Car Loan Interest Rates
What is the interest rate on a car?
Yes, that which determines in part the cost a buyer will pay over the tenure of the loan is the interest rate.
Car interest rates are calculated on a flat percentage per year on the full loan amount, and this interest is multiplied by the number of years of the loan tenure.
Unlike most property loans, the interest is not reducing each successive year but is flat throughout. And so the percentage stated on your car loan represents a larger amount than for property loans showing the same rate for the equal amount loaned.
Which means all the more you should compare and shop around for a car loan with the lowest rates.
New car loans are generally cheaper in the interest charged than used car loans. This represents less risk for the lender and the correspondingly lower interest rates show it.
Used cars may be loaned up to the end of their COE period in Singapore, that is, the 10th year. Though the maximum tenure now allowed by the MAS is now 5 years, note that you cannot take out a loan of 5 years on a car with less than 5 years remaining on the COE.