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What kind of car can I finance?
Know the possibilities and restrictions when it comes to financing your car.
Car financing, while convenient, can be tricky if you’ve never had a vehicle loan before. The minimum eligibility lenders have in place can vary greatly. This guide will outline the general criteria that lenders have in place for vehicles you may be looking to finance.
Why is there eligibility criteria for my car?
Car loans in Singapore come with lower rates as the cars that are financed through it are used as a collateral, meaning that the lenders have the right to repossess and sell your vehicle if you default on the loan. To make sure that they will be able to cover the full amount of the loan, they need to check the vehicle to ensure it’s of a certain value; enough to cover their losses. To do this they require various documents or have strict minimum criteria in place.
What kind of car do you want to finance?
Here are some criteria that lenders use to decide whether or not to approve you for a car loan.
- An older vehicle or a used car.
Lenders have restrictions on how old a vehicle can be if you wish to apply financing for it. Generally, lenders in Singapore will allow you to finance cars up to 10 years old, calculated from the original date of registration. You can take a look at some of the used car loan criteria outlined here.
- A motorcycle.
Unlike car loans, where it is mandatory for the car to be used as a collateral, motorcycle loans are more flexible and vary from lender to lender. You may use the motorcycle as a secured loan for lower interest rates, or even consider taking a personal loan to finance it. You can find finance for new and used motorbikes; just take a look at the criteria before you apply.
- An imported vehicle.
Buying a car overseas and importing it to Singapore brings with it a host of additional costs. There’s customs fees, shipping costs and the costs of transferring your payment. If you’re looking for a loan to cover all of these costs, you’ll need to ensure the loan will cover all of these costs before you apply. You can also consider applying for an unsecured loan to cover all the import costs until the car is successfully shipped in before taking up a car loan from a bank.
- A car from a dealership or private sale.
Buying a car from a dealership opens up additional financing options, such as balloon scheme payment. There are additional considerations with a private sale – ensure you get all the documentation needed from the seller to be approved for the loan you’re considering. Also, ensure that the car you obtain from a private sale is fully paid off and no longer under financing.
Understanding the kind of car you can finance is the first step to finding the right loan. Make sure you compare your options before applying for your car loan so that you get the best option for you.
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