delivery of your car to Singapore.

Certificate of Entitlement (COE)

COE is a legal document that entitles you the right to own and use a vehicle in Singapore for either 5 or 10 years depending on your vehicle category. This is also where the bulk of financing your car purchase would come from.

The COE cost tends to fluctuate depending on market demand and supply.

Additional Registration Fee (ARF)

Additional registration fee is a tax that is payable upon registration of your car. The amount of ARF that you have to pay is dependent on your car’s OMV and is minimally 100% of the OMV.

PARF (Preferential Additional Registration Fee)

PARF is a rebate that you receive if you decide to deregister your vehicle before the 10-year mark. The amount of rebate is pegged to the remaining OMV of your car at the point of deregistration.

Excise Duty

Excise duty is an additional tax that you have to pay when purchasing certain goods such as alcohol or tobacco. For cars, this is pegged at 20% of the car’s OMV.

Goods & Services Tax (GST)

GST is essentially the consumption tax levied on imported goods in Singapore as well as the supply of any goods and services. The current GST rate in Singapore is 7%.

For cars, you will need to pay 7% of the car’s OMV and excise duty.

What is the maximum amount that I can borrow under a car loan?

It is important to be aware of the factors that contribute to the cost of your car as this will have an impact on the amount of loan you can take.

The loan amount that you are ultimately eligible for is dependent on the car’s OMV, not the total cost of purchasing your car.

The Monetary Authority of Singapore (MAS) has set maximum limits on the loan amounts and loan tenure. Based on their existing regulations, the maximum loan amount that you can take are as follows:

• For cars with OMV of up to S$20,000: 70% of car purchase price with repayment tenure of maximum 7 years
• For cars with OMV of more than S$20,000: 60% of car purchase price with repayment tenure of maximum 7 years

Do bear in mind that these are maximum limits set by MAS. The actual loan amount and repayment period granted to you ultimately depends on several factors including your income, age, and credit score.

What are the interest rates on car loans?

The interest rates on your car loans vary between banks and financial institutions. Most banks tend to offer an interest rate of 2.78%. 

However, interest rates do fluctuate from time to time. Some banks and financial institutions also offer promotions from time to time. Hence it is best to always do your due research and enquire directly with the bank or financial institution for more updated rates.

Are there any other additional costs that I should be aware of?

When getting a quotation on your car loan from banks or financial institution, here are other additional costs that you need to take note of as well:

Processing / Administrative Fee

Most banks charge a minimum administrative fee of $200. However, some banks also waive the administrative fee if your loan amount meets a minimum value.

Early Settlement Fee

Most banks charge an early settlement fee should you decide to repay your loan earlier than the stipulated repayment period. The amount is usually at least 1% of your outstanding car loan.

Unpaid Interest Fee

Similar to the early settlement fee, you may incur an additional penalty on the unpaid interest if you repay your car loan early. Most banks charge a penalty of 20% on the remaining unpaid interest on your outstanding car loan.

Editor’s Note:

While every precaution has been made to ensure the accuracy and fairness of this listing, we acknowledge that they may be inaccuracies. Therefore, we urge you to contact the service provider above for the correct information and/or contact us with the correct information.

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