Car Loans Guide Singapore

No matter how expensive automobiles become in Singapore, some of us will still want to buy them. But how many of us have a hundred grand lying around simply ready to be spent on a car? Unless you’ve been diligently saving for a car, you’ll almost certainly need to obtain a car loan.
And your auto dealer is well aware of this. He does, indeed. He’s only waiting for the proper opportunity to get you into his dealership’s in-house auto financing programme. In this blog, we give you a car loans guide in Singapore.

What do You need To Know?

Of course, everyone is aware of COE. Isn’t that what drives Singapore’s exorbitant automobile prices? But, guess what, COE isn’t the only factor driving up car prices. Check out this list of components that contribute to the overall cost of your vehicle:

OMV Component Description (Open Market Value)

The car’s “true” purchasing price EXCLUDING Singapore-specific taxes and charges, such as COE. This is how much your automobile would cost in countries where car ownership isn’t taxed to infinity and beyond, as it is in the United States.

Certificate of Excellence (Certificate of Entitlement)

The majority of your spending when purchasing an automobile will be incurred here. This legal document allows you to drive it in Singapore for a period of five or ten years. It is currently slightly shy of $40,000, however, the price varies greatly due to market demand.

Fee for Additional Registration (ARF)

A tax that you must pay when you register your vehicle. It is based on the OMV and represents at least 100% of the OMV.

PARF (Preferential Additional Registration Fee)

You can earn this PARF reimbursement if you deregister your automobile before its COE expires at the 10-year mark if it is less than ten years old. This is proportional to the remaining OMV at the time of deregistration.

Excise Tax Excise duty

It is a type of additional tax levied on specific items (like alcohol and tobacco). It is 20% of the OMV for automobiles.

GST (Goods and Services Tax)

GST must be paid on the OMV in addition to the excise charge. This is currently at 7% but will climb to 9% in the next years.

Why do you need to know the exact cost breakdown?

Because the amount you can borrow to finance your car is determined by the OMV, not the overall cost of the vehicle.

How much money can I get for a car loan? Car Loans Guide Singapore

Here is the maximum amount you can borrow based on your car’s OMV, according to the new laws.

Price at the Open Market (OMV)

The most you can borrow is
70% of the purchase or value price up to $20,000
More than $20,000 – 60% of the purchase or value price

However, this simply represents a maximum. Because the bank will consider your monthly income, financial responsibilities, and credit score, the actual amount a bank will accept to loan you may be less.

The TDSR, or Total Debt Servicing Ratio, is one formal law that applies to your car loan in Singapore. It means that you can’t use more than 60% of your income to repay loans.

So, if the majority of your paycheck is going to large home loan payments or if you have massive outstanding credit card bills to settle, you may not be able to collect the whole 70%.

Ascertain if you are financially equipped for a downpayment of 30% or more.