Things You Need to Know Before Getting a Car Loan in Singapore

Car Sales Agreement

A car is now an indispensable commodity in a world of modern technology that has drastically decreased its prices, especially here in Singapore. Although public transportation in Singapore is an ever-improving mode of transportation, a car is more flexible. 

Whenever and whatever you need to travel into or bring, your car can be customized to solve your issue. If you need help buying a car since you do not have enough budget or your credit cards cannot cover the cost of purchasing one, you can get a car loan to cover the car financing.

What is a Car Loan?

A car loan is a type of loan in which personal loans provider bonds the car cost loaned to your chosen car. This means that the credit institution where you file your loan application is the one to pay when you are buying a car in the car dealers while you repay them later on with the corresponding fees and interest rates, similar to how credit cards work. 

Unlike credit cards, however, the car serves as a mortgage of some sort. The lender holds the ownership until you have fully paid for the car loan interest rates, your loans’ insurance considerations, and the base cost. It can therefore be seized if you forfeit from repaying your car loan.

How Do Car Loans Work?

When you get a car loan, you first have to make sure that you can pay for the car purchase price (either through cash or via credit cards). Then, you can check the following table for the financing you can borrow from your car loan.

Open Market Value (OMV)

Open Market Value (OMV) Maximum finance amount
< SGD 20, 000 70% of the purchase price or valuation price, whichever is lower70% of the valuation car price
> SGD 20,000 60% of the purchase price or valuation price, whichever is lower60% of the purchase price or valuation car price, whichever is lower

The first factor that determines the loan amount is the open market value, wherein if the car price from the dealer is greater or equal to SGD 20,000, you can loan up to 70% of the amount. 

Your monthly income and current credit situation under certain terms and conditions, as well as existing personal loans, credit cards, home loans, and debt consolidation, are factors that determine your loan car amount. Like other loans, a higher credit score can also secure a higher loan car amount.

How to Get the Best Car Loan Interest Rates?

To be able to plan your repayments for your loans (car loan, home loan, a credit card, and more), you should know the details such as car loan interest rate, loan tenure, car insurance services, and which provider fits your preferences in the market. 

For car loans, these usually range from 2.28 to 2.88%, more or less, and vary for a new car or a used car. Three car loans and their loan details (car loan interest rates, some terms and conditions, and the corresponding loan amount) from banks will be discussed here to give you an idea of what to expect when you get one, all rights reserved from their respective sites.

1.DBS Car Loan In Singapore

This bank offers credit cards, home loans, a savings account, travel insurance, and many other banking services and products. They are also considered one of the best places to get a car loan from, with its effective interest rate (EIR) for both the new car and the used car set at 2.28%. 

This is a unique banking policy as the loan interest rate for used cars is typically higher. The minimum loan amount you can get is SGD 10,000, loan tenure of 1 to 7 years. The bank does not offer loans for company cars, however.

2.UOB Car Loan In Singapore

UOB also has its credit cards, travel insurance, savings account, home loan, and more bank products. Loan tenures for UOB car loans are also for 1-7 years, but the EIR is set at 2.78% for new cars and 2.98% for used cars. This means that you will be paying about 0.5 to 0.7% compared to when you get your DBS loan. You can opt to pay this additional rate with your credit card account.

3.OCBC Car Loan In Singapore

Similar to that of UOB and DBS, OCBC loans also have their travel insurance, home loans, credit cards, and more bank services. Their car loan interest rate is at 2.78% for a new car and 2.98% for a used car that you can pay for three years up to 7 years. 

The minimum loan amount required is SGD 15 000, 5,000 dollars more than the other two. You are allowed to loan a lower amount, but you will have to pay SGD 200 for the loading fee, which you can pay using credit cards.

How to Qualify for a Car Loan?

Suppose you are deciding on getting a car loan from any of the bank results above or from other credit institutions. In that case, you can check your eligibility and prepare the requirements (e.g., COE and others). 

You have to be above 21 years old to qualify for car loans and must have a monthly salary of SGD 2,000 for Singapore residents and SGD 4,000 if you are a foreigner. Then, you will have to bring the following documents to get your loan approved.

  1. Vehicle Sales Agreement (if applicable)
  2. Employment details

This should detail your company’s name, designation, length of service, and monthly gross income. You can opt to bring your certificate of employment or COE for additional proof.

1.Details and proof of existing financial commitments

Includes home loans, personal loans, travel insurance, credit cards, or whatever is applicable. This is important to prove that you can repay your best car loans, interest rates, and car insurance throughout the loan personal tenure (maximum of 7 years). 

Like bank credit cards, loans from other credit institutions in Singapore can easily accumulate. If you are not careful, the interest rates you pay for in-car loans can be as detrimental as debts from credit cards.

2. Income documentation

Your salary credited to your bank account, a computerized payslip, or your IRAS Notice of Assessment are some documents you can include, along with your COE as a back-up document. 

If you have been employed for less than one year, your latest CPF Contribution history statement and the COE would also be required.

What is the Maximum Loan Period for a Car Loan?

As already stated above, you can get your best car loan in Singapore for a loan tenure of 1 to 7 years with a fixed interest r. However, this varies with the type of car you will be getting, whether you are purchasing new cars or used by the car dealer. 

Used cars have maximum loan periods determined by their registration date, and the interest rate is also adjusted accordingly. Car loans are sometimes only available for cars that are less than ten years old, the age of which is calculated from the date of the registration.


If you want to apply for a car loan, as mentioned previously, you need to have the cash to pay for a down payment. This can be a dilemma when you do not have the means (i.e. through credit cards with their high-interest rate) to pay for one, especially with COVID-19 in the picture. 

Good thing that you can also get a personal loan to compensate for this issue. You can use the personal loan to pay for the needed down payment and get travel insurance, and you can find yourself driving your dream car in no time.

If you are in a situation such as the one stated above, apply for a personal loan at A1 CreditThey are the top-rated licensed moneylender in Singapore, and you can receive your loan within 60 minutes after approval. 

They have low-interest rates and flexible fees. You can be secured from getting a safe loan and travel insurance as they comply with the regulations set by the Moneylenders Act for their privacy policy. You can contact them through their Contact Us page or by calling their contact number.

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