• Car Loans

    Car Loan BYTES FROM OUR KITCHEN

    Car Loans in Singapore

    Singapore is known for an efficient public transport system. With a well-connected network of trains and buses, getting around is quite feasible. But there are instances when public transportation might not be the best answer. Sure, you can get yourself a bike or a moped but then again it doesn’t provide you much protection from the elements of weather. Besides, it would be quite a feat to fit your entire family on a bike. Having a car becomes more of a necessity when you’re travelling in a group of more than 2 people. Be it carpooling to work or getting away for the weekend with your family and friends, owning a car comes with its own set of advantages and to some, serves more than just a mode of transportation.

    But owning a car in Singapore can be an expensive affair. With cars costing a significant amount, not many people can afford to dip into their savings to purchase a car lest their savings dwindle down significantly. For that very reason, most people go in for a car loan to acquire the additional funds required to purchase the car. These car loans cater to new cars and used cars alike and offer competitive interest rates. Car loans typically require the borrower to borrow a minimum amount and don’t finance 100% of the cost of the vehicle.

    Types of car loans

    These loans are provided by banks as well as finance companies. Finance companies work not only with banks but also insurance companies and car dealers alike to give borrowers affordable rates. In Singapore we typically see the following types of car loans:

    • New car loans:

      These loans are the most typical loans sought-after by borrowers looking to purchase a new car. Almost all banks in Singapore offer car loans that allow customers to purchase a new car from the showroom of a car manufacturer or an authorized dealer. Tenures of such car loans vary from one to seven years and can be acquired quite easily subject to the borrower having a good credit score and meeting the required eligibility criteria.

    • Used car loans:

      As the name suggests, this car loan is often opted by borrowers looking to purchase a used car. Used cars come with certain drawbacks and used car loans usually carry with it a unique set of eligibility criteria pertaining to the age of the car. Used cars are, however, much cheaper than a brand new car and hence is a popular choice among those looking to purchase a car.

    • Commercial car loans

      These loans are given out to those borrowers looking to purchase a car for commercial purposes. Cars intended to be used as taxicabs, company cars and even cars used for Uber can be purchased through this loan.

    • Car loan refinancing

      Car loan refinancing is akin to a balance transfer of a car loan. In this type of loan, borrowers with an existing car loan can switch from one bank to another for more affordable interest rates. Under this type of car loan, the new bank to which you transfer the loan will pay off 100% of the outstanding loan amount but will refinance the car on newly-agreed terms.

    Features and benefits of car loans

    A car loan can help you get one step closer to owning your dream car. Let us take a look at some of the features and benefits of car loans in Singapore:

    • Financing your car

      The most basic of needs, car loans serve to give borrowers the additional funds they need to purchase a car. Borrowers need to only provide a down payment of 30% of the car’s OMV or open market value as the car loans can finance up to 70% of the market price of the car.

    Flexible tenures

    Car loans have the added advantage of having longer tenures. The average tenure offered by a car loan ranges from one year to seven years with one year being the minimum tenure you can get a loan for. Longer tenures can result in lower installments but will result in the borrower having to pay more interest overall.

    Competitive interest rates

    Car loans are affordable and offer lower interest rates than a typical personal loan. Most car loans offer interest rates in the range of 2.75% p.a. to 3.25% p.a. The lowered interest rates coupled with longer tenures make it easier to repay the loan.

    • Easy to repay

      Repayments for car loans are quite easy and borrowers can pay the monthly installments through a variety of modes such as GIRO, cheques, and auto-debit from a savings account, among others.

    • Low risk and hassle free

      A car loan, in essence, is a secured loan. Unlike personal loans which require no collateral, car loans require collateral, which in this case, is the car itself which is pledged to the bank. But the risk of losing the car to the bank is very low provided the borrower continues making regular payments. Being a secured loan, it is also easier to acquire and most banks approve car loans. They also offer fast processing and disbursement times provided the borrower has a good credit score and meets the eligibility criteria.

    Banks offering car loans in Singapore

    • DBS Bank Car Loan

      DBS offers loans for both, new and used cars and can finance up to 70% of the car’s purchase price.

    • OCBC Car Loan

      OCBC offers a car financing package that caters to borrowers looking for a new car, a used car, or even for car loan refinancing.

    • UOB Car Loan

      UOB offers packages for car loans ranging from the traditional car loan to the UOB HP50 car loan where you can pay half the installment amount and pay the remainder on the very last installment of the loan tenure. UOB also offers an attractive commercial vehicle financing package that can finance up to 90% of the purchase price of the vehicle.

    • POSB Car Loan

      The POSB Car Loan can be used to purchase both, new and used cars and can finance up to 70% of the car’s purchase price.

    • Maybank Car Loan

      Maybank in Singapore offers a car financing package for borrowers that lets them get a loan for the purchase of a new or used car. It also offers them packages specifically designed for the purchase of their first car and also offers a Shariah-compliant car financing package.

    • Standard Chartered Car Loan

      The Standard Chartered Auto Financing Hire Purchase Plan offers loans for both, new and used cars, can finance up to 70% of the car’s purchase price, and offers attractive interest rates.

    • Hong Leong Bank Car Loan

      Hong Leong Bank in Singapore offers a comprehensive car financing package catering to borrowers looking to purchase a car. The bank also offers Floor Stock Financing and Block Discounting packages that cater specifically to motor traders.

    Eligibility Criteria to Apply Car Loan

    A car loan can provide financing up to 70% of the purchase price of the car. But just because a car loan is a secured loan does not mean that any borrower can get a loan. They need to qualify for the loan by meeting certain eligibility criteria on car loan which are as follows:

    • The borrower must be a Singapore citizen or Permanent Resident.
    • Foreigners or non-residents can also apply for a car loan but can do so only if they have a local guarantor who is willing and capable of repaying the loan if there is a default.
    • The borrower must have attained the age of 21 years.
    • The credit score of the borrower must be in good standing.
    • While there is no specific income requirement set forth by banks, borrowers must earn a high enough monthly income such that their TDSR (total debt servicing ratio) does not fall below permissible levels.

    Documents Required to Apply Car Loan in Singapore

    During the time of application, banks will request borrowers for additional supporting documents. These documents range from mandatory documents required to check the borrower’s I.D. to documents that show the borrower’s income level and their capability to repay the loan. The supporting documents requested for car loans are as follows:

    • A copy of both sides of the borrower’s NRIC or a copy of the borrower’s valid passport if the borrower is a Singapore citizen or Permanent Resident.
    • If the borrower is a non-resident or foreigner, then a copy of the borrower’s passport along with a copy of their employment pass is required. The employment pass should have a validity of at least 2 months at the time of making the application. Non-resident borrowers are also required to produce some form of a utility bill to serve as proof of address.
    • A copy of the bank statements dating back at least 6 to 12 months.
    • A copy of the latest Income Tax notice of assessment. This notice should date back a minimum of 1 year for salaried borrowers and 2 years for borrowers who are self-employed.
    • Salaried borrowers are also required to provide their latest computerised payslips dating back at least 3 months.
    • A copy of the borrower’s most recent CPF Contribution History Statement dating back 6 to 12 months.
    • A copy of the sale and purchase agreement of the car.
    • A copy of the vehicle registration or the vehicle log card in case of purchasing a used car.
    • The completed Hire Purchase application form.

    Car Loan Interest Rates in Singapore

    Interest rates for car loans are lower than that offered for personal loans. Most car loans have interest rates averaging around the 3% mark. The below table highlights car loan interest rates offered by the various banks in Singapore.

    Bank Rate of interest
    DBS 2.18% p.a.
    POSB 2.18% p.a.
    UOB 3.25% p.a. for new car loan and 3.875% p.a. for used car loan
    OCBC 2.78% p.a. for new car loan and 2.98% p.a. for used car loan and 2.08% for car refinancing
    Maybank 3.25% p.a.
    Standard Chartered 2.70% p.a. for new car loan and 3% p.a. for used car loan
    Hong Leong 2.78% p.a. for new car loan and 2.98% p.a. for used car loan

    Car loan EMI calculator

    Before a borrower applies for a car loan, it is necessary that they factor in what their monthly installment will amount to. This is important as they can figure out how much they can afford to borrow. There’s no point going in for a loan with which they’ll struggle to keep up with repayments. Car loan EMI calculators are available online for this very purpose and one can even find it on BankBazaar. Car loan EMI calculators can offer the following benefits:

    • It helps you estimate your monthly installment within minutes.
    • The calculator will give a detailed break-up of the installment including the EMI amount and the amortisation details.
    • The tool is free to use and does not require signing up for any service of a kind. It can be accessed either through a desktop or mobile.

    Early Settlements of Auto Loans

    Car loans can be easy to acquire and the lower interest rates coupled with longer tenures can allow for easy repayment. But at the end of the day, it still needs to be repaid. Borrowers might look to close a loan early and pay off the remainder after a year or more of taking up the loan but well before the actual tenure is up.

    Early settlement of a car loan is actually quite a common practice. Not just because it allows borrowers to close open lines of credit but the fact that most borrowers would sell their car within 5 years. Since car loans cannot be transferred, most borrowers tend to settle the loan early prior to selling it.

    However, early settlement of a car loan can turn out to be an expensive affair. Early settlement comes with a penalty that is calculated using Rule 78. Rule 78 is basically a method used to calculate the interest charged on a loan across the loan repayment period. Generally, a loan charges higher interest towards the start of the loan as compared to when the loan is nearing its tenure. In a bid to close existing loans quickly, borrowers might decide to settle early but this usually results in them paying more interest overall.

    The early settlement penalty charged is usually around 20% of the unpaid interest. This penalty is charged for banks to make up for administrative costs and commission costs incurred by them. Banks also generally levy an additional early settlement fee as well.

    Tips to Apply Best Car Loan

    Before applying for a car loan, there are certain factors one must consider which are as follows:

    • Choose a loan wisely: Before applying for a loan, one must carry out proper research and take into consideration the affordability of the loan. These loans come with long tenures and can be a huge financial responsibility. One must ensure that the loan taken can be repaid with ease and if not, one should consider going in for a smaller loan amount.
    • Compare: One bank might offer lower interest rates but it doesn’t mean it could be the more affordable one. Fees and charges and late payment penalties can drive up the cost of a loan. Compare thoroughly before taking up a car loan.
    • Car loans are secured loans: This means that when a car loan is taken, the car is put up as collateral. This means defaults in payments can result in the bank confiscating the car and putting it up for auction to recover their money.
    • Factor in the credit score: A borrower must have their credit score in good standing for the loan to be approved. A poor credit score will act as a hurdle and indicates the lack of ability of the borrower to repay the loan. If bank’s think that there might be a slight chance of default, then they will not approve the loan. It is advisable to not make too many enquiries either. Seeking other forms of credit such as credit cards or personal loans around the time of applying for a car loan can result in a hit to the borrower’s credit score and make it difficult for the loan to be approved.

    News About Car Loan

    • How to ask the right things about your prospective automobile loan

      While it is possible to pay for a car without a loan, it is not usual. So we here are a few questions we think you should ask before you take on a loan to avoid paying too much.

        Do you even need a car? While we all know how comfortable and convenient it is to have your own vehicle, there are certain downsides to owning a vehicle. When you own a vehicle you pay for all kinds of things: from parking charges, road taxes, maintenance bills, loan payments, to fuel costs. We also need to remember that a car’s value decreases each year. In the age of affordable ride-sharing services, one needs to question themselves if they even need to buy a car.

        Are you buying the right car? If you do decide that it makes financial sense to buy a car, choose a sensible car instead of the flashier version. Calculate your monthly payment ability and choose a sensible and easily maintainable car.

        Are you choosing the right loan? Auto dealers not only get a bonus when they convince you to get a loan through an affiliated bank or credit company, but they end up charging an extra processing fee of S$500 to S$1,500 which they only disclose after all the papers have been signed. We recommend buying directly through the seller or going online to do a loan comparison and avowing the car dealers. This would allow you to not only avoid the payment of extra charges, it might also give you a fairly lower interest rate by comparison. 

      22nd September 2017

       
    • Car loan defaults see a decline even amidst bigger borrowings following ease of loan curbs

      According to recent study conducted by the Credit Bureau of Singapore, the number of car loan defaulters has gone down, even as the number of buyers saw an increase along with a corresponding increase in the size of the car loans. 

      A study conducted late last year observed that car owners borrowed S$65,868 on an average to fund the purchase of both new and used vehicles. This is a steady increase of 22.5% from figures posted in May 2016, not to mention, car loan curbs were eased by the Monetary Authority of Singapore in the month of May last year. 

      The Monetary Authority of Singapore, in May 2016, brought in a piece of regulation that allowed vehicles with an Open Market Value of S$20,000 to be funded up to 70% of their price by financial institutions. Prior to 2013, car buyers could get up to 100% financing for their used or new vehicles. 

      For vehicles with OMV greater than S$20,000, 60% of the vehicle’s Open Market Value can be funded by financial institutions. Also, the tenure was increased from 5 years to 7 years, giving more room to avoid instances of defaults and delinquencies. 

      In the absence of economic distress, market, top level CBS executives predict a situation where loan balances will look healthier and delinquency will fall even further over time.

      18th August 2017

       
    • After relaxation of MAS rules, car buyers eye bigger loans

      After Monetary Authority Singapore (MAS) relaxed rules, the number of takers of car loans in Singapore has increased drastically. The rise came after the announcement that was made in May, 2016. According to a report released by the Credit Bureau Singapore, the loan amount is around $65,868 till last December. This amount was lent to people who wanted to buy new as well as used cars.

      Last year, around $53,777 was lent to the same category. There has been a rise of 10.99% in the amount this year when one compares it to the figures of last year. The highest amount borrowed by an individual in the previous year was $8,37,135. This is touted to be the highest amount lent in the history of car loans.

      Car buyers of open market value can get more than $20,000. One can also spot changes in the patterns of payment in the last seven years. It is being said that people from every age group can use this facility. The low rates also provide flexibility to the people borrowing the money.

      20th February 2017

    • Car loan amounts went up after MAS mitigated rules: report

      6th February 2017 The Monetary Authority of Singapore (MAS) made the terms of automobile loans more lenient in May 2016. The Credit Bureau of Singapore (CBS) has found that car buyers in the country opted for larger car loan amounts after this move.

      CBS member banks revealed that people in Singapore took a total of 76,942 car loans in 2016, up 25.6% from the previous year. They took out loans to the tune of S$65,868 to buy cars - both new and used - in December last year. This is 22.5% higher than the S$53,777 borrowed in May and 10.9% more than the S$59,408 taken a year ago.

      Restrictions were imposed on car loans in 2013 to reduce the number of car purchases, and bring down the demand for automobiles and Certificate of Entitlement premiums.

      06th February 2017

       
    • All new version of Audi Q5 makes debut at 2016 Paris Motor Show

      The all new version of the Audi Q5 recently made its debut at the 2016 Paris Motor Show and is certainly expected to overwhelm the market. Touted to be the best-seller in Audi’s Sport Utility Vehicle Class, the all new Q5 comes with a range of design and technological upgrades. The latest of Audi’s Q5 iterations, the SUV comes fitted with a powerful 2.0 TDi engine capable of delivering a horsepower of 187 bhp. A rather prominent feature is the significant weight reduction by upto 90 kgs with the new engine taking most of the credit in enabling the unladen weight reduction. The 2.0 TFSI engine is also expected to be launched very soon and is capable of delivering a horsepower of about 249 bhp. Audi is also working on the 3.0 TDI which is expected to follow the release of the 2.0 TFSI. The 3.0 TDI is built to generate a massive output of 282 bhp with a torque of 620 Nm. The Q5 is expected to hit markets by the Spring of 2016.

      10th November 2016

       
    • 2017 Infiniti Q50 set to come with design and technology upgrades

      The 2017 version of the Infiniti Q50 sports sedan is set to receive a sound technological and design revamp after making its debut earlier this year at the Paris Motor Show. The 2017 Q50 already comes with enhanced exterior and interior features to enable an engaging driving experience. To begin with, customers wishing to buy the 2017 Infiniti Q50 can opt for a Bose Performance Series Sound System that boasts a setup of 13 speakers and state-of-the-art electronic components. Further, the Q50 is fitted with an advanced Telematic Control Unit that enables customers to remotely control various aspects of the car through a smartphone app, called the Infiniti Intouch Services. This feature has been particularly embedded in vehicles hitting the European market. The Infiniti Q50 is fitted with a 3.0 litre V6 twin-turbo engine that delivers a massive 400 bhp of power.

      03rd November 2016

       
    • Borneo Motors Announced Launch of the all new Toyota Sienta

      Borneo Motors recently announced the launch of the Toyota Sienta, the latest in the line of Toyota’s multi-purpose vehicles. The announced of the launch transpired at a media event that took place at a DW workshop in Rochester Drive. The Sienta has been conceptualized keeping in mind the urban families and young populace. The compact yet spacious 7-seater MPV seeks to present the perfect road-trip styled family holiday vehicle with its design and comfort. Certain aspects that deserve mention are the gorgeously styled front headlamps, a radiator grille and the urban trekking shoe styled design concept.

      18th October 2016

       
    • Get ready to experience wireless charging with Audi iPhone case

      Now you can enjoy more of iPhone’s in-car capability with its new wireless charging case. This new wireless charging case works with the optional Audi Phone Box connection and charging system. The Qi enabled cover has to be fixed to the latest iphone 6 and 6s models and placed in the designated centre console of the car to start charging the phone. This will eliminate the need of connecting the phone via a USB port to charge it. This feature not only works in the car but also works in any base station that has Qi functionality.

      22nd August 2016

       
    • Smart will be releasing new models including the Brabus Sport

      Latest updates have been announced by Smart recently. According to these updates the Brabus Sport Line’s price range has also been stated. The range includes the different versions like the Brabus Sport, Prime Sport, Prime and entry-level model called Passion. The Passion coupe (built for two) flaunts a roof covered with fabric. This gives the car a striking look. The Prime and the Prime Sport (both built for four) versions flaunt a fabric roof which can be controlled electrically. Across the entire range, the Passion is equipped with automatic climate control, smart audio system, multi-function steering wheel (three spoke, leather wrapped) and eight spoke wheels.

      Heated front seats are offered in the Prime models. Along with this, you can get black leather upholstery, dashboard instruments with rev counter and clock, holders for your sunglasses, etc. Sports steering wheel (perforated) comes with the Prime Sport version. With the models that come with twinamic transmission (auto), you can also enjoy shift paddles. Some of the other features of the car are the 8Y spoke wheels, chrome exhaust finisher and lowered sports suspension.

      The Brabus Sport comes with Brabus alloy wheels and an engine producing a power of 89 bhp. The logo of Brabus is stitched on the gear shift and hand brake. Along with these, the car comes with sports pedals (stainless steel), sports steering wheel, etc. The seat of the driver and the steering wheel can be adjusted according to the height of the driver in the Premium editions of this car. Ambient lighting, fog lamps, LED headlights and rear view camera are installed on the Premium Plus editions. If you wish to purchase this car, you could go for a car loan which would give the upfront money you require to buy this car.

      18th August 2016

       
    • Suzuki Ignis to hit the car market soon

      Suzuki is coming up with it compact crossover car called the Ignis in 2017. Instead of being a replacement for Suzuki Jimny which has already been in the car market for quite a long time, the Ignis will set its own course and help in expanding Suzuki’s range of brand.

      The iM4 concept is where the new Ignis has been inspired from. The iM4 was first seen in 2015 at the Geneva Motor Show. The Suzuki Ignis has a chunky muscular ecterior along with high set and large headlamps. The car also has a petrol engine which is Dualjet. The capacity of the engine is 1.2 L, the same as the new Suzuki Swift. Along with this, it has a turbocharged petrol engine (Boosterjet) of 1.0 L capacity. Mild hybrid or full hybrid editions are also possible in the near future. It will be a good competition to Fiat Panda 4X4 and Nissan Juke. If you wish to buy such cars, you could go for a car loan. The car loan will offer you the upfront money you need to buy this car. You will not have to empty your savings to buy that car. You can repay the car loan in easy instalments over a period of time.

      17th August 2016

       

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