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Considering to renew your COE? Can’t decide between a bank and an in-house loan? Here are the pros and cons of both of them!
With COE prices climbing, the dream to buy a brand-new car to replace your ageing one drifts further and further away. While all hope seems to be lost, don’t forget, you do have the option to renew your car’s COE!
Of course, you should only do this if your car is in good condition and is able to continue serving our ever-changing needs.
For COE renewals, you have to pay the Prevailing Quota Premiums (PQP), a moving average of the COE prices in the past three months, which varies from month to month, for whichever category your car falls in.
You have a choice of renewing your car’s COE for five or 10 years, and you only need to pay half the PQP for the former. The catch is, if you renew your COE for five years, you will have to deregister it when the five years end. You can only renew your car’s COE repeatedly if you buy it for 10 years each time.
Another choice you need to make is deciding on how to finance your COE renewal, should you not have enough cash to make the full payment upfront. For that you have a choice of two options, bank loan and in-house loan.
Now we shall break down in specific details how both loans work and which would suit you best.
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Often, the key factor between choosing a bank loan over an in-house loan is credit assessment, as in, with a bad credit score, it is very hard to get a bank loan.
When applying for a bank loan, it often takes longer than an in-house loan to get approval. Industry experts often tell their client that they have to wait for at least three working days.
Where banks often have in-house institutions beat is on interest rates. A quick check by us shows rates as low as 3.18% flat rate per annum from banks like UOB and Hong Leong Finance. Even Financial Institutions like Tokyo Century offers a rather low rate of 3.25%.
As expected with banks, they offer more security to customers and transparency with their terms and conditions, lending them a level of credibility with people looking for a loan with minimal worries.
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Generally, with in-house loans, customers can expect higher interest rates. One industry expert tells us that in-house companies often charge a minimum of 3.18% flat per annum, climbing all the way up to just under 4%.
Also, only some of them check the credit score of people wanting to take a loan from them. Often, that is what makes in-house loans appealing. Credit scores do not hamper a person’s eligibility to get a loan from them.
However, in-house loan companies can charge exorbitantly high admin fee in extreme cases, especially when the customer is almost reaching his or her credit limit. Despite this, a loan will still be approved for the customer.
Industry experts we spoke to also told us that with in-house loans, companies often quote lower interest rates to direct customers compared to agents representing potential customers.
What this means is, if a customer goes to an agent with the intention of getting an in-house loan, the agent would go to the in-house loan company, who might give a quote of 3.5%, for example. However, if the customer goes straight to the in-house loan company without the agent, he or she will most probably get a lower quote of 3.3%, for example.
So, the conclusion is, if you have a decent credit rating, which most people do, it’s best to go with a bank loan. But that still leaves you with all the hassle of finding the cheapest bank loan and sorting the paperwork from renewing your car’s COE.
So, with that in mind, why not simplify your life and renew your car’s COE with us? Here at Motorist, we offer completely free COE renewal advice and we will guide you through the entire renewal process. We will also settle all your paperwork and source for the cheapest bank loans for you.
That way, we take the stress of renewing your car’s COE off you so that you can continue driving your car with a peace of mind for as long as you want!
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