• Used Car Loans (Vehicle Loans) Singapore

    Car Loan BYTES FROM OUR KITCHEN

    Used Car Loans (Vehicle Loans) Singapore

    Buying a new car can be a desire for many people but that desire may not be easily fulfilled at time if people do not have enough money to buy a new car. Purchasing a vehicle can involve a significant amount of investment and not everyone has access to the required resources or funds to purchase the vehicle that they want. If you are someone who does not have access to the required finances for purchasing a new vehicle, you can always decide to purchase a pre-owned or used vehicle. If you still feel that you do not have the money needed to buy a used car of if you don’t want to utilize your savings, you can always opt for a car loan to purchase the used vehicle of your choice.

    Banks offering used car loans in Singapore

    There are many banks, financial institutions and auto dealers in Singapore that lend money to people for the purchase of used cars. The interest rates applied on the loan amount differs from one bank to the other. Some of the banks offer a separate loan product for used car loans while there are others that offer a single loan product for the purchase of both new and used cars. However, the loan amount offered and the rate of interest charged can be different for new and used vehicles. The terms and conditions for the loan also differ from one bank to the other.

    The banks that offer used car loans in Singapore are listed below.

    DBS Bank Used Car Loan

    DBS Bank does not offer a separate loan product for the purchase of used vehicles and instead it offers one auto loan product that finances the purchase of both new and used vehicles. The maximum amount offered as loan is 60 percent for vehicles with open market value of $20,000 and below and 50 percent for vehicles with open market value of more than $20,000. In case of used vehicles, the bank determines the open market value of the vehicle based on its age, condition and other factors. To determine the value of vehicles older than 10 years, the bank utilizes a straight line value depreciation approach.

    OCBC Used Car Loan

    OCBC Bank offers a unique loan product for financing the purchase of pre-owned or used cars. You can avail up to 60 percent of the value of the vehicle as a loan. You will also enjoy a repayment period of up to 5 years. The loan comes with an attractive interest rate of 2.98 percent per annum. The best part is that, you can also transfer your existing used car loan to OCBC Bank and enjoy a variety of beneficial features in the process.

    OCBC Used Car Loan Interest Rates

    Tenor of the Loan Rate of Interest Effective Rate of Interest
    1 year 2.98 percent per annum 6.46 percent per annum
    2 years 2.98 percent per annum 6.12 percent per annum
    3 years 2.98 percent per annum 5.98 percent per annum
    4 years 2.98 percent per annum 5.88 percent per annum
    5 years 2.98 percent per annum 5.81 percent per annum

    OCBC Used Car Loan Eligibility

    • You should be minimum 21 years of age.
    • You should be a Citizen of Singapore, a Permanent Resident of Singapore, or a foreigner who lives and works in the city.

    How to Apply?

    You can either apply directly to OCBC Bank or you can apply through a dealer. You can call the hotline of the bank or leave your contact details on the website of the bank through the enquiry form and they will call you back.

    Maybank Used Car Loan

    Maybank, the Malaysia based banking giant, offers loans for the purchase of new as well as used vehicles. Through this loan, you can avail up to 60 percent of the market value of the vehicle as a loan. The tenor of the loan is very flexible and can be up to 5 years with an interest rate that can be as low as 3.25 percent.

    Age of the vehicle Margin of Finance Tenor
    Under 10 years Up to 60 percent of the value of the vehicle Up to 5 years
    Above 10 years but not more than 20 years Up to 60 percent of the value of the vehicle

    Up to 5 years in case revalidated COE is 10 years

    Up to 4 years in case revalidated COE is 5 years

    HLF Used Car Loan

    Hong Leong Finance (HLF) offers a car loan for the purchase of used vehicles in Singapore and the loan amount offered can be up to 60 percent of the market value of the vehicle. You will get up to 5 years to pay off the loan amount and the application and approval process for the loan is very simple as well. The loan is available for the purchase of all pre-owned or used vehicles that are under 10 years old.

    Tenor of the Loan Rate of Interest Effective Rate of Interest
    1 year 2.88 percent per annum 6.25 percent per annum
    2 years 2.88 percent per annum 5.92 percent per annum
    3 years 2.88 percent per annum 5.78 percent per annum
    4 years 2.88 percent per annum 5.69 percent per annum
    5 years 2.88 percent per annum 5.62 percent per annum

    Used Car Loan EMI Calculator

    You can use the EMI calculator present on our website to calculate the EMI for your used car loan. You will need to provide the Loan Amount, the Rate of Interest and the Loan tenor to calculate your EMI within no time. By calculating your EMIS, you can better plan your budget and ensure that the payments are made on time.

    Things to Remember Before Applying For a Used Car Loan

    It is useful to know what is happening in general in the market for car loans. Normally you have two options as a customer when you want to apply for a used car loan: the first is to directly contact the dealer for the finance required to purchase the vehicle; the second is to apply for the loan independently from a bank or financial institution and and then go to the dealer to purchase the vehicle.

    In the first case you will be dealing with a form of loan finalized by the dealer, which has entered into an agreement with one or more financial institutions to offer you with the financial support for purchasing the vehicle of your choice. In most cases, the dealer also receives a commission from the bank or financial institution as it provided them with more business. Hence, your overall cost of borrowing can be a little higher as the lender will also charge you for the commission paid to the dealer. If approved, the amount financed is paid directly by the lender to the dealer. Upon receipt of the sum the retailer is committed to delivering the vehicle, while the customer is committed to repaying the loan through installment payments to the lender institution.

    In the second case, you apply for the loan with a bank and then the bank evaluates your application based on your financial condition and credit history. The bank will most likely not contact the dealer and will ask you to provide your sale documents and other documents related to the purchase of the vehicle. Based on the same, your loan application will be processed and if it is approved the loan amount will be credited to your bank account directly. In the next step, you can then pay the dealer with the loan amount and take possession of your vehicle.

    Why is interest rate higher for used cars?

    In most cases, the interest rate charged for the purchase of a used car is higher than that charged for the purchase of a new car. This is because an used car loan is regarded as a high risk product by the bank. In case you default on your loan, there is a huge possibility that the value of the vehicle will depreciate dramatically within a short period of time. Hence, they charge a higher interest rate so that they can earn more money in a short period of time (during the tenor of the loan) and reduce their risk of lending.

    Do I need to provide any Collateral Security?

    Typically the approval for a car loan is not subject to the presentation of collateral (i.e. rights of lien or mortgage on property owned by the applicant).

    However, in many cases the vehicle itself acts as collateral for the loan and in case the borrower is unable to pay off the loan amount the lender can take possession of the vehicle to recover the loan amount.

    In many cases a guarantor may be required for the loan application to be approved and the signature of a joint debtor or a third party guarantor will be required on the loan application. A guarantor is mainly required when the applicant does not meet the income criteria or does not have a good credit history. In such cases, the banks might ask for additional guarantor security to approve the loan application.

    Elements of the loan agreement or contract

    The law states that a car loan agreement (both new car loans and used car loans) must contain the following elements:

    • the interest rate charged;
    • any other price and condition applied, including higher costs in the event of default;
    • the amount and methods of financing;
    • the number, the amounts and maturity of each installment;
    • the annual percentage rate (APR);
    • details of the analytical conditions under which the APR may be modified;
    • the amount and the purpose of the charges that are excluded from the calculation of the APR;
    • any guarantees required;
    • any insurance required and not included in the calculation of the APR.

    Failure to Pay EMIs

    The interruption of the repayment of the loan will result in immediate failure to comply with the loan agreement and the risk of unpleasant consequences:

    • the interest payable would be increased, with the application of a default;
    • it is likely that the name(s) of the borrower(s) will be listed as defaulters and / or reported to credit authorities for the protection of bad redit.
    • the credit reporting authorities will share the information with the entire banking and financial system. The result will be a deterioration in the creditworthiness of the borrower(s) and resulting in greater difficulty in obtaining credit in the future.

    Failure to make timely payment of even one installment authorizes Lending bank to unilaterally terminate the contract. The customer will be required to pay all bank charges as well as all costs incurred by the bank to recover the sums due, as well as a possible penalty.

    Early termination or repayment of the loan

    • The rules state that you can always pay off the loan in advance of the deadline agreed.
    • The customer who chooses to exercise this option will be required to repay the remaining principal still due, increased by a penalty, which is usually not more than 2 % of the loan.
    • If the contract does not specify what amount of remaining capital has to be considered for the loan, then it is to be understood that the remaining principal sum of the present value of all payments not yet due at the date of early repayment should be considered for calculating the early repayment fee.

    How is an used car loan application evaluated?

    Here are some of the factors that are utilized by the banks in evaluating car loan application:

    1. Risk policies
    2. Each Bank applies a policy of risk in the evaluation of the applications, based on the data that they receive (credit scores). This data constitute the tool that allows the Institute to keep insolvencies below a specified level.

    3. Income level
    4. Acceptance of applications is normally also subject to the assessment of the level of income of the applicant and the relationship between it and the installment amounts

    5. Creditworthiness
    6. Great importance is finally given to the creditworthiness of the applicant. Institutes are limited to estimate the level of risk associated with each request, on the basis of credit reports provided by the central credit bureaus.

    If the applicant's credit history has some "flaws" (delays in repayments of previous loans, unpaid, etc.. ) the likelihood that the application is accepted is obviously lower.

    In some cases, the bank can consider the loan application of a customer even if he or she has a bad credit history, provided that they have deposit accounts and prior relationship with the bank.

    Things to Consider When Choosing an Used Car Loan

    When choosing between used car loans offered by different banks, it is good to consider the overall cost of borrowing associated with loans offered by each of these banks, but not limited to the assessment of single monthly payment.

    However, the transaction is sometimes not easy, as the items of expenditure associated with used car loans can be many (amount paid, interest, charges, any initial expenses, insurance costs) and are not easily measured in an immediate way.

    In general, the elements that you should consider before signing a loan agreement are:

    1. Annual Rate of Interest (per annum rate) - It is the interest rate, expressed as a percentage and on an annual basis, applied to the principal amount. It is used to calculate the monthly instalment payments and the interest amount that has to be paid by the borrower to the lender bank.
    2. APR (annual percentage rate) - The APR is a measure, expressed as a percentage, with two decimal places and on an annual basis, and it helps in calculating the total cost of the loan. Unlike the Annual Rate of Interest, the APR is inclusive of any additional charges, such as arrangement fees and insurance costs, which are borne by the customer.

    News About Used Car Loan

    • Volkswagen Singapore to implement software updates for EA189 Engines

      Volkswagen Singapore is preparing to implement technical software updates for the EA189 diesel engines that took center stage in the recent emission scandals.. Currently, 662 Tiguan 2.0 TDI, Caddy and Caddy Maxi vehicles in Singapore have been fitted with the EA189 diesel engines and contain a software that can identify a test bench environment and stimulate the engine to manipulate NOx emission levels during the test. Both the 2.0 and the 1.6 litre TDI engines are set to receive the software update to correct technical software flaws. Volkswagen Singapore is working actively with the National Environment Agency and the Land Transport Authority to make vehicles adhere to acceptable environmental standards.

      10th November 2016

       
    • Increased Number of Used Cars being bought to work for Uber and Grab

      Drivers are buying used cars with the intent to work for private firms including Uber and Grab as claimed by car dealers in Singapore. Yong Lee Seng Motor, I-Deal Auto Trading and other car rental firms and private car hire firms have seen a significant rise in their sale of used cars compared to last year. Other used car dealers including 99 Motors Trading and Prime said that more drivers are buying used cars to drive for private car hire companies.

      Furthermore, car rental companies such as Prime and Hawk Asia Pacific are also expanding their used car fleets. The question on everybody’s minds now is whether the MAS’s easing of loan curbs will have an effect towards the trend of higher used car purchase.

      31st May 2016

       
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