{"id":15824,"date":"2025-09-10T13:57:24","date_gmt":"2025-09-10T05:57:24","guid":{"rendered":"https:\/\/carro.co\/sg\/blog\/?p=15824"},"modified":"2025-11-05T17:06:47","modified_gmt":"2025-11-05T09:06:47","slug":"how-to-calculate-car-loan-interest-in-singapore","status":"publish","type":"post","link":"https:\/\/carro.co\/sg\/blog\/how-to-calculate-car-loan-interest-in-singapore\/","title":{"rendered":"How to calculate car loan interest in Singapore"},"content":{"rendered":"<span style=\"font-weight: 400;\">Buying a car in Singapore is a big financial decision. Whether you\u2019re getting a <\/span><a href=\"https:\/\/carro.co\/sg\/en\/buy-new\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">new<\/span><\/a><span style=\"font-weight: 400;\"> or <\/span><a href=\"https:\/\/carro.co\/sg\/en\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">used car<\/span><\/a><span style=\"font-weight: 400;\">, knowing how to calculate your car loan interest helps you plan your budget and avoid surprises.<\/span>\r\n\r\n<span style=\"font-weight: 400;\">Also, check out our <\/span><a href=\"https:\/\/carro.co\/sg\/blog\/car-loan-guide-new-car-vs-used-car-loan-in-singapore\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">car loan guide<\/span><\/a><span style=\"font-weight: 400;\"> on new vs used car loans in Singapore.<\/span>\r\n\r\n<span style=\"font-weight: 400;\">Here\u2019s a simple breakdown of how it works.<\/span>\r\n<h2>1. Know your loan amount<\/h2>\r\n<span style=\"font-weight: 400;\">Your loan amount is the price of the car minus your down payment. In Singapore, MAS regulations cap the loan amount based on the car\u2019s Open Market Value (OMV):<\/span>\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">OMV \u2264 $20,000: Up to 70% loan<\/span><\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">OMV &gt; $20,000: Up to 60% loan<\/span><span style=\"font-weight: 400;\">\r\n<\/span><\/li>\r\n<\/ul>\r\n<span style=\"font-weight: 400;\">Example:<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\"> Car price: $100,000<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\"> OMV: $25,000 (max 60% loan)<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\"> Loan amount = $100,000 \u00d7 60% = $60,000<\/span>\r\n<h2>2. Understanding a car loan\u2019s interest rate<\/h2>\r\n<span style=\"font-weight: 400;\">Car loans in Singapore typically use a <\/span><b>flat interest rate<\/b><span style=\"font-weight: 400;\">. This means interest is calculated based on the <\/span><b>original loan amount<\/b><span style=\"font-weight: 400;\">, not the reducing balance.<\/span>\r\n\r\n<figure style=\"width: 1920px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/carro.co\/_next\/image?url=https%3A%2F%2Fcdn.carro.co%2Ftr%3Aar-16-9%2Cw-1920%2Cpr-true%2Cf-webp%2Cq-50%2F2025%2F02%2FInventory%2F195253228%2Fhonda-s2000-2.2-m-2008-N95EOR0RPO-carro-002.jpeg&amp;w=3840&amp;q=75\" alt=\"Car Media Image\" width=\"1920\" height=\"1080\" title=\"\"><figcaption class=\"wp-caption-text\"><a href=\"https:\/\/carro.co\/sg\/en\/cars\/honda\/s2000-2-2-m\/honda-s2000-2-2m-coe-till-05-2028\/N95EOR0RPO\" target=\"_blank\" rel=\"noopener\">Honda S2000<\/a> on Carro SG going for $93,888<\/figcaption><\/figure>\r\n\r\n<span style=\"font-weight: 400;\">Take for example the <strong>Honda S2000<\/strong> above, priced at <strong>$93,888<\/strong>.<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\">Loan amount: $55,000 (example)<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\">Interest rate: 2.5% p.a.<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\">Loan term: 5 years<\/span>\r\n\r\n<span style=\"font-weight: 400;\">Total interest = Loan amount \u00d7 Interest rate \u00d7 Loan tenure (in years)<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\">Total interest = $55,000 \u00d7 2.5% \u00d7 5 = <strong>$6,875<\/strong><\/span>\r\n<h2>3. Calculate monthly repayments<\/h2>\r\n<span style=\"font-weight: 400;\">Add the total interest to the loan amount, then divide by the number of months.<\/span>\r\n\r\n<span style=\"font-weight: 400;\">Total repayment = $55,000 + $6,875 = $61,875<\/span><span style=\"font-weight: 400;\">\r\n<\/span><span style=\"font-weight: 400;\">Monthly repayment = $61,875 \u00f7 60 = $1,031.25<\/span>\r\n<h2>Flat interest rate vs effective interest rate (EIR)<\/h2>\r\n<span style=\"font-weight: 400;\">While car loans are advertised with a <\/span><b>flat interest rate<\/b><span style=\"font-weight: 400;\">, this doesn\u2019t show the true cost of borrowing.<\/span>\r\n\r\n<span style=\"font-weight: 400;\">That\u2019s because interest is calculated on the original loan amount for the entire tenure, even though you\u2019re gradually paying it off. The <\/span><b>effective interest rate (EIR)<\/b><span style=\"font-weight: 400;\"> takes this into account and is always higher than the flat rate.<\/span>\r\n\r\n<b>Example using the same loan above:<\/b>\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loan amount: 55,000<\/span><\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Flat rate: 2.5% p.a.<\/span><\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tenure: 5 years<\/span><\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monthly repayment: $1,031.25<\/span><\/li>\r\n<\/ul>\r\n<span style=\"font-weight: 400;\">If you calculate the EIR based on the reducing loan balance, it works out to roughly <\/span><b>4.6% p.a.<\/b><span style=\"font-weight: 400;\"> - almost double the flat rate.<\/span>\r\n\r\n<span style=\"font-weight: 400;\">This is why the EIR is a better measure of your true borrowing cost. Always check with your bank or use a car loan calculator that shows both flat and effective rates before deciding.<\/span>\r\n<h2>Use a car loan calculator<\/h2>\r\n<span style=\"font-weight: 400;\">Instead of crunching numbers manually, you can use a <\/span><b>car loan interest calculator<\/b><span style=\"font-weight: 400;\"> to get quick results.\u00a0<\/span>\r\n\r\n<span style=\"font-weight: 400;\">We have a built-in car loan calculator available towards the bottom of our page whenever you\u2019re viewing a car.\u00a0<\/span>\r\n\r\n<figure id=\"attachment_15624\" aria-describedby=\"caption-attachment-15624\" style=\"width: 676px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-15624\" src=\"https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/04\/Monthly-Loan-Monthly-Instalment-Calculator-Carro-New-Cars-300x185.png\" alt=\"Monthly Loan Monthly Instalment Calculator - Carro New Cars\" width=\"676\" height=\"417\" title=\"\" srcset=\"https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/04\/Monthly-Loan-Monthly-Instalment-Calculator-Carro-New-Cars-300x185.png 300w, https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/04\/Monthly-Loan-Monthly-Instalment-Calculator-Carro-New-Cars-1024x631.png 1024w, https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/04\/Monthly-Loan-Monthly-Instalment-Calculator-Carro-New-Cars-768x473.png 768w, https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/04\/Monthly-Loan-Monthly-Instalment-Calculator-Carro-New-Cars.png 1037w\" sizes=\"auto, (max-width: 676px) 100vw, 676px\" \/><figcaption id=\"caption-attachment-15624\" class=\"wp-caption-text\">An example of our loan calculator<\/figcaption><\/figure>\r\n\r\n<span style=\"font-weight: 400;\">Just enter your car price, loan amount, down payment, interest rate, and loan tenure.<\/span>\r\n\r\n<span style=\"font-weight: 400;\">When you <\/span><a href=\"https:\/\/carro.co\/sg\/en\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">buy a car with Carro<\/span><\/a><span style=\"font-weight: 400;\">, we can help you compare rates, apply for a loan, and handle paperwork so you can focus on choosing your dream car.<\/span>\r\n<h2>Understand before you commit<\/h2>\r\n<span style=\"font-weight: 400;\">Car loans in Singapore may look straightforward, but the way interest is calculated can make a big difference to your total cost. Don\u2019t just focus on the flat interest rate - always check the EIR to understand the real price of borrowing. A few minutes of calculation or using a loan calculator can help you choose a loan that saves you thousands over the years.<\/span>\r\n\r\n<span style=\"font-weight: 400;\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-15826\" src=\"https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/09\/Carro-Genie-Singapore-300x127.png\" alt=\"Carro Genie Singapore\" width=\"706\" height=\"299\" title=\"\" srcset=\"https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/09\/Carro-Genie-Singapore-300x127.png 300w, https:\/\/carro.co\/sg\/blog\/wp-content\/uploads\/2025\/09\/Carro-Genie-Singapore.png 718w\" sizes=\"auto, (max-width: 706px) 100vw, 706px\" \/><\/span>\r\n\r\n<span style=\"font-weight: 400;\">With <\/span><a href=\"https:\/\/carro.sg\/used-car-loan\" target=\"_blank\" rel=\"noopener\"><b>Genie Singapore<\/b><\/a><span style=\"font-weight: 400;\">, you can easily compare loan options, check your affordability, and get transparent breakdowns of both flat and effective interest rates before you commit. Plus, through <\/span><a href=\"https:\/\/carro.co\/sg\/en\" target=\"_blank\" rel=\"noopener\"><b>Carro<\/b><\/a><span style=\"font-weight: 400;\">, you can trade in your car, get it inspected, and finance your next purchase all in one place \u2013 making the whole process faster, clearer, and stress-free.<\/span>","protected":false},"excerpt":{"rendered":"<p>Buying a car in Singapore is a big financial decision. Whether you\u2019re getting a new or used car, knowing how to calculate your car loan interest helps you plan your budget and avoid surprises. Also, check out our car loan guide on new vs used car loans in Singapore. Here\u2019s a simple breakdown of how &hellip;<\/p>\n","protected":false},"author":83,"featured_media":15825,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[724],"tags":[697,694,696,695],"class_list":["post-15824","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-car-insurance-car-loans","tag-auto-loan-interest","tag-car-loan-interest","tag-carro-genie","tag-loan-interest-singapore"],"_links":{"self":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts\/15824","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/users\/83"}],"replies":[{"embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/comments?post=15824"}],"version-history":[{"count":3,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts\/15824\/revisions"}],"predecessor-version":[{"id":15829,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts\/15824\/revisions\/15829"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/media\/15825"}],"wp:attachment":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/media?parent=15824"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/categories?post=15824"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/tags?post=15824"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}