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Commercial vehicle loans in Singapore

How you could raise finance to pay for your next business vehicle.

Commercial vehicle loans can help your business get access to essential tools that offer mobility and portability. This guide will cover commercial vehicle loans in Singapore, including their features, eligibility requirements and potential providers.

What is a commercial vehicle loan?

Commercial vehicle loans are a type of business loan that can help cover the cost of a new car, truck, van or other vehicles for business use. The loan that works best for your business depends on a range of factors including its financial situation, taxation needs and type of vehicle involved.

How does a commercial vehicle loan in Singapore work?

A commercial vehicle loan in Singapore helps you break up the cost of a vehicle into manageable payments over a period of time, plus interest. This type of loan is offered by banks, credit unions, finance companies, and alternative lenders. These loans often consist of upfront costs, interest rates and fees, and the repayment term. Many lenders will cover up to 100% of the cost for a new vehicle, but this may not be the case for used vehicles. The interest rates, fees, and loan term depend on the lender as well as factors that go into determining how risky the investment is.

How can I compare commercial vehicle loans in Singapore?

  • Terms. The length of the term of your vehicle finance arrangement will influence how much money you have to pay in order to gain ownership of a commercial vehicle. Compare the terms available and find an option that suits your budget and needs.
  • Interest rate. The higher the rate, the more you’ll have to pay in interest charges. Will the rate be fixed or variable, offering either the security of knowing what your repayments will be or the chance to take advantage of possible falling rates?
  • Repayment options. Look for a commercial vehicle loan in Singapore that allows you to tailor repayments to suit your budget. Some lenders offer fixed monthly repayments which provide security, while others may allow you to choose a more flexible repayment schedule.
  • Fees and charges. As with any financial product, it pays to familiarize yourself with any fees and charges attached to a commercial vehicle loan in Singapore. They may not seem like much at first, but these expenses can add up to a lot of money in the long run.

Business lenders for commercial vehicle loans in Singapore

At the time of writing in March 2020, here are some popular commercial vehicle loans in Singapore; and their respective features.

  • UOB Commercial Vehicle & Machinery Financing: A commercial vehicle loan with a quick and secure application process using Singpass’s MyInfo Business. Receive cover, including COE, from S$5,000 to S$500,000.
  • DBS Commercial Vehicle Financing: A commercial vehicle loan in Singapore that requires minimal upfront financing. Borrow as much as 90% of the vehicle value, and choose between flat and fixed-rate loans to meet your needs best.
  • Speed Credit Commercial Vehicle Financing: Offers quick loans and affordable monthly instalments, up to a maximum tenure of 84 months.

Buying versus leasing a vehicle for your business

Before choosing a commercial vehicle loan in Singapore, you should decide on whether you’re looking to buy or lease a corporate vehicle. This will help you choose the loan option that will best fit your needs. Here are some factors you should consider:

  • Initial Cost. Buying a vehicle requires a down payment and Certificate of Entitlement (COE) cost while leasing a vehicle incurs costs in the form of monthly payments.
  • Ownership. When buying a car, your business immediately owns the car as soon as the paperwork is signed. On the other hand, if you lease a vehicle, you can buy it after your lease is up for a large balloon payment.
  • Tax benefits. Vehicle owners and leaders can deduct mileage expenses from taxes. In addition to this, vehicle owners can deduct depreciation expenses from taxes.
  • Maintenance. Vehicle owners will be in charge of maintenance costs, while individuals leasing vehicles will only be charged maintenance fees on a case-by-case basis.

Are there any risks involved with commercial vehicle loans in Singapore?

As with any commercial loan, one of the most important things to avoid is getting in over your head. Having debts pile up on top of one another can hurt your business, so make sure you can afford a commercial vehicle loan. Consider all the available options, and be sure to weigh your pros and cons before committing to a commercial vehicle loan in Singapore.

Frequently asked questions

What other options do I have for vehicle financing in Singapore?

Besides commercial vehicle loans, your business should consider leases, commercial lines of credit, heavy-duty vehicle financing and potentially personal loans.

Can I use my business to pay for my personal car?

This depends on your lender, but you can generally use your car for business and personal uses.

Can I get a commercial vehicle loan in Singapore if my business has poor credit?

Businesses with poor credit or startups with a limited credit history may not qualify for commercial vehicle loans. However, these requirements will vary across providers so do look out for lender specifications.

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