DBS Car Loan
Borrow from S$10,000
Interest rate from 1.99%
- Available for cars less than 10 years old
- Loan period calculated from the original date of registration
- Applicants must earn a minimum of S$2,000
Updated . What changed?
DBS Car Loan
Borrow from S$10,000
Interest rate from 1.99%
Before you sign up to the car loan your dealership or bank is offering, compare your options from a wide range of brands. There are some competitive car loans out there, and the key to finding the right one is picking the loan type to suit your financial needs.
Find out what you need to know to compare car loans in Singapore, and how to pick the right option for you.
A car loan in Singapore can be taken out in through a bank or via the car dealership where you’re buying the vehicle. Car loans can work differently depending on what type of loan you take out and what kind of car you’re looking to purchase. Whichever way you decide to loan money to buy the car, you’ll have to agree to pay back the amount you borrowed through monthly payments, plus interest.
Generally, the following steps will apply:
When you’re shopping for a car in Singapore, you’d most likely come across these two types of cars – PARF and COE.
All new cars come with an Open Market Value (OMV), which is the original cost to produce the vehicle. If you purchase a new vehicle and de-registered within 10 years from its first registration date, you’ll receive a Preferential Additional Registration Fee (PARF) rebate, which is typically a percentage of the OMV.
If you wish to continue using your car after 10 years, you’ll need to renew the car’s COE. The renewal amount is dependable on the Prevailing Quota Premium (PQP). Once you’ve renewed the COE (either 5 or 10 years), you’re no longer entitled to the PARF rebate upon the de-registration of the vehicle. Instead, you’ll only receive the COE rebate and hence the name ‘COE car’.
In Singapore, a car loan is often a secured loan whereby the car itself is the collateral pledged to the bank. However, the risk of losing the car to the bank is low as long as the borrower continues make good on the loan through regular payments. Being a secured loan, it is also easier to acquire and receive fast approval for car loans provided the borrower has a good credit score and meets the eligibility criteria.
Car loans are provided by both banks and finance companies. Besides working with the banks, finance companies also work collaboratively with insurance companies and car dealers to offer borrowers affordable rates. We typically see four types of car loans:
These loans are most commonly sought-after by borrowers looking to purchase a brand new car. Almost all banks and finance companies in Singapore offer car loans that allow borrowers to purchase a new vehicle from the showroom of a car manufacturer or an authorised dealer. Tenures may vary from one to seven years and can be acquired quite easily as long as the borrower meets the eligibility criteria and have a good credit score.
Used car loans usually come with a unique set of eligibility criteria pertaining to the age of the car. However, since used cars are much cheaper than a brand new car, many borrowers do consider it.
As the name suggests, these loans are offered to those borrowers intending to purchase a car for commercial purposes. Cars that may be purchased through this loan include company cars, taxicabs, and even cars used for Grab.
Through car loan refinancing, borrowers with an existing car loan can switch from one bank to another for more competitive interest rates. The new bank to which you transfer the loan will pay off all the outstanding loan amount, and you will refinance the car on newly-agreed terms.
Before you apply for any loan, it’s always a good idea to check as many details as you can about the offer you’re getting. Here are some things you need to look for before you proceed.
If you plan to borrow to finance your car, the limit to how much you can borrow will depend on the vehicle’s Open Market Value (OMV) rather than the total cost of your car. The OMV is what your car would be worth if you didn’t have to pay the considerable taxes and duties required to drive a car in Singapore (many of which are stated in the next section).
If your car’s OMV is more than S$20,000, then the upper limit you can borrow is 60% of its OMV. The absolute maximum you can borrow for a car loan in Singapore is 70% of the car’s value – assuming the OMV is S$20,000 or below.
There are a number of standard fees which apply to every car that’s intended to be driven in Singapore. These include:
When most people go hunting for the cheapest car loan, they immediately look for a low-interest rate car loan and believe they’re getting a great deal. Unfortunately, fees and charges including late payment penalties can ramp up the cost of a loan, making it less competitive. Make sure you consider all costs before you apply for a car loan and use a comparison rate calculator to determine your repayments.
How the cheapest rate could cost you more:
Consider a car that costs $25,000. One lender is offering a rate of 8% p.a. over five years and another is offering a rate of 9% p.a. The only difference is the fees. Take a look at how much it could cost you by just opting for the cheapest rate:
|Lender A||Lender B|
|Interest rate||8% p.a.||9% p.a.|
|Loan term||5 years||5 years|
|Monthly account fee||$20||$0|
|Total monthly cost||$532.91||$518.96|
|Total repayment amount||$32,275||$31,588|
In the above example, the interest rate that was higher turned out to be the cheaper option. This was despite the initial upfront cost.
Make sure you consider all costs before you apply for a car loan and use a comparison rate calculator to determine your repayments.
It’s always possible to reduce the payments you make on your car finance each month. The key is to ensure that you’re not paying more than you really should over the entire term of the loan. Here are some ways you can reduce your minimum monthly payments.
Let’s take a look at this example, a S$70,000 car loan on two different tenure.
|Description||Option 1||Option 2|
|Loan term||5 years||7 years|
|Total paid over loan term||S$79,450||S$82,250|
In this example, option 1 has a higher monthly repayment but you only end up paying S$9,450 in interest over the term of that loan. By comparison, option 2 allows you to pay S$345 per month less on your monthly repayments. This will definitely make budgeting easier throughout the loan term, but you end up paying S$12,250 in interest over the life of the loan. This is S$2,800 more in interest charges you end up paying overall.
Below is a checklist of some of the information and documentation you may need to supply for your car loan application.
In Singapore, a car loan can provide financing up to 70% of the purchase price of the car. However, borrowers need to meet certain eligibility criteria in order to qualify for a car loan, which are as follows:
Getting your car loan approval might seem quick, but there are several stages your application needs to progress through before your money is released to the seller of the car.
Step one. To get the approval process started, you will need to fill out and sign an application form. This can be done in person at the bank branch or at the car dealership, or alternatively can be filled out using the lender’s online application form on the website.
Step two. Once your application has been received, it’s reviewed by a credit officer. If everything is in order, you should receive your conditional approval within 24 hours to five working days.
Step three. The final approval stage is where the lender may request you to supply any documentation to support your application. This includes your identification, payslips or income verification, bank statements and any other pertinent information required.
Step four. Once your final approval has been received, you’ll be asked to sign your loan documentation. This is your agreement with the bank to repay any remaining downpayment (difference between purchase price and approved finance amount) to your dealer.
Step five. Your dealer will then proceed to do the following and update you on the progress: Order your car (if out of stock), bid for new car COE and register your car.
Step six. Your dealer will contact you when your car is ready for collection.
Step seven. You will then begin to make the monthly repayments, either via GIRO, cheque or cash.
Remember that a car loan can be a large financial commitment, so do your due diligence and compare a wide range of options before applying.Back to top
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