Looking for a car loan? DBS car loan is one of the best financial assistance in Singapore. Understand why as we discuss the facts you need to know about it.
DBS offers car loans to Singapore Citizens, Permanent Residents, or foreigners at least 21 years old. You must have a minimum monthly income of $2,000 to $4,000.
However, before applying for a DBS car loan (or any loan), make a self-assessment. Banks are strict when it comes to loans. They will evaluate your creditworthiness by looking into your credit report.
So even though you meet the eligibility, if you have a history of payment delinquency, you might get declined. It would help if you asked the credit bureau for a copy of your credit history. If this is the first time you are applying for a DBS loan, you can get it free.
Like most banks in Singapore, DBS increased its loan term from 5 years to 7 years. It might be tempting to get the most extended loan term as it has lower monthly amortization. However, you will end up paying more than you should. Therefore, it is better to know how much you want to borrow and for how long. Use a loan calculator to help you see the possible amount of your monthly amortization.
The loan amount you can borrow will depend on the car unit’s Open Market Value. For example, suppose you want to purchase a unit for less than $20,000. You can borrow up to 70% of the valuation or purchase price. If the two have a different value, DBS will base the loan amount on whichever is lower.
If the unit costs more than $20,000, you can borrow 60% of its valuation or purchase price.
Another feature is that DBS also finances used cars up to 70% of their appraised value, though it still depends on the car’s age. It is best not to change the ownership yet if you haven’t got any loan approval. The used car must not be older than 10 years. Since the vehicle’s value depreciates, the older the car, the lower the amount you might be allowed to borrow.
It indicates the monthly instalment, loanable amount and the estimated purchase price based on your monthly income, chosen loan period and existing financial commitment.
Also, it is useful when you want to know how much you can handle should you finally decide to get a car. Most people get over-excited that they only consider the interest rate and loan term. However, you will not feel the impact of a car loan unless you see the realistic figure you have to pay every month.
Of course, most of us know that you will lose your car. However, the bank repossessing your car is just one of the consequences of defaulting. You will be charged with additional penalty fees for your delayed payments. Failure to settle the loan in a week means you will put your car on sale. If the amount of money from the sold car is still not enough to settle the ballooning loan amount, you are still accountable for it.
And much worst is the impact it will do on your credit score. A car loan is vital, and a history of a default car loan will not look good in your records. Even if you get another chance to buy a car with a loan, you will be offered a very high-interest rate.