Loan in Singapore: 5 Mistakes to Avoid
Calculates repayments for an amortising loan. The maths is not complicated, but a handful of errors come up again and again in this and related loans & finance calculations. Here is what to watch for.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
An emergency fund of three to six months of essential expenses protects you from having to borrow at high rates when something unexpected happens. Once that buffer is in place, extra savings can go towards longer-term goals and investments.
1. Paying only the minimum on a card
Minimum payments barely cover interest, so balances can take years to clear.
2. Mixing monthly and annual rates
Divide annual rates by 12 for monthly calculations and keep periods consistent.
3. Forgetting inflation
S$1 million in 30 years will buy much less than S$1 million today.
4. Comparing flat rates with effective rates
A 3% flat rate can be close to 5.5% effective because interest is charged on the original amount for the whole term.
5. Ignoring fees
Processing fees, platform fees and early repayment penalties reduce real returns.
The correct method
PMT = P × r ÷ (1 − (1 + r)^−n).
For example, with these inputs:
- Loan amount (S$): 20,000
- Interest rate (% a year): 6
- Term (years): 5
the calculator returns:
- Monthly payment: S$386.66
- Total interest: S$3,199.36
Related calculations
- Maximum Car Loan Calculator: MAS rules cap car loans at 70% of the price if OMV is S$20,000 or less, and 60% if OMV is higher, with a maximum tenure of 7 years.
- Additional Registration Fee (ARF) Calculator: Calculates the tiered ARF for cars registered in Singapore.
- Car Depreciation Calculator: Works out the yearly depreciation buyers in Singapore use to compare used cars.
- Personal Loan Calculator (Flat Rate): Singapore banks advertise personal loans at flat rates.
The Loan Calculator applies the formula consistently, so it is a quick way to double-check your own working.
Run your own numbers: Loan Calculator