Published on November 7, 2021

Bank loan VS auto-dealer car loan: 3 differences

New Car FinanceUsed Car Loan FinanceVehicle Finance Solutions

It is a known fact that Singapore is one of the most expensive countries to own a car especially after adding the different costs like COE and taxes. However, don’t let the high costs deter you from owning a car as the bulk of the financial burden can always be relieved with vehicle finance solutions

There are generally two options available for consideration when it comes to financing a new or used car in Singapore – a bank loan or auto-dealer. In this article, we will share more about the differences between the two, so that you can make a better and informed decision.

1. Interest Rates

When doing your research, you may realise that the car loan rates offered in Singapore are seemingly higher than the other types of loans. The reason for this is that we use a flat rate method – the rate of interest is fixed and based on the original loan amount. 

COE Renewal Financing Fee
Interest Rates Differences

Generally, the interest rates offered by auto dealers are higher than the ones by banks, with some of them raising the interest rates further for commission. As such, it is best to do thorough research before coming to a decision. Here at Swee Seng Credit, we offer new car finance plans with competitive rates that are similar to the banks and flexible loan amounts to your discretion. 

Both banks and auto dealers offer loan tenures ranging from one to seven years, with the possibility of early repayment fees charges should you change your mind and decide to make an early repayment.

2. Convenience and Different Loan Options

Choosing the dealer’s car loan can be more convenient and hassle-free since you can purchase the car and settle the finance paperwork all at once. Furthermore, choosing to finance your vehicle with a dealer allows you to negotiate your loan amount and flexibility as well. However, apart from the interest rates and loan amounts, you should also find out the administration or processing fees that you’re required to pay the auto dealer. Some auto dealers charge an exorbitant processing fee on top of the high interest rates. 

Car Loan Singapore
Car Loan Singapore

Not only do we offer competitive rates but we also charge a flat rate of $374.50 which will be applied across all loans offered. 

On the other hand, taking a bank loan may be slightly more troublesome as you have to either apply through the bank’s website or physically head down to the branch itself to settle the paperwork. Whether it is financing a new or used car, both auto dealers like Swee Seng Credit and banks provide car loans for both types of vehicles.

3. Credit History Requirements

A benefit of taking out a car loan from an auto dealer is that there is a higher and better chance of you getting approval. This can be attributed to auto dealers being more lenient in loan approvals without focusing so much on credit history. 

Credit Score Requirements
Credit Score Requirements

Meanwhile, banks often require you to have a good credit history before your loan gets approved. If you have a bad credit score or history, then you should consider taking a loan from your auto dealer or even a private financial institution like Swee Seng Credit.

In conclusion

With a wide range of new and used car financing solutions, it is not as difficult or unattainable as you think it is to drive your vehicle in sunny Singapore. 


If you’re looking for the best vehicle financing solutions, then you can always count on Swee Seng Credit to provide you with flexible loan options and competitive interest rates. Reach out to us to find out more.