By The Ledger desk · Last verified 11 October 2026
Under MAS rules, you can borrow at most 70% of a car’s purchase price if its Open Market Value (OMV) is S$20,000 or less, and 60% if the OMV is above S$20,000. The longest loan allowed is seven years. The rest must come from your own cash. Car loans are quoted as a flat rate, charged on the original amount for the whole term, so the effective interest rate is roughly double: a 2.5% flat loan over five years works out to about 4.7% to 4.8% a year. Settling early is allowed, but most lenders use the Rule of 78 to work out your interest rebate and may add an early redemption fee.
A car is one of the largest purchases most Singaporeans make, so a little arithmetic before signing pays off handsomely.
Quick facts
- Loan limit: 70% (OMV up to S$20,000) or 60% (OMV above S$20,000).
- Maximum tenure: 7 years, unchanged since MAS eased the rules in May 2016.
- The limits apply to new and used cars.
- Refinancing is allowed for the whole balance, but only for up to 7 years minus the years already elapsed.
- Flat rate × about 1.8 to 1.9 ≈ the effective rate, depending on tenure.
- Early settlement: interest rebate by Rule of 78, often minus a fee on that rebate.
How much can you borrow?
| Car’s OMV | Maximum loan | Minimum downpayment | Longest tenure |
|---|---|---|---|
| S$20,000 or less | 70% of purchase price | 30% | 7 years |
| Above S$20,000 | 60% of purchase price | 40% | 7 years |
OMV is the car’s assessed import value, not the showroom price, which also includes COE, registration fees and taxes. Many family cars sit near the S$20,000 line, so check the OMV on the price list before you plan your downpayment.
Flat rate versus effective rate
With a flat rate, interest is worked out on the full loan for every year, even as you pay it down. Take a S$60,000 loan at 2.5% flat:
| 5-year loan | 7-year loan | |
|---|---|---|
| Total interest (S$60,000 × 2.5% × years) | S$7,500 | S$10,500 |
| Total repaid | S$67,500 | S$70,500 |
| Monthly instalment | S$1,125.00 | about S$839.29 |
| Approximate effective rate | about 4.7% to 4.8% | about 4.7% to 4.8% |
The longer loan lowers the monthly bill but costs S$3,000 more in interest. Always ask for the effective interest rate when comparing a car loan with a personal loan or any other borrowing.
Settling early: a worked example
DBS publishes this example: the same S$60,000, five-year loan at 2.5% flat, settled after 25 months.
- Paid so far: 25 × S$1,125 = S$28,125. Outstanding: S$67,500 − S$28,125 = S$39,375.
- Rule of 78 rebate: with 35 of 60 months left, the share of interest refunded is (35 × 36 ÷ 2) ÷ (60 × 61 ÷ 2) = 630 ÷ 1,830. S$7,500 × 630 ÷ 1,830 = S$2,581.97.
- Fee of 20% on the rebate: S$516.39.
- Fee of 1% on the S$60,000 financed: S$600.
- To settle: S$39,375 − S$2,581.97 + S$516.39 + S$600 = about S$37,909.42.
Under a simple straight-line split, 35 of 60 months would refund S$4,375 of interest. The Rule of 78 front-loads interest, so the rebate is smaller, and fees trim it further. Other lenders’ fees differ, so ask for a written redemption quote.
The WahLiao Verdict
Borrow as little and for as short a time as your monthly budget comfortably allows, and compare loans by effective rate, never by flat rate. If you might sell or upgrade within a few years, ask each lender for its early settlement formula and fees before you sign, since that can matter more than a small difference in the headline rate. A bigger downpayment is often the cheapest loan of all.
Questions people ask
Can I borrow more through the dealer?
No. MAS’s limits apply to banks and finance companies, and the rules were extended to credit companies not regulated by MAS in 2013, so dealer-arranged loans follow the same caps.
Can I transfer my car loan to the buyer when I sell?
No. Car loans cannot be transferred, so you must settle the balance before ownership changes.
Do the limits apply to used cars?
Yes. For used cars, MAS uses an adjusted value to decide which tier applies.
Is refinancing worth it?
Only if the new effective rate, after early settlement fees on the old loan, is clearly lower. Remember the refinanced tenure is capped at seven years minus the years already used.
Sources: Monetary Authority of Singapore, motor vehicle loan limits from May 2016; Monetary Authority of Singapore, refinancing rules; Monetary Authority of Singapore, restrictions extended to credit companies; DBS, early redemption example. The Ledger explains; it does not advise.
Read next: What a Car Really Costs in Singapore: COE, ARF, Loan, Insurance and Running Costs · Personal Loans in Singapore: EIR, Processing Fees and Early Repayment · Back to The Ledger
For what’s worth it this week, with the bill shown, read The WahLiao Week.
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