Should you choose the UOB Car Loan?
The Monetary Authority of Singapore (MAS) eased the restrictions on car loans in 2016. With Singaporeans heaving a sigh of relief, you should mainly take more time considering which loan you will take. Yes, you are bound to get a car loan, as most of us do.
Why not? It makes a car seemingly affordable. Also, you can take out your new wheels just by paying the downpayment and other corresponding fees.
In addition, car loan promos sprouted to attract more buyers. It includes the UOB Car Loan. With the normal car loan, you will have fixed monthly amortization for 7 years.
UOB offers its car loan to Singaporean citizens and permanent residents. The minimum age is 21 years old. Also, foreigners may apply. But it requires them to have a qualified guarantor who is a Singaporean citizen.
If you want to apply, make sure you can present your:
Do you want to buy a new car? When you look at the advertised interest rate per year, you’ll see the inviting figure of 3.250%. However, you must consider the effective interest rate per year. Usually, it is 6.170% up to 7.040%. On the other hand, used cars even have a higher Effective Interest Rate, from 7.270% to 8.390%.
Of course, you must follow the new regulations. UOB’s longest loan tenor is 7 years. But it had a margin loan amount of up to 70% of the purchase price.
Now, let’s look at UOB’s promotional car loan called HP50 Car Loan.
Why HP50? Because you are just required to pay 50% of your amortization! Pay half the amount of your monthly repayment for 59 months. It is the fixed term for this promo. Also, note that this promo is only applicable for brand new cars.
What happens after serving your monthly instalment for 59 months? Will the bank just let you keep your car without paying the rest? Nope! (No bank will be that generous.)
You will choose among three options:
Suppose your new car’s purchase price is $200,000. The HP50 loan quantum is 50%. It makes your maximum principal loan $100,000 to be settled in 5 years (60 months).
If you apply for UOB HP50 Car Loan, you must borrow at least $50,000. But it only allows up to the maximum amount of $400,000. So it fits most of the current car prices in Singapore. Sounds tempting, right?
The HP50 Car Loan is limited to only new cars. If you are considering a used car, you will have to apply for the usual car loan. Another limitation on the promo is the amount you have to settle on the 60th month. Should you want to keep the car, you have to find a way to pay the balance. It will be an advantage if you have enough savings. But shedding such an enormous amount might dent your monthly budget for some time.
Taking out a car loan is not an easy matter. It takes serious consideration of your future finances. Are you ready to take on such financial responsibility?