Used car loans

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Managed by Yvonne Taylor   |   Verified by Kwok Zhong Li   |   Updated 16th January 2020

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Q&As about Used car loans

How much can I borrow for a used car loan?

It all depends on the car’s Open Market Value (OMV). If the OMV is $20,000 or below you can borrow up to 70% of the purchase price (including COE and taxes). This is a regulation imposed by the Monetary Authority of Singapore (MAS). If the car’s OMV is over $20,000, banks are only allowed to lend up to 60% of the purchase price (including COE and taxes). However, you may be able to borrow up to 90% of the OMV if you are operating a company and register it as a private car hire business.

Can anyone borrow 60% or 70% of a car’s OMV (Open Market Value)?

No. The loan amounts of 60% of OMV (where OMV is over $20,000) and 70% of OMV (where OMV is $20,000 or below) are only upper limits, the maximum amounts that banks are allowed to lend. In practice, the amount that you are allowed to borrow will depend on your credit score and your Total Debt Servicing Ratio (TDSR). Put simply, your TDSR is the total amount of all your monthly loan repayments expressed as a percentage of your monthly income, and a regulation imposed by the Monetary Authority of Singapore (MAS) means that it cannot be higher than 60%.

What is the maximum repayment period (loan tenure or loan tenor) for a used car loan?

Car loan regulations allow a repayment period of up to seven years, but some lenders insist on shorter repayment periods depending on the age of the car. For example, if your chosen lender only finances cars up to 10 years old, and the car you want to buy is already six years old, your maximum repayment period would be limited to four years.

Is there any reason why I shouldn’t accept the car dealer’s finance offer?

The car dealer is an expert in selling cars, not in selling loans. He will most likely be affiliated with a single bank or finance company, so there’s no competition. At Finty you can compare offers from different banks. You may also be persuaded to take out a loan for a longer period than you really need, just because the monthly repayments will be lower. Lower monthly repayments are a good selling point for the dealer, but the result will be that you will pay a larger amount of interest overall. You will almost certainly be better off by organising the finance separately, comparing offers and choosing your own repayment term.

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