Understand your own needs – be honest with yourself.
Buying a car is always exciting! From regular vehicles that help you reach your destination to exciting sports vehicles, the options are truly endless. Even though we all dream of riding expensive sports cars, it is important to remember to work around our budget and utilization needs. When you’re looking to buy a used car, search for and finalize with a trusted dealer like Otua car dealers which sell commercial vehicles.
Financial Planning
There are 2 essential factors here to take note of. Your TDSR (Total debt servicing ratio): This affects your future credit rating. Young couples who are applying for a BTO have to take note of this. The total income and finances committed to service all types of loans combined is earmarked at 60%. Based on our humble experience, servicing a monthly repayment loan that takes up 20%-30% of your salary is the sweet spot. Your first down payment will be a hefty one and it’s best to be prepared for it.
Let’s show you an example of the breakdown for your first payment:
● Down payment (Usually 30% of the car price)
● First month installment
● Some car dealerships may charge an administrative fee for each purchase
● Loan Processing Fee (if you take up an inhouse loan)
● Motor insurance that ranges between $800 to $2500, depending on your No Claim
Discount (NCD) and the type of car you buy.
As your next step, find out which finance package works best for you. While there are
probably a dozen different hired purchase loan types available in the market, it basically
boils down to 2 main types:
● Bank loans (Examples: Maybank, DBS, UOB etc)
● Inhouse Financing
Here is the basic summary of each type of loan:
Bank loans offer a competitive and attractive interest rate. They rarely charge any loan
processing fees; so they are much cheaper to apply. However, they do record these loans
into your total debt servicing ratios, so they might not be suitable if you are looking to make a property purchase in the near future.
Inhouse financing is typically aimed at customers who might have weaker credit ratings. It
usually comes with a much higher interest rate (sometimes 2 to 3% higher than bank rates).
There is also a loan processing fee, ranging from $300 to $2000, depending on your credit
rating. People who are highly leveraged tend to prefer inhouse financing options since it
does not show on their TDSR.
Always consider and contemplate your options well before opting one for your car loan,
because it can span up to 7 years; which is a long time. Remember to buy within your
means and if you have more questions about finance packages, our client advisors at Otua
Singapore are always happy to help.
Shortlisting your car
There are many ways to help you find the car of your dreams. The most common method is
to go to classified platforms like www.sgcarmart.com or www.carousell.com where you can
compare and check out over 10,000 cars listed at any given time. Potential sellers who look
up ‘resale car singapore’ and ‘car mart singapore‘ end up finding the top reliable services like Otua Auto.
If you are looking for a workhorse or just prefer a hassle-free car ownership experience, we
would recommend that you consider Japanese or Korean make and models. In addition,
take care to conduct a thorough inspection of the vehicle before finalising a transaction.
Remember that it really depends on your needs. The cheapest car may not always be the
best purchase; rather you should find the car that caters to both your needs and financial
capabilities.
OTUA, being the reflection of AUTO, defines an inspiring platform for the people of
Singapore to sell their vehicle. For more information, check out our website .
