Should you choose the UOB Car Loan?
Monetary Authority of Singapore (MAS) eased the restrictions on car loans in 2016. With Singaporeans heaving a sigh of relief, you should particularly take more time considering which loan you are going to take. Yes, you are bound to get a car loan as most of us do.
Why not? It makes a car seemingly affordable and 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. This includes the UOB Car Loan. With the normal car loan, you will be bound with fixed monthly amortization for up to 7 years.
UOB Normal HP Car Loan
UOB offers its car loan to Singaporean citizens and permanent Residents. The minimum age is 21 years old. Foreigners may also apply provided that they have a qualified guarantor who is a Singaporean citizen.
UOB Car Loan Requirements
If you interested to apply, make sure you can present your:
- Valid ID or passport,
- Purchase Order acquired from the car dealer,
- Latest Income Tax Notice of Assessment, latest pay slips or IR8A Form, and
- A copy of LTA Vehicle Information (if you are buying a used car)
UOB Car Loan Interest Rates
Do you want to buy a new car? When you take a look at the advertised interest rate per year, you’ll see the inviting figure of 3.250%. However, what you must consider is the effective interest rate per year which is 6.170% up to 7.040%. Used cars even have higher Effective Interest Rate of 7.270% up to 8.390%.
Of course, following the new regulations, UOB’s longest loan Tenor is 7 years with margin loan amount of up to 70% of the purchase price.
UOB HP50 Car Loan
Now, let’s take a 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. This is the fixed term for this promo. Also, take not that this promo is only applicable for brand new cars.
What happens after serving your monthly installment 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:
- Trade your car at the same dealership
- Pay the loan balance plus interest on the 60th month installment
- Have a Sell and Lease Back scheme with your dealership
How does is really work?
Suppose your new car’s purchase price is $200,000. The HP50 loan quantum is 50%. This makes you maximum principal loan into: $100,000 to be settle in 5 years (60 months).
- Interest flat rate: 3.50%
- Principal plus interest rate at the end of the car loan: S$117,500
- UOB Normal HP Car Loan
- S$117,500 / 60 months = S$1,959 a month from 1st to 60th month
- UOB HP50 Car Loan
- S$117,500 / 59 months = S$1,991.5
- S$1,991.5 / 2 = S$996 from 1st to 59th month
- Your 60th month instalment is : S$58,736
If you are going to apply for UOB HP50 Car Loan, you must borrow at last S$50,000 up to the maximum amount of S$400,000. This fits most of the current car prices in Singapore. Sounds tempting, right?
The HP50 Car Loan is limited to only new cars. This means that if you are considering a used car, then 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, then you have to find a way to settle the balance. It will be an advantage if you have enough savings, but shedding such a big amount might make a dent of your monthly budget for some time.
Taking out a car loan is not an easy matter. It takes serious consideration on your future finances. Are you ready to take on such financial responsibility?
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