Published on November 3, 2022
The Pros & Cons Of In-House Car Loans

The process of buying a car requires a formidable amount of research and planning. First comes the most exciting part of the process, car shopping. Next, where all excitement ends, is financial responsibilities. Unless you have sufficient funds to pay off the car, you will most likely need to take out a loan. With different interest rates and instalment plans from different types of lenders, finding one that suits your financial plan and needs can be a hassle.
In-house car loans in Singapore allow you to search, purchase, finance and drive away with the car of your choice directly from a trusted dealership in one streamlined process. This form of financing eliminates the need for a bank loan since you only have to go through a dealer, saving you time and money. But just like any other kind of financing plan, in-house car loans also have their own advantages and disadvantages. So before deciding on the financing option that is best suited to your needs, here are some things to consider.
Advantages of In-House Car Loans
Realistic Budget
In-house car loans in Singapore do provide convenience for car buyers. If you are planning to finance your car through the dealership you are buying from, your financial information will usually be handled first. The dealership will work with you to find a payment plan that fits your budget, unlike traditional loans where you are limited to a term that fits within your budget.
Bad Credit Score is Not Important
Those with credit issues will know exactly what a nightmare it can be to finance from a bank. A bad credit score negatively impacts your chances of getting a bank loan but this is not the case when it comes to working with a car dealership. Through a car dealership, you can purchase a car within your means as well as improve or build your credit score. The dealership will also benefit from your in-house car loan as well, through the car sale profits and the interest on the loan.
Afford a Better Car
Even if your finances allow you to pay cash for a used car, in-house car loans in Singapore give you the privilege of buying a newer, more comfortable and better-looking car. A brand new car is often seen as an achievement and one that will continue running well till the end of your payment terms.
Learn More: Buying A New Car For The First Time – On Finance, COE and More
Do Not Affect TDSR
Through an in-house loan, you can enjoy the freedom of owning a car without worrying about how it will affect your Total Debt Servicing Ratio (TDSR). If you are planning to purchase a car and a house, a car dealership allows more room for flexibility for future expensive purchases. Your financial commitments and obligations will be lowered, allowing you to maximise your future TDSR threshold while enjoying the freedom of owning a car.
Disadvantages of In-House Car Loans
Higher Interest Rates
One of the biggest disadvantages of in-house car loans is that the interest rates are usually higher than traditional lenders like banks and other financial institutions. Although, there are ways you can work around this such as increasing your down payments or paying more than the minimum monthly payment. Before you sign-up for a car with a particular dealership, do compare rates with other dealers as you may find some that offer competitive rates.
Steep Administrative Cost
Apart from the steep interest rates, certain dealerships also have administrative costs that can put a hole in your wallet. Some of these costs are hidden, only to be revealed at the end of the whole agreement. By then, backing out is no longer an option. For greater peace of mind, do get your dealer to iron out all the details of your loan agreement as well as any miscellaneous fees that you will have to pay upfront before signing your deal.
Despite in-house car loans in Singapore comes with their disadvantages, the advantages outweigh them. As one of the finance companies in Singapore, our team at Swee Seng Credit aims to make the car financing process as simple as possible. With a competitive interest rate of just 2.98%, we will tailor the loan repayment term to suit your financial needs. We ensure no hidden charges or additional fees. What you see upfront is what you pay as well.
Ready to get the car of your dreams? Contact Swee Seng Credit today to make that dream come true.