COE renewal - bank loan or in-house loan?

If the COE for your car is ending soon, renewing your COE for five or 10 years might be an option for you.

If you have ready cash, the COE renewal process is simple. Just pay the Prevailing Quota Premium (PQP) for your car's category. PQP is a moving three-month average of current COE prices.

Another way to give your car a fresh lease of life is to take up a COE renewal loan via a bank loan or in-house loan.

But if you're feeling confused about COE renewal loans, along with the pressure of rising COE premiums, read on to find out more.

Bank COE renewal car loans

Banks usually offer attractive interest rates when compared to in-house COE renewal loans.

Maybank, for example, offers an interest rate of 3.18 per cent, and Hong Leong Finance at 2.88 per cent.

While a COE renewal loan with a bank is attractive, not many are able to secure a loan due to a bad credit score.

Banks will access your credit to see your capacity to take a loan. The process usually takes a few working days.

Generally, it is not as easy to score a loan from the bank as compared to an in-house loan, as your eligibility for a loan is taken into account.

The good thing is that banks are transparent, offer added security, and rarely do banks charge exorbitant administrative fees as compared to in-house COE renewal loans.

Do note that banks DO NOT accept direct COE renewal loan applications. You'll have to go through an agent (like sgCarMart Connect) that offers the same interest rates as the bank.

In-house COE renewal car loans

For in-house COE renewal loans, the process usually is much simpler, and attracts a higher interest rate when compared to banks, starting from 3 per cent, going up to as high as 4 per cent, depending on your loan amount and loan tenure.

There are exceptions when promotional interest rates (as low at 1.88 per cent) are offered in order to attract more customers to take up an in-house loan, though the admin fees may be high.

Generally, in-house loans are approved quicker than bank loans, as they may not require credit checks. Even if they do carry out credit assessments and you have a poor credit rating, it seldom affects your chances of getting a COE renewal loan approved.

There are numerous "middlemen" companies in Singapore who can provide in-house COE renewal loan services. But their interest rates can vary.

Acting as a middleman to in-house loan companies, these middlemen may end up charging you a higher interest rate as compared to you going directly to the company for your COE renewal loan.

sgCarMart Connect does not mark up the interest rates that banks offer. We offer consumers the exact same rates as the banks and in-house loan companies.

Deciding factors

Simply put, if you have a good credit score, it is best to take up a bank loan for your COE renewal. But that leaves you with the hassle of handling all the paperwork required for taking up a loan, as well as the application process to renew your COE.

But it is always wise to make a comparison between the two, making sure you make the best choice according to your COE renewal loan needs.

This article was first published in sgCarmart.