A car loan in Singapore is limited by the Monetary Authority of Singapore (MAS) to 60% or 70% of the purchase price and a tenure of seven years. Within those limits, lenders quote a flat rate, so the true yearly cost is nearly double the number advertised.
That makes “best” a matter of two things: the lowest Effective Interest Rate (EIR) for your tenure, and the least costly terms if you sell or settle early.
A caution on borrowing: a car loses value from the day it is registered, and the COE expires. The loan is a fixed cost on top of fuel, insurance, road tax and parking.
The MAS Limits on a Car Loan in Singapore
MAS rules tie the limits to the car’s open market value (OMV), the price assessed by Singapore Customs before taxes.
| Open market value | Maximum loan | Maximum tenure | Minimum cash down payment |
|---|---|---|---|
| S$20,000 or less | 70% of purchase price | 7 years | 30% |
| More than $20,000 | 60% of purchase price | 7 years | 40% |
The purchase price includes relevant taxes and the COE. The limits cover new and used cars, and loans from banks, finance companies and merchant banks. MAS’s October 2026 statement says they also apply to licensed and exempt moneylenders, and to hire purchase and conditional sale agreements.
Exempt: motorcycles, commercial vehicles, vehicles for people with physical disabilities or their caregivers, and private hire cars not owned by an individual.
What changed in October 2026. Private hire cars owned by individuals were previously exempt. For agreements signed on or after 30 October 2026, they fall under the same 60% or 70% and seven-year limits.
Why a 2.78% Flat Rate Is Really About 5.2%
Car loans use flat-rate interest. MoneySense explains that interest is calculated on the original loan for the whole tenure, so it does not fall as you repay.
OCBC’s car loan page is the clearest published example we found. As at November 2026 it lists:
- Petrol and diesel cars: 2.78% a year flat; EIR 5.19% over seven years.
- Electric cars: 2.48% flat; EIR 4.65% over seven years.
- COE cars: 2.98% flat; EIR 5.54% over seven years.
OCBC states that rates are subject to change. UOB lists a car loan, a COE car loan and a loan for electric vehicles, and DBS a car loan of up to seven years, but neither published a rate on the pages we read on 13 November 2026. They quote on application.
Dealers often arrange financing too. A dealer’s “package price” may depend on taking its loan, so ask for the price with and without it.
Worked Example: A $150,000 Car
An illustrative buyer chooses a car with a purchase price of $150,000 including COE and an OMV of $25,000.
- Maximum loan: 60% × $150,000 = $90,000
- Cash down payment: $60,000
At OCBC’s published flat rate of 2.78% a year:
- Over 5 years: interest of $90,000 × 2.78% × 5 = $12,510; instalment $1,708.50 a month; $102,510 repaid in all
- Over 7 years: interest of $90,000 × 2.78% × 7 = $17,514; instalment $1,279.93 a month; $107,514 repaid in all
The seven-year loan is $429 a month lighter and about $5,000 more expensive.
The instalment is only part of the running cost. Add insurance, road tax, fuel or charging, parking, ERP and servicing before deciding what fits. Our budget planner has a line for each.
The short version: MAS decides the most you can borrow: 60% or 70% of the price, over at most seven years. Compare lenders on EIR for the same tenure, ask for the early settlement terms in writing, and pick the shortest tenure whose instalment fits with all the other costs of the car.
Early Settlement and the Rule of 78
Many buyers sell before the loan ends, so the exit terms matter as much as the rate.
With a flat-rate loan, the total interest is fixed at the start. Settle early and you receive a rebate of the unearned interest. Lenders commonly compute it under the Rule of 78, which treats more of the interest as earned in the early months. The rebate is therefore smaller than a simple pro-rata share.
OCBC’s page lists a full settlement penalty of 1% of the outstanding loan, and a clawback of 20% of the interest rebate under the Rule of 78.
Before signing, ask the lender for an illustration: “If I settle after three years, how much do I pay?” Before selling, ask for the exact settlement figure and compare it with the offer for the car.
Things to Check Before You Sign
- The agreement type. Most car financing is hire purchase. The lender owns the car until the last instalment, and can repossess it on default.
- Late fees. OCBC lists $80 for a late payment.
- Used cars. The limits still apply, but MAS uses an adjusted value for used vehicles. Ask the lender how it values the car.
- Insurance conditions. Comprehensive insurance is normally required for a financed car. It is a real cost; price it before committing.
- In-house and unregulated schemes. MAS has said it may extend the restrictions to in-house loans and advises buyers to avoid unregulated financing.
How a Car Loan Affects Other Borrowing
A car loan is secured on the car, so it does not count towards the unsecured credit limits described in how many personal loans you can take.
It does count when you apply for a home loan. MAS lists car loans among the debts in the Total Debt Servicing Ratio, which is capped at 55% of gross monthly income. A $1,280 car instalment reduces the mortgage you can service. Our mortgage repayment calculator shows the instalment on a given home loan.
Borrowing the down payment defeats the purpose of the MAS limits and adds a second instalment at a higher rate. A personal loan at an EIR of 7% on a $60,000 down payment over five years would cost roughly $11,300 in interest on top of the car loan.
What To Do Next
- Use our car cost of ownership calculator to see the loan alongside COE, road tax and rebates.
- Find the car’s OMV on the dealer’s price list to see whether the 60% or 70% limit applies.
- Work out the down payment in cash, then the instalment at five and seven years.
- Ask at least two lenders, and the dealer, for the flat rate, EIR and early settlement terms on the same amount and tenure.
- Add the instalment and running costs to your monthly budget before placing a deposit.
- If you already have a loan and want to see the effect of paying more each month, try our debt payoff calculator.
- Before borrowing, add up the full cost of owning a car in Singapore, including COE, insurance and upkeep.
