COE prices killing your car dreams? You're not alone. With sky-high premiums making brand-new rides feel out of reach, many Singaporeans are turning to buying second-hand. In fact, Singapore's used car market is set to grow by over 20 per cent by 2027, according to CNA — proving it's not a trend, it's a movement.

But even pre-owned cars come with hefty price tags and that dreaded COE.

And while traditional car loans can help, they often come with strings attached. That's where a personal loan might give you more flexibility and control over your purchase.

Here's how it works — plus, we'll show you some of the best personal loan deals on the market right now.

Why use a personal loan to buy a used car?

What's the difference? A loan is just a loan where you'll get a sum of money to buy something, right? At the very basics, yes. But different types of loans come with limitations and terms and conditions.

A car loan is a type of secured loan that's specifically meant for buying a car whereas a personal loan is a flexible, unsecured loan that you can use for just about anything, including buying a car.

Car loans are regulated by the Monetary Authority of Singapore (MAS), and there are certain limitations on the loan amount and tenure. Not forgetting that you don't fully own the car — it belongs to the bank — until the loan is repaid.

You can also consider using a personal loan to buy a used car, which gives you more freedom and flexibility in how and what you use it for. Personal loans provide more flexibility, especially when you're buying a used car that falls outside the scope of traditional financing options.

Key factors to consider before taking a personal loan to buy a used car

Before you start browsing car listings, it's worth asking yourself: Is a personal loan the right way to finance your used car?

Unlike a traditional car loan, which is tied to the vehicle, a personal loan is unsecured. That means the money goes straight to you, not the seller. But it also means the bank needs to assess your ability to repay, and you'll want to be sure it makes sense for your situation.

• Your credit score matters: Since personal loans are unsecured, your creditworthiness plays a big role in whether you’re approved — and at what interest rate. A higher score = better loan terms.
• Where you're buying the car from: Planning to buy from a direct seller or parallel importer? Personal loans give you the flexibility that traditional car loans might not offer, especially if the seller isn’t an authorised dealer.
• How you’re paying: If you're paying upfront in full (rather than instalments via a dealer), you may be able to negotiate a better price. A personal loan can give you the lump sum you need to do that.
• Covering other car costs: COE top-ups, insurance, road tax, minor repairs — these all add up. A personal loan lets you borrow a little extra to cover these if needed, without having to dip into emergency savings.
• You don't need to borrow a lot: Maybe you've already saved up most of the car’s price and just need a top-up. Personal loans are flexible — you’re not locked into borrowing more than you need.
• You want full ownership from the start: With a personal loan, the car is yours the moment you pay for it. Unlike traditional car loans, where the bank holds legal ownership until the loan is paid off.

Pros and cons of financing a used car with a personal loan

Pros:

• Greater flexibility in how you use the funds
• Fast approval and disbursement — ideal for quick deals
• No downpayment or collateral needed
• Accessible even for older vehicles or private sellers

Cons:

• Higher interest rates compared to car loans (though some personal loans offer competitive rates)
• Lower loan amounts depending on your income and credit profile
• Temptation to overborrow if you’re not disciplined with spending
• May have a penalty for early repayment

Weigh the trade-offs carefully and see what works for your financial situation.

How to choose the best personal loan for buying a used car

We're going to assume a few things here. If you're buying a used car, you're probably more price-conscious than the average new car buyer. You're likely looking to move fast (good deals don't wait), and you want solid value without locking yourself into years of unnecessary debt.

With that in mind, here's what to look out for when choosing a personal loan to finance your second-hand ride.

• Interest rates (the real cost of the loan): Budget-conscious buyers should pay close attention to the effective interest rate (EIR) — not just the advertised flat rate. Even an one per cent difference can add up. Some loans start from around four per cent EIR, depending on your credit score.
• Loan tenure and repayment terms: Since used cars are generally cheaper, you might not need a long repayment period. A shorter tenure (12–36 months) could save you more in total interest, while still keeping your monthly payments manageable.
• Early repayment flexibility: If you plan to pay it off early, say, after your bonus drops, make sure your loan doesn't slap you with a prepayment penalty. The more flexible the terms, the more breathing room you have.
• Fast and simple application: Used car listings can disappear in a day. Go for lenders that offer instant approval, digital applications, and Singpass login. Time saved = deal secured.
• No hidden surprises: Use the lender's calculator to see exactly what you're signing up for — monthly repayments, total interest, and fees. The clearer the breakdown, the easier it is to stay within budget.

Here are some personal loans to consider 

Standard Chartered CashOne

With one of the lowest interest rates in the market at 1.90 per cent p.a. (EIR from 3.63 per cent p.a.), the Standard Chartered CashOne personal loan instantly disburses cash into your bank account upon approval.

If you pay your monthly instalments in full consecutively for six months, you can repay as low as $50 monthly without any penalty charges. What's more, there's no processing fee!

Trust Instant Loan

A loan with a low interest rate at 2.22 per cent p.a. (EIR from 4.22 per cent p.a.), Trust is another bank that offers no processing fees, and no annual fee. What makes it stand out is its flexible repayment method — you can choose your desired loan amount and tenure within three months to 60 months, so you’re in full control of your budgeting.

UOB Personal Loan

UOB bank account holders can look forward to instant approval and cash disbursement if they submit their application between 8am to 9pm through their account-something that will come in useful once you've decided on your car. Rates are reasonable, starting from 2.88 per cent p.a. (EIR from 5.43 per cent), and on top of that, there is no processing fee.

DBS Personal Loan

Another loan that gives instant disbursement is the DBS Personal Loan. With an interest rate of 1.99 per cent p.a. (EIR from 4.17 per cent p.a.), you can easily apply for it through your DBS account and get it instantly approved if you're an existing DBS/POSB customer.

The maximum loan tenure is five years, so think carefully about how much and how long you want, as you can't repay early or you'll be slapped with a penalty fee.

*Disclaimer: rates are accurate at the time of publishing and are subject to change as per bank’s discretion

Important costs beyond the loan

• COE (Certificate of Entitlement): Yes, even used cars need a valid COE. Some come with one bundled, but if it’s near expiry, you'll need to fork out for a renewal — and that's no small change.
• Insurance premiums: Older cars can mean higher insurance costs, especially if parts are harder to replace or if you’re seen as a higher risk. Shop around and compare quotes.
• Road tax & vehicle inspection: Expect to pay road tax annually, and if your car is over three years old, it’ll also need to pass regular LTA inspections.
• Transfer and admin fees: Buying from a dealer? There’ll be admin charges. Buying direct? There's still the LTA transfer fee and paperwork involved. Budget a few hundred for this.
• Servicing and repairs: Unlike a new car, used cars may no longer be under warranty. That means wear-and-tear items — brakes, tyres, air-con — are fully on you. A pre-purchase inspection is a good idea to avoid surprises.

When should you use a personal loan for a used car

Choosing to finance a used car with a personal loan can be a smart move, especially if you need fast access to funds and more flexibility than a traditional car loan offers.

Ultimately, if you already plan to buy a car, you more or less need or want it for your daily lifestyle. But if you think that taking a personal loan can be a fast track to getting you a car, used or new, it's best to consider if you have your finances in place to afford the COE, costs of upkeep and can afford the repayments over the years.

This article was first published in MoneySmart.