Still hesitant about getting a car loan? Let me help you make the final decision by pointing out the advantages and disadvantages of a car loan. Obtaining a car loan in Singapore provides a lot of benefits especially in occasions in which you don’t have the financial resources to purchase in cash the car you really want. Nevertheless, it is only correct and reasonable to be completely conscious and aware of the consequences and to be prepared for the worst in case you fall short of your commitments with the bank or finance company.
The principal advantage of a car loan is crystal clear to everyone:
In drawing up a hire purchase agreement, you can distribute the entire sum necessary to purchase the car of your dream into pieces of reasonable instalment payments on a given number of years. In spite of the fact that paying in cash is an appropriate manner to buy a vehicle (because you don’t have to pay added interest charges), some individuals cannot just come up with the money for a new car. In other words, a car loan grants you the opportunity to pay what you can for the vehicle that would have been impossible to acquire.
Thus, with a car loan in Singapore, the bank or other financial company lends you the money, you finally have your car, then you provide regular and easy monthly payments, leaving you and other party satisfied and contented.
Nevertheless, the disadvantages of such a deal should always be taken into consideration:
Difference Between Ownership and Possession Rights
Under a hire purchase agreement in Singapore, keep in mind that the real ownership of the car belongs to the bank. The bank is the owner of the car, which means you are only “renting” the car from the bank. You only have possession rights but you don’t own the car. Possession rights and ownership are not the same thing. Hence, you cannot dispose of any part of the car or sell the car itself unless you have completely settled what you owed to the bank.
Repossession Rights of the Bank
If you happen to fail with your monthly instalment commitment with the bank, remember that the bank can avail of its right to repossess your vehicle. In that case, you have to provide payment of the total outstanding balance in order to get back your vehicle.
Is It Convenient to Deal with a Bank or a Registered Car Dealer?
The plausible answer to this question is “it depends.” The fact is in Singapore, car dealers are generally rapid and swift in their work procedures and, even though they are known to be profit motivated, most often they provide special discounts that may benefit you in the long run.
Alternatively, although banks in Singapore are known for their efficiency and dynamism, they may seem to be slow or sluggish in their work procedures, especially for those who are eager to get immediate hold of their dream car. However, going directly to the bank may give you the opportunity to select a car from a wide assortment of places.
Important Reminder on Car Loan Application in Singapore
Delve into it, examine and compare from different types of car loan schemes. Avoid settling for the first car loan you stumble on. Car loans vary in charges and interest compositions. Keep in mind that even a small disparity in interest rates can make a great difference in terms of payments over a certain period of time.
For a comprehensive study of car loans in Singapore, verify our car loan comparison page!
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