Car loan rates in Singapore are usually advertised as 1.98% or 2.48%. These are flat rates — not your true borrowing cost.
The real cost is reflected in the Effective Interest Rate (EIR), which is typically 1.8–2.2× higher than the quoted flat rate.
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Most Singapore car loans use a flat interest structure. Interest is calculated on the original principal for the entire tenure — not on a declining balance.
Example:
$100,000 × 2.28% flat × 5 years = $11,400 total interest
Even though your outstanding principal reduces monthly, interest is still computed on the full original amount.
EIR converts this into the real annualised borrowing cost.
Rule of thumb: 2.0% flat ≈ ~3.7–4.0% EIR 2.5% flat ≈ ~4.5–4.8% EIR
| Quoted Flat Rate | Approximate EIR | Profile |
|---|---|---|
| 1.68% – 1.98% | ~3.1% – 3.8% | Promotional / strong credit |
| 2.18% – 2.48% | ~4.0% – 4.6% | Common approval range |
| 2.68% – 3.00%+ | ~4.8% – 5.5%+ | Higher risk / weaker profile |
| Flat Rate | Total Interest (5 Years) | Approx Monthly Instalment |
|---|---|---|
| 1.98% | ~$9,900 | ~$1,830 |
| 2.48% | ~$12,400 | ~$1,870 |
| 2.98% | ~$14,900 | ~$1,910 |
Financing alone commonly adds $10,000–$15,000 over five years.
Lower instalment does not mean lower cost. It only spreads cost.
If instalment thinking is driving your decision: Read this first.
A car loan:
Always evaluate financing inside:
The lowest flat rate is not automatically the lowest total cost.
Financing does not reduce car cost — it reshapes it.
The real decision is not: “Can I afford the instalment?”
It is: Does financing still make ownership rational after pricing full 5-year exposure?
If unsure: Run the Break-Even Calculator