How to Determine the Right Loan Amount for Buying a Car in Singapore

Buying a car in Singapore is a significant financial commitment due to high costs associated with vehicle ownership. Determining the right loan amount is crucial for managing your finances effectively and avoiding over extension. Here’s a concise guide to help you figure out how much to borrow when buying a car in Singapore. To contact with the best money lender in Singapore, visit Jefflee Credit today!

The Total Price of Ownership

Before deciding on a loan amount, it’s important to understand the total cost of owning a car in Singapore, which includes:

  • Certificate of Entitlement (COE): A mandatory permit that allows you to own a car for ten years.
  • Down Payment: Typically, 30-40% of the car’s price.
  • Interest Rates: The price of borrowing, varying with loan tenure and credit score.
  • Road Tax: Annual tax based on engine capacity.
  • Insurance: Mandatory coverage.
  • Maintenance and Repairs: Regular servicing and potential repairs.
  • Fuel Costs: Monthly expenses for fuel.
  • Parking and ERP Charges: Regular costs for parking and road usage.

Gauge Your Economic State

Know your correct financial health to calculate how much you can afford to borrow:

  • Your monthly income and other revenue sources.
  • Monthly expenses, including housing, utilities, groceries, etc.
  • Available funds for down payment and emergencies.
  • Current loans or debts.

Your Loan Eligibility

Banks and financial institutions in Singapore typically offer car loans up to 60-70% of the car’s purchase price. Your eligibility depends on your credit score, income, and financial stability. Getting pre – approved for a loan helps you understand the amount you can borrow and the interest rate you will receive.

Tip: Use online loan calculators to estimate your monthly payments & determine an easy loan amount based on your financial situation.

Loan Tenure

The tenure of your loan affects both your monthly payments and the total interest paid. Longer tenures mean lower monthly payments but higher overall interest costs, while shorter tenures have higher monthly payments but lower total interest costs. Choose a tenure that balances affordable monthly payments with minimizing interest costs.

Factor in the Down Payment

The size of your down payment significantly affects the loan amount. A larger down payment reduces the loan amount needed and the interest paid over time. Aim to save enough to make a substantial down payment, minimizing the amount you need to borrow.


Defining the ideal debt for buying a car in Singapore involves understanding the total cost of ownership, evaluating your financial situation, determining your loan eligibility, considering the loan tenure, and making a substantial down payment. By following these steps, you can ensure that you borrow within your means and manage your car loan effectively.