Car loan products are immensely popular in Singapore. In a country that was in 2022 ranked the most expensive place in the world to purchase a car, this comes as no surprise – car loans are now basically an essential form of financing.
If you live in the city-state and want to buy a new or used car, chances are you’ll need a car loan to help you out. But with so many car loan products on the market, finding the cheapest car loans or best car loans for your unique circumstances takes some shopping around.
Here’s everything you need to know about car loans, including five of our favorite providers compared.
What’s the Maximum Car Loan Amount and Car Loan Interest Rates in Singapore?
The maximum amount you can borrow for a car loan in Singapore is:
- 70% Loan to Value (LTV) on cars with an Open Market Value (OMV) of $20,000 or more.
- 60% LTV on vehicles with an OMV of $20,000 or less.
The maximum car loan interest rates you’ll be expected to pay will vary depending on the banks or financial institutions you decide to borrow from. Generally, you can expect to pay an interest rate of between 2.5 and 4% with most providers.
5 Cheapest Car Loans for New and Used Cars in Singapore
Our five favorite best car loans in Singapore hail from Hong Leong Finance, OCBC, DBS, UOB and Standard Chartered Bank. Let’s review how our best car loans compare against one another in terms of interest rates, loan quantum available, and other important categories.
|Max. Loan Amount
|Max. Loan Tenure
|Top Product Benefits
|Hong Leong Finance New Car Loan
|2.78% p.a. (flat in advance)
|Up to 70% financing of car price
|Up to 7 years loan tenure
|OCBC New Car Loan
|New cars powered by petrol or electric
|Up to 70% of your vehicle’s purchase price
|Up to 7 years loan tenure
|DBS Used Car Loan
|Check with provider
|60-70% financing depending on car price
|Up to 7 years loan tenure
|UOB COE Car Loan
|Borrow up to 70% of car price
|Up to 7 years
|Standard Chartered Auto Financing
|New or used vehicle
|Up to 70% of car price
|12 – 84 months available
Hong Leong Finance offers multiple car loan products aimed at people purchasing either a new or used vehicle, but their new car loan stands out as a particularly great deal. Borrowers can access a pre-agreed flat interest rate of 2.78% on up to 70% financing, and get their loan approved quickly online.
If you’re thinking of going green, OCBC will offer you a significantly lower interest rate on an Eco Care Car loan than a new car loan, but new petrol car buyers can still benefit from the other great features of OCBC products. You’ll get your loan approved within 60 seconds of vesting car dealerships regardless of what kind of car you’re buying, for example.
With DBS, your car loan amount will be pegged to the car price or OMV of the vehicle you are buying. You’ll be able to borrow more if the car price if you’re buying exceeds $20,000 or more, and you’ll get great rates, too. DBS also offers a useful loan calculator you can use to get an idea of what your payments might look like before borrowing.
If you own a COE car that you intend to keep running for another 5 – 10 years, you’re going to need a COE renewal. UOB offers fast processing and approval with a wide distribution network, and you can borrow a loan quantum of up to 70% of the car price, too. Interest rates currently sit at around 3.18% p.a – which is very competitive for COE cars.
If you want the flexibility to be able to finance either a new or used car at the same rate, Standard Chartered is the bank for you. You can borrow at an interest rate of 3.08% p.a. and benefit from accessing a wide distribution network of dealers across the city-state. Their application process is hassle-free, too.
What to Consider when Taking out a Car Loan
Before submitting a car loan application to banks or other financial institutions, you should consider the following:
1. Whether You Need a New or Used Car Loan
You should think about upfront costs and depreciation to help you decide whether a new or used car is best. From here, note that whether you’re purchasing a new or used vehicle may affect the type of loan you’ll be eligible for. Some financial institutions offer specific products to electric car buyers, too.
2. Car Loan Affordability
A car loan will only cover 60-70% of your vehicle’s Open Market Value. Calculate how much more you’ll need to cough up as a down payment, and what level of monthly payments you can realistically afford on your loan.
3. Whether to Buy from Car Dealerships or Parallel Importers
These are the two most common ways people will buy a car in Singapore. Authorized car dealerships are more reliable but also more expensive, whereas parallel importers offer cheaper cars but may lack replacement parts if things go wrong.
4. How Long You Plan to Keep Your Car
Used cars make more sense if you’ll be driving your vehicle for two years or less, but a new car is a no-brainer if you’re keeping it for the long haul. Older cars might also require COE renewal after a certain age – so keep this in mind, too.
5. The Car Loan Amount and Monthly Instalment Terms You Need
Different banks will offer you different monthly instalment costs depending on the loan amount you are borrowing and the length of repayment periods you require. Determine exactly what you want before comparing the market to get the best deal.
Frequently Asked Questions (FAQs) About Car Loans in Singapore
1. How Much Does It Cost to Finance a Car with a Car Loan in Singapore?
Banks in Singapore offer a lot of different car loan products, but it’s estimated that the average cost of a car loan in Singapore is around 2.5% interest per annum (p.a.) on new car loans and 2.6% p.a. on used car loans. From the financial institutions viewpoint, used cars are a “riskier” bet, which is why a higher interest rate is typically charged on a used car loan.
2. Is it Cheaper to Finance a Car Through a Bank or a Car Dealer?
Most banks in the city-state will offer better interest rates and more flexibility than car dealerships or alternative financial institutions. That said, comparing the market widely and negotiating with different banks directly can sometimes swing you a more favorable deal.
3. What is the Best Way to Choose a Car Loan?
The best car loan for you will always depend on your unique requirements. Consider whether your car is new, used, or electric – as different loan products are available for different kinds of vehicles. You should also think carefully about what kind of interest rate and monthly payments you can afford, as well as the loan tenure you need and the maximum amount you’d like to borrow for your loan.
4. What is a Good Interest Rate on a Car Loan?
Obviously, every bank will be different from the next when it comes to interest rate charges. You’ll usually be expected to fork out an interest rate of between 2.5 and 4% with most Singaporean banks, with lower rates usually available on new and electric car loans than COE renewal products or loans for used cars.
5. When is a COE Renewal Required for My Car?
A COE renewal is due when your vehicle’s existing COE expires, but only if you intend to keep driving the vehicle for another 5 – 10 years. If so, you will need to pursue a COE renewal either before it expires or within one month of its expiry date – otherwise you may be hit by late payment or processing fees.
Car Loans Are a Good Idea if…
Car loans suit some circumstances more than others. In short, if you’re buying a car but can’t afford to cover the whole purchase price with your own savings, a car loan is probably a good idea. That said, if you have poor credit, this might be a problem when borrowing from a bank. Some financial institutions in Singapore will still offer financing to borrowers with poor credit, though you might need to work to improve your credit score prior to submitting an application.
Compare the Market for the Best Car Loan Interest Rates and Perks with Instant Loan
Car loans can be complicated. It’s important to determine whether a car loan is definitely the right kind of financing for you prior to applying – and it’s also absolutely essential to compare the market. Here are the key things to keep in mind:
- Whether you are buying a new or used car will affect what kind of loan you are eligible for, as banks offer different car loans to cater to new or used vehicle types.
- You should consider how much you want to borrow, what kind of down payment you’ll require to make up the difference, and what level of monthly payments you can realistically afford to pay on your outstanding loan amount before getting a car loan.
- Car loan interest rates vary from bank to bank and used car owners will typically be charged more than those applying for a new car loan.
- Whether you need a new car loan, used car loan or COE renewal, shopping around to compare the market is always the best way to secure the right deal.
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