How Grab car loans can help you get on the road
Want Grab to help you buy your car? We take you through the financing options available.
If you’re thinking about being a Grab driver, you may have heard about some of the financing options it has on offer. We’ll take you through everything you need to know about GrabCar financing, plus some alternatives offered by banks and lenders that you may want to consider.
Who is eligible for GrabCar financing?
You can only get a loan from the Grab finance marketplace if you meet the following criteria:
- You are a current Grab partner. This means you have already completed the sign-up process, have obtained a valid PDVL (Private hire car driver’s vocational license), are currently a Grab driver and continue to be registered for a minimum duration of five years.
- You have registered your car as Z10/Z11 with the LTA. You must register or convert your vehicle classification from P10/P11 to Z10/Z11 at LTA.
What Grab car loans are available?
There are a few different financing options available:
- Rental. If you need an eligible car to get you on the road with Grab but aren’t ready for a car loan, you can consider renting through one of its partners.
- Car loan. A private hire purchase (PHP) scheme is available with Grab’s partner, Goldbell Financial Services.
The benefits and drawbacks of GrabCar financing
- Get up to 90% financing on a new car. Depending on the car’s open market value (OMV), the Monetary Authority of Singapore (MAS) regulations only allow buyers to loan up to 60-70% of the purchase price for cars. However, with the PHP scheme, you only need to make a 10% down payment.
- Longer loan terms. Under the PHP scheme, you can stretch the loan tenure to a maximum of 10 years instead of 7 years.
- Save on car rental costs. Instead of worrying about the daily rental costs, you can earn with GrabCar at your own time and use the earnings to pay for car costs.
- Higher interest rates. Interest rates hover around 3.98% for PHP and 2.58% for a regular loan.
- Higher insurance costs. All cars that are intended to be used for private-hire purposes must be converted to Z10/Z11 classification at LTA. These vehicles must be covered by commercial insurance, which is more costly than personal car insurance.
How can I compare GrabCar financing to standard car loans?
Do your research and check if GrabCar financing is suitable for you. You can compare these features to find the right loan:
- Structure of the loan. The finance might be for a rental car or for a car loan, so decide which one will work best for your needs and situation.
- Type of car the loan is suited to. Some partners have restrictions as to what kind of car you can finance with the loan. For instance, you may only be able to select particular new makes and models from the participating dealerships.
- Interest rate and fees. How competitive is the loan? The PHP scheme normally comes with higher interest rates than conventional car loans. Compare the loan with loans from banks and other car-loan lenders to make sure you’re getting a good deal.
- Loan terms. The PHP scheme allows you to stretch the loan tenure to a maximum of 10 years instead of 7 years. Do your calculations and make sure that the loan tenure is manageable for ongoing repayments.
What are some of the alternatives to a Grab loan?
Selecting a loan offered by Grab isn’t the only way to finance a car to drive with Grab. You can also consider loans offered by banks and standalone car loan lenders. Here are some of your options:
- Fixed rate financing. Car loans in Singapore typically charge “flat” interest rates as opposed to “rest” interest rates on home loans. This means that the monthly interest payment is constant over the tenure of a loan. For example, a 2% flat rate for a $50,000 loan over 5 years will incur annual interest of $1000. These loans are most commonly offered and sought-after by borrowers looking to purchase a new car in Singapore.
- In-house financing. For buyers facing rejection or slow turnaround when trying to get a car loan from traditional banking channels, some finance companies or dealerships offer in-house loans that they have already borrowed from the banks. This means that the dealers borrow a large sum of money from banks and then offer portions of it to buyers who have difficulty securing a loan. The main drawback of such financing is the significantly higher interest rates.
Becoming a Grab driver is a great option to consider, with flexible hours and ability to earn up to $30 per hour. If you’ve decided to be a driver, Grab car loans could be the icing on top of an enticing cake, helping you get into an eligible vehicle to get you onto the road as a Grab driver.