Car Loan
Owning a car in Singapore can be a far more expensive proposition than in many other countries. In fact, you could end up spending upwards of $1000 on the payment of your car loan installments and the maintenance of the car. However, if you dislike commuting or you need to travel around with your family and your friends, buying your own car is definitely a good idea. If you are short of money to pay for the car, you can always get a car loan.
It helps if you are a citizen or a Permanent Resident of Singapore. You will have no problem getting any kind of loan including a loan to buy a car. Depending on how the government views your application, you could become a permanent resident in as little as six months. If you are a foreigner or a non-Singaporean citizen, you can still get a loan to buy a car but you need to present your employment pass and obtain a local guarantor who is either a citizen or a permanent resident of Singapore. The guarantor is responsible for your loan obligations if you should default. This may not be easy if you are new in Singapore and do not know people well enough. You should also be at least 21 years of age as at the date of the application.
Car Loan
If a bank makes a loan to you to buy a car, the bank owns the car till the loan has been fully repaid. You can generally get a loan of up to 95% of the price of the car or of the bank’s valuation of the car, whichever is the lower of the two figures. The maximum tenor of the loan will be 10 years and, in the case of used or second-hand cars, for the number of years that are left on the COE. Interest rates can vary between 3% and 3.5% depending on the lender. Generally, car loans are available at a fixed rate and, as a rough thumb rule; you can calculate the estimated real rate of interest by doubling the fixed-rate. As a measure of convenience, you can apply for the loan through the dealer from home you are purchasing the car. You should bear in mind that the dealer is an agent of a particular bank and you can often get a much better deal if you shop around with other lenders.
You will often see advertisements or promotions offering zero interest rate financing or discounted interest rate financing for the purchase of new cars. These deals are generally offered to people who buy new cars and have a good credit score. You should exercise caution that these promotions because the car dealer may well jack up the price of the car to compensate for the interest. If you decide to investigate one of these offerings, check the price of the dealer will give you if you pay in cash. You may well find that against a price of say $25,000 under one of these zero interest schemes, you may well get a price of $22,000 if you pay in cash. The difference of $3000 is the mark up to make up for the interest loss is so you are not really getting zero interest financing.
