By MoneyBees
Work out the most expensive car you can buy from the instalment you can pay and the cash you have, under MAS's 60% or 70% car loan limit and 7-year cap, and see how the instalment cuts the home loan you could get later.
Start from the instalment you can pay and the cash you have. The instalment sets the largest loan you can repay over up to 7 years; your cash has to cover at least 30% or 40% of the price under MAS rules. The car you can afford is the lower of the two limits.
For cars bought under agreements from 27 May 2016, you can borrow up to 70% of the price if the car's OMV is S$20,000 or less, and up to 60% if the OMV is higher. The longest loan is 7 years either way.
MAS's motor vehicle loan rules limit the loan amount and the tenure, not your income ratio. The bank or finance company still checks your income and credit record before it lends.
Yes. Under MAS's TDSR rules, all your monthly debts, car loans included, count towards the 55% limit when you apply for a home loan. Every dollar of car instalment is a dollar less for the home loan.
A flat rate charges interest on the full amount you borrowed for the whole loan, even as you repay it. The effective interest rate (EIR) reflects the reducing balance, so it is close to double the flat rate on a long loan.
No. MAS caps car loans at 7 years. To lower the instalment you need a cheaper car, more cash upfront or a lower interest rate.
Yes. For a used car, MAS reduces the OMV by the car's age before it decides whether the 70% or 60% limit applies. The car loan calculator works out the adjusted OMV from the registration date.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).