Car loan in Singapore: What are your options?

Elle Kasser

Looking to buy a new car? One of the first things to do before you can test drive your new set of wheels is work out how you’ll pay for it.

A car loan could be the solution. But what are your options for a car loan in Singapore? Should you go with the car dealer’s finance package or directly through a bank?

We’ll cover everything you need to know about new car loans in Singapore here in this guide. This includes the options available, the rules and eligibility requirements and other key things to think about before you borrow.

And remember, if you’re looking to buy a car from another country, make sure you use the Wise multi-currency account to pay for it. With Wise, you can send money worldwide for tiny fees and the real, mid-market exchange rate.

Plus, if you want to finance your car purchase from an overseas source, you can receive money for free.

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But more on this later. Let’s start by walking you through the different options for car loans in Singapore.

📝 Table of contents:

Option 1: An in-house car loan from a Singapore car dealer

While you’re admiring car models at your local dealership, you’re also likely to encounter the big sales push to use one of their in-house financing packages.

In-house car loans in Singapore are a popular choice, partly because they’re so easy and convenient. You can buy a car and arrange finance at the same time, without having to shop around.

While some car dealerships can be quite pushy when it comes to financing options, you don’t have to sign on the dotted line. It’s always a good idea to go away and assess all your car loan options before taking out any kind of finance. After all, it’s likely that in-house car loans from the car dealership won’t offer the cheapest interest rates.

Option 2: Arrange a bank loan through the car dealer

Another service your car dealership can provide is financing through a bank. These bank loans are often for major, recognised banks such as OCBC, UOB or DBS - so you may feel more comfortable borrowing from a brand you can trust.

The car dealer aims to facilitate the bank loan for you, acting as intermediary between you and the bank. In return, they get commission from the bank. If all goes well, it should be a relatively seamless and paperwork-free experience. There’s even the possibility that they’ll throw in a freebie or special offer as an incentive to take out the loan.

Option 3: Get a car loan at a Singapore bank

If you’re the kind of person who prefers to shop around and do your own research on all things finance-related, this is the option for you.

You don’t have to finance your car purchase through a car dealership. Instead, you can find a vehicle you want to buy and get a car loan directly from a Singapore bank or financial institution.

Let’s take a look at the details for car loans available from major Singapore banks:

UOB car loan

UOB offers one of the first digital car financing services in Singapore, to help you get instant approval for a car loan. You can apply online for a loan for a new or used car, in an application process that should only take around 10 minutes¹.

However, UOB car loans are only available to Singapore citizens or permanent residents (PRs). You’ll also need to be at least 21 years old, and be able to provide proof of income along with ID documents².

The interest rates vary depending on the loan period and whether you buy a new or used car, but rates with UOB range from 2.68% to 2.78% per annum².

UOB also works with a wide network of dealers should you choose to go down that route, such as Audi, Nissan, Mazda and Subaru¹.

OCBC car loan

With OCBC,³ you can get a car loan for up to 7 years, in as little as 60 seconds if you meet all the criteria. OCBC car loans are for 70% of the purchase price or its own valuation of the vehicle, whichever is lower.

Interest rates for car loans at OCBC vary depending on the loan period and whether you buy an electric or petrol/diesel car. This is because the bank has its own OCBC Eco-Care Car Loan scheme to incentivise drivers to choose more sustainable vehicles.

Rates for electric car purchases are fixed at 1.68% per annum, with added perks such as 6-12 months of free charging.

For petrol or diesel cars, loan rates from OCBC start from 2.28% per annum.

DBS car loan

You can apply for a DBS car loan⁴ online, with loan periods of up to 7 years available. If you can log in using Singpass or digibank, you can complete your application in just minutes.

DBS car loans are for up to 60% or 70% Loan-To-Value. To find out how much you can borrow, what monthly instalments you’ll pay and the interest rate, you’ll need to use its online car loan calculator.

Which option is the cheapest for car loans in Singapore?

Unfortunately, there’s no simple answer to that question. It often depends on how much you’re borrowing, the loan period and whether you go through a car dealership or directly to a bank.

Plus, whether you’re buying a new or used car, and in the case of some banks like OCBC, whether your new car is electric or petrol/diesel.

What is really important is to find the best and most affordable option for you. This means shopping around and comparing interest rates, making sure to look at the effective interest rate as well as the per annum rate.

Have a play with online car loan calculators and rates from different lenders, and make sure you choose a loan you can comfortably afford to pay back.

Also, make sure you check the small print for application or processing fees, or other costs associated with the loan.

Car loan Singapore rules - what you need to know

Before you take out a car loan, there are certain crucial rules and other pieces of information you need to know:⁵

  • You can’t get a 100% car loan in Singapore. For cars with an Open Market Value (OMV) or up to S$20,000, you can only borrow up to 70% of the purchase or valuation price. For cars with an OMV of more than S$20,000, you can only borrow up to 70% of the purchase or valuation price
  • You can’t use more than 60% of your income to pay back loans, according to Singapore’s Total Debt Servicing Ratio (TDSR) rules.
  • The maximum car loan period in Singapore is usually 7 years.
  • Buying a car over 10 years old? You may struggle to get a used car loan in Singapore, unless you go for a specialist COE car loan from a bank such as UOB or Maybank.

Buying a car from overseas? Save money by paying for it with Wise

If you’re buying a car from another country, open a free Wise account first. From this handy multi-currency account, you can send money internationally for just a small, transparent fee.

Better still, you’ll always get the fairest exchange rate around. This could save you money when buying a car from abroad, particularly compared to using your bank.

Open your free Wise account

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After reading this guide, you should be all clued up on your options for car loans in Singapore.

Whether you go through a car dealer or a bank, make sure you read the small print and compare options carefully. Just make sure you can afford the repayments, and you’ll be all set to hit the road. Good luck!

Sources used for this article:

  1. UOB Car Loan
  2. UOB Car Loan - Benefits
  3. OCBC Singapore - Car loan
  4. DBS Singapore - Car loan
  5. MoneySmart - Car loan in Singapore

Sources checked on 23 April 2021

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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