How To Calculate Car Loan Interest In Singapore


Thinking of getting a car?

Interest rate is a factor that determines the amount of money you will spend on a loan. So it is important to understand how to calculate car loan interest to make informed decisions about the car loan you should get.

A loan calculator is a useful tool that will show you the total interest and amount you have paid over time. This article will tell you how to calculate car loan interest Singapore.

What COE, OMV, And PARF Mean

COE, OMV, and PARF are all acronyms commonly used in Singapore when discussing cars. Here’s a quick rundown of what each of them stands for and what they mean:

Certificate of Entitlement (COE): This refers to a certificate issued by the Land Transport Authority (LTA) in Singapore that allows the holder to purchase a vehicle and use it on the roads in Singapore for 10 years.

Open Market Value (OMV): This is the value of a car after considering all the taxes, fees, and other charges that are required to be paid by the car owner in Singapore.

You can find the open market value of a car by using the online calculator provided by LTA. The LTA website also provides a list of all the cars that are currently available in the open market.

Preferential Additional Registration Fees (PARF): This applies to a new car with an OMV. The registered owner is eligible for a PARF reimbursement if the vehicle is deregistered within 10 years of its initial registration date. This represents a portion of the OMV.

How Much Can You Borrow For A Car Loan?

For car loans in Singapore, the maximum amount you can borrow is 70% or 60% of your car’s OMV. According to current legislation, if the OMV is less than or equivalent to $20,000, you are eligible for a loan of up to 70% of the car’s purchase price. You can only get a loan for up to 60% of the cost of the car if the OMV is more than $20,000.

The Total Debt Servicing Ratio (TDSR) also comes into play. The TDSR is the percentage of your monthly income that goes towards servicing all of your debts, including your car loan. The current TDSR limit is set at 55%, which means that your car loan repayments should not exceed 55% of your monthly income.

Therefore, you might be unable to collect the entire 70% if a large portion of your earnings goes toward your loans. So ensure you have enough money for a 30% downpayment on a car or more, which you must pay in cash.

How Long Should Your Car Loan Tenure Be?

The average car loan tenure in Singapore is about seven years. However, the length of your car loan tenure should be based on your financial situation and needs.

If you can afford to repay your car loan within a shorter period, you should do so. This will save you money in interest payments. Of course, you can spread the payments over a longer time. Just make sure that you are comfortable with the monthly payments.

Car loans are normally only available for the first 10 years of a car’s existence because of how COE is set up in Singapore. After 10 years, cars are deemed “worthless”.

So if you’re looking at a loan for a car that is more than 10 years old, you may want to consider a shorter loan tenure so that you don’t end up paying more in interest than the car is worth.

How To Use A Car Loan Calculator

To purchase a car in Singapore, you first need to figure out how to calculate car loan interest in Singapore. A car loan calculator can help you determine your monthly payments and save time and money.

Here’s how to use a car calculator so you know how to calculate car loan interest Singapore.

The first thing you need to do is find a car loan calculator online. Next, take some time to compare rates and terms of various car loans. Once you’ve found a few, it’s time to input some information.

Most car loan calculators will ask for the vehicle’s purchase price, the downpayment for the car, the loan term, and the interest rate.

You can usually find this information on the dealership website where you plan to purchase the car. If you’re unsure about details, don’t hesitate to ask a salesperson for help.

Once you have all the necessary information, it’s time to plug it into the car loan calculator. This is usually a very simple process – the results will be displayed on the screen in just a few seconds.

The calculator’s results will show you the monthly payment amount, the total interest you’ll pay over the loan’s life, and the car’s total cost. This information can help you decide whether or not you can afford the car you’re interested in.

If you’re unsure what you can afford, adjust the loan term or interest rate until you find a payment amount that works for you. Once you’ve found a payment you’re comfortable with, you can begin applying for a car loan.

If you have used a car calculator, you know it is a valuable tool that can help you save time and money when shopping for a car in Singapore.

Take some time to find a reputable website and input the necessary figures. With just a few clicks of the mouse, you will know how to calculate car loan interest Singapore.

How To Lower Your Car Loan Payment

When you want to lower your car loan payment in Singapore, getting a lower interest rate is one of the best ways. This can be done by refinancing your loan with a new lender or negotiating with your current lender for a lower rate.

Getting a lower interest rate on your car loan will lower your monthly payments and save you money over the life of the loan. In addition, it can also help you to pay off your loan faster.

There are a few things to remember when considering lowering your car loan payment in Singapore.

  • Make sure that you compare rates from multiple lenders before you choose one.
  • Be sure you negotiate with your current lender for a lower rate.
  • Remember that the longer you keep your car loan, the more interest you will pay over time.

How To Lower Your Car Loan Payment

Here are some ways to lower your car loan payment:

Reduce The Amount You Borrow

This will lower your car loan payment in Singapore. This is because the amount you borrowed is the principal amount on which your interest is calculated. Therefore, the lower the principal amount, the lower the interest, and the lower the monthly car loan payment.

Shorten The Loan Tenure

This will lower your car loan payment in Singapore. The longer the loan tenure, the more interest you will have to pay on the loan.

By shortening the loan tenure, you will be able to reduce the interest you have to pay and lower your monthly car loan payment.

Get A Less Expensive Car

If you are looking to lower your car loan payments in Singapore, one option is to get a less expensive car. This may seem like an obvious solution, but it is often overlooked.

Getting a less expensive car will lower your payments because you need to finance a smaller loan. This means your monthly payments will be lower, as you will pay back less money overall.

Where To Get A Car Loan

Financing a car in Singapore can be done in a few different ways. The most common way is to get a car loan from a bank or a licensed money lender.

Many different banks in Singapore offer car loans. The interest rates and terms of the loans vary from bank to bank.

Let’s look at some banks’ interest rates*, as well as the loan tenure and minimum loan amount.

New CarInterest RateLoan TenureMinimum Loan Amount
DBS2.68%One to seven years$10,000
UOB2.78%One to seven years$10,000
Standard Chartered (auto financing)2.48%One to seven yearsNot stated
Maybank2.28%One to seven years$10,000
OCBC2.48%One to seven years$15,000

Used CarsInterest RateLoan TenureMinimum Loan Amount
DBS2.68%One to seven years$10.000
UOB2.78%One to seven years$10.000
Standard Chartered (auto financing)2.78%One to seven yearsNot stated
OCBC2.98%One to seven years$15.000

*Information correct at time of publishing

In addition, car dealers provide bank loans through well-known institutions, including DBS Bank, OCBC Bank, and United Overseas Bank.

The main benefit of getting a loan from a car dealer is that you can often get a lower interest rate than you would from a bank. The downside is that you may not be able to get the same terms or repayment schedule as you would from a bank.

Lastly, you may want to consider a car dealer’s in-house financing package. These packages are designed to help you finance the purchase of a new or used car. The interest rates on these loans are often lower than those you would find at a bank.

Calculating Car Loan Interest In Singapore

When you know how to calculate car loan interest Singapore, it is much easier to find a great deal.

The interest rates for car loans in Singapore are quite high, so it’s important to know how to accurately calculate your car loan interest using a loan calculator.

This will help you to plan your monthly budget. The best way to calculate your car loan interest is to see your loan terms and then see the interest rate.