Buying a new or used car might be one of the primary purchases you make in life. Whether it is a car for travelling to and from work every day, or a family vehicle, getting to own it comes with a great deal of satisfaction. All about car loan rates in Singapore and in house car loan in Singapore.

If you do not have enough money right away, that should not dim your dream of owning a car because it is possible to use a car loan in Singapore. That said, car financing can be confusing, especially if you are buying your first car. From the calculation of interest rates to down payments and tenure of the loan, everything can quickly get overwhelming. Many Singaporeans ask: “How do I get the best car loan Singapore?”.

To help you out, this post is a step-by-step guide to help you understand how car loans in Singapore work. Furthermore, this article will outline the tricks of getting the cheapest car loan Singapore to finally ride off the streets of Singapore and enjoy every moment

Car Loan Rates in Singapore: How Do Car Loans Singapore Work?

A car loan is an agreement between a borrower and a loan provider, indicating that the borrower gets the money to purchase a car of choice. In return, the borrower is required to repay the money back together with the agreed interest within a specified period. In case the borrower is late with payments, he/she is penalised.

The loan contract can be broken down into the principal (the actual amount of the loan) and interest. Car loans that take a longer period to pay, such as 60-72 months, can help to bring down the monthly payments with a significant margin. However, such long-term loans mean that the total amount payable will be higher compared to a similar loan taken over a shorter period. When you pay the loan over a lengthy period, the chances are that the total amount paid will surpass the value of the car.

To demonstrate the importance of the loan term, we will compare a $20,000 loan offered at a 3.75% interest rate across different loan terms. Note that the calculation only factors the interest rate and excludes other costs, such as sales tax, that might be attached to such a loan facility.

Loan Amount


Loan Term

Monthly Payment

Total Interest



36 months (3 years)





60 months (5 years)



From the demonstration above, if you opt to repay the loan in five years, it implies that you will pay $788 more compared to another person who clears it in 3 years.

Get to Know the Language Used in Car Financing Singapore

Before you can commence searching for the best car loan in Singapore, it is important also to understand the used language, especially the main terms. Here are the main ones:

  • Annual percentage rate (APR): APR is the amount that you pay after borrowing a loan, and it includes fees and interests. It is given as a yearly percentage. When you take a loan with a high APR, it implies that the total amount payable will be equally high. The best car loan in Singapore is the one that comes with lower APR. So, it will be a good idea to use Lendela to compare the APRs for different banks before signing the agreement.

  • Principal: This is the amount that you borrow to buy a car. Note that the principle does not include the fees, penalties that might be incurred along the way, interest, and other applicable fees.

  • Car Loan Term: Car loan term, also referred to as the loan tenure, is the length that the auto loan will last, and it is expressed in months. Common loan terms in Singapore were 36-48 months, but the period has increased over time as cars get more expensive. When applying for an auto loan, it is advisable to divide it by 12 to understand the number of years it will take and the annual percentage rate (APR).

  • Car Payment: Once you take an auto loan, monthly payments will be required to clear the principal plus the interest. It is important to mention that figuring out the monthly payments can be a little complex because some banks progressively reduce the interest as the auto loan balance reduces. However, you do not have to worry about that because you can always use a car loan calculator in Singapore.

  • Processing Fee: When dealing with some banks, an additional processing fee, also known as administration fee, might be included. However, the fee is usually waived when the loan amount is more than $20,000


Car Financing Singapore: What are the Main Options?

Whether you want to buy a brand new or used car, there are two main types of financing that you can use; the car dealer’s financing and bank loans. This is important about car loan rates in Singapore (and all about car loan rules in Singapore).

Bank Loan / Direct Lending

Direct lending companies, such as banks and other financial institutions, lend you money to buy the car of choice. This is considered one of the best options because you get the opportunity to compare the bank with the best terms and conditions. Once you get the loan, go ahead and buy your preferred car.

Using direct lending is considered a better option compared to going through a dealer because the car seller might require you to add more money as a commission.

Car Dealer’s Financing

Most car dealers work with banks to offer in-house can loans in Singapore. However, they handle most of the details for you to make it more convenient when buying a car. Although dealers have relationships with multiple banks, meaning that you can compare the more affordable options, they also claim a commission from the lending institution. This additional cost is passed down to the client, a consideration that makes car dealership financing more expensive compared to direct lending.

The average personal loan interest rate in Singapore in 2021

What You Need to Do when Looking for Car Financing Singapore

Now that you understand the different types of car loans Singapore, here are the five main steps to follow before making your application.

Check Your Credit Score and Ensure It is Correct

Credit score is the measure of a person's creditworthiness and ability to repay a loan. The information you get on your credit report is broken down into a four-digit number, ranging from 1000 to 2000. If you have a credit rating of about 1000, you are considered to have a high risk of defaulting. However, you are considered to have the lowest risk of defaulting if the score is 2000.

People with high credit scores are considered less risky and get lower car loan interest rates compared to those with poor scores. To calculate the score, the credit reference agencies gather your financial information from different parties, such as banks and online lending institutions. Since they rely on third party organisations to gather your details, it is not uncommon to find the reports having errors.

If you had taken a credit card loan and cleared it, but the details are not factored on the credit report, the score is likely to be lower than it should be. Therefore, checking the credit score rating before applying for an auto loan can help you identify such errors and have them corrected.

Because errors on your credit score can take some time to correct, it is advisable to check it early enough, probably a few months before applying for a brand new or used car loan Singapore.

Auto loan providers Singapore are not just interested in your credit score. In addition, they will want to check your age, address, marital status, address, and employment status. The focus is on getting the whole picture of the borrower before approving the auto loan. This is key to understand car loan rates in Singapore.

In House Car Loan in Singapore: Look for a Good Financing Deal

Different banks in Singapore charge car loan interests depending on the market demand, the borrower’s creditworthiness, the amount being borrowed, and their appetite for risk. So, with a bit of comparison, you are likely to get an impressive offer and competitive car loan interest rate Singapore. Lendela helps you compare loans for car financing in Singapore so that you can choose the best option. Simply apply at, and we’ll send your application to several car financing companies. When they return with their offers, we make sure to present the for you in a simple and comparable way.

When you compare the car loan offers, it is important to go beyond monthly payments or interest rates. Particularly, you should check out the total cost of the vehicle plus the interest that you will have paid when the loan is finally cleared (more about cost of living in Singapore).

First, use a car loan calculator Singapore and key in the desired amount as well as the number of months for repayment. This will help you to determine the monthly payment. Then, multiply the monthly payment by the number of months for loan repayment and add the down payment.

Compare the offers from car dealers and financial institutions with Lendela to see who has the most competitive option. In some cases, especially when considering car dealerships, it might be possible to negotiate for better terms one you have chosen the offer initially. Even if you “only” negotiate for a 0.7% reduction of the interest rate, this small difference can help to reduce the total repayable amount with a huge margin.

Raise Some Down Payment

When purchasing a car, whether using a bank loan or in-house car loan in Singapore, you are likely to get a better deal by making a significant down payment. Putting forward a down payment implies that you will need a smaller loan compared to having the bank finance the entire amount. It also means you shorten the term of the loan and cut down the monthly payments. Some banks will also be willing to lend you at lower interest rates.

Making a down payment also implies that you are less likely to suffer negative equity on the in-house car loan in Singapore. For example, if the vehicle is involved in an accident and declared a total loss, the insurance payment will cover the entire loan balance and might provide money for your down payment.

When planning for a down payment, it is important to also prepare for other costs that might come along. For example, you might be required to pay for licensing fees and applicable taxes. It is advisable to pay these additional costs upfront as opposed to including them in the financed amount.

A Co-Signer can Help You Get Lower Car Loan Interest Rates

If your credit score is poor, working on it can take time. However, you can get another person with an excellent credit rating to co-sign the loan. This implies that the person with a good credit history lends his/her reputation to help you get lower interest rates. In such an arrangement, you need to ensure that the loan is repaid as agreed because defaulting is likely to negatively affect both the borrower and co-signer's credit scores.

An agreement with a co-signer works well when a borrower is progressively improving his/her credit score. Indeed, you can even ask for auto loan refinancing when the credit score improves. Refinancing involves relooking at the terms and conditions of the loan so that you are able to enjoy lower interest rates because of the improved credit rating. Very important to understand in house car loan in Singapore.

Prepare Yourself Financially

When you decide to buy a car, it is important to appreciate that it will have significant financial implications on you. Therefore, it is crucial to think about it in advance and adjust your personal budgeting. If you are short of finances, it is advisable to cut some spending in unnecessary areas to cater for the monthly payments.

If possible, you should consider increasing your streams of revenue to reduce pressure on your finances. For example, can you take a part-time job to raise additional funds? This can come in handy to help you repay the car loan in Singapore smoothly and improve your credit score.

Financing a car


Mistakes to Avoid when Looking for a Car Loan Singapore

When tracking down good auto loans in Singapore, many people tend to focus more on the car and leave financing at the end of the journey. This mistake is likely to make you pay more for a longer period. Here are other common mistakes people make when buying cars. Note them carefully and avoid them as much as possible:

1. Failing to Select What You Can Afford

Failing to shop for a car loan that you can afford is likely to cause serious financial strain. While it is true that having a car makes travelling easy and enjoyable, it comes with some costs. Starting with the loan repayment to costs for gas and insurance, you need to be prepared to meet the additional costs.

Before signing an auto loan, please think of how it will merge with your regular budget. Here, you should aim at getting the cheapest car loan Singapore and try to clear it as fast as possible. Then, the funds you were directing to finance the car can be channeled to other areas, such as growing your emergency fund.

2. Putting Expectations Too High

When it comes to cars, there are plenty of choices, and society exerts a lot of pressure on the people, making them only focus on perfection. However, this approach often results in disappointments when the expectations are not met. The moment a dealer realises that you are looking for perfection when looking for an in-house car loan Singapore, it becomes easy to charge you high interest rates.

You are also likely to incur additional costs that could otherwise have been avoided. For example, some people buy cars expecting that they will keep them for ten years to justify depreciation rates. However, rarely do people keep their cars for more than five years.

Instead of setting your expectations too high, it is advisable to use facts to make the right decisions. As opposed to thinking that a car will last for up to ten years, consider leaving the options open. If you use it for only three years and get an opportunity to sell and upgrade to a better one, "Will that not be a good idea?"

3. Being Unable to Walk Away when Necessary

Note that up until you sign the loan agreement, you have the option of waking up and walking away anytime. If you notice something that is likely to increase the repayable amount, such as hidden costs and fail to get it checked, it will be permanently embedded into the agreement. The effect will be higher interest rates and a more repayable amount. The ultimate impact is the risk of paying a higher amount than its actual value. The burden will also be higher because the additional amount could have gone into doing something else.

Make sure to closely interrogate the car financing deal and understand every detail. You might even consider seeking expert assistance with the financing deal to get it right. If you notice that something is wrong, do not hesitate to walk away!

4. Letting Emotions Control You

Trusting your guts is sometimes a smart move in life, but it is not when it comes to buying a car. When a person gets emotional about buying a specific car, the mind starts figuring him behind the wheel, and the thrill is fantastic!

Being emotional is likely to clog your ability to compare available deals, making you settle for what is more expensive. For example, even if you feel so much attached to a car being offered by a specific dealer, it will be a good idea to check what other sellers are offering. If it is a 4x4 double cabin, try to ask a number of questions, including; “Am I getting the best deal?” and “What alternatives do I have?”

Car loan Singapore

How to Apply for the Best In House Car Loan in Singapore

One of the most important things when applying for a car loan Singapore is ensuring to identify and work with the best loan provider.

This is where Lendela comes in. With our online application service, you will not only get access to multiple personalised car loan offers from Singapore banks and financial institutions via just one application – you will also be able to compare them easily and make sure that you select the best possible option. It all starts with the application at

Thereafter, you will be asked to upload selected documents to support your application. This will help the loan providers return with offers that are tailored for your unique situation. Documents that are commonly required by the banks include:

Vehicle Sales Agreement

The vehicle sales agreement is a confirmation of the sale of the car showing all the details. Even before taking the sales agreement to the bank, it is prudent to study and understand all the details well. Particularly, you need to grasp the total amount payable, monthly payment, and interest rates. You also need to know the impact of defaulting.

Proof of Employment

As a bank, the primary thing before approving a car loan in Singapore is establishing your ability to repay the money. You need to provide proof of employment and income history using documents such as pay slips, bank statements, income tax statements, and the name of your employer.

Proof of Financial Commitment

Although the bank will check your credit score before finally approving the loan, proof of financial commitments will still be required. Here, you can attach documents that are related to a personal loan or house loan.

Sign Off the Auto Loan and Start Repaying

Once the deal is through, it is time to enjoy your new ride, but remember that the repayment journey has just started. Therefore, stick to the terms and conditions, which mean repaying the loan on time every month. To avoid forgetting or getting late with repayments, consider asking your bank to automatically deduct and remit the monthly payments to the bank.

What If You are Unable to Replay a Car Loan in Singapore?

When COVID-19 pandemic struck in 2020, it caught people unaware and its impacts, such as the collapse of businesses and job losses, have been massive. Other things that can make one unable to service loans include medical bills, losing jobs, and natural calamities.

So, if you are caught up in any of such situations, where you are unable to repay a car loan in Singapore, what do you do? Here is a solution:

If the vehicle’s value is more than the balance of the loan, it is advisable to sell it and clear the balance before missing payments. You might even be able to raise enough money to purchase a cheaper car. Note that an additional valuation for the vehicle might be required to confirm its current value.

When you start experiencing difficulties servicing your loan, reach out to the bank and agree on the way forward. Most financial institutions are willing to listen and even try to assist you to overcome the current challenge. For clients who have been consistent with their monthly instalments, it might be possible to get new car loan rates in Singapore.

Getting the best car loan in Singapore is just as crucial as the type of vehicle you decide to purchase. Do not fall into the temptation of randomly picking a financing option. Instead, have a look at all available options and compare the different offers. Be sure to also look at the entire picture by factoring in not just the monthly payment, but also the total repayable amount and interest. With this guide, you should be able to arrive at an informed decision on car financing.