Is it “legal” to have zero downpayment in the purchase of cars? If so, what are the ‘side effects’ of purchasing zero downpayment cars?

I believe what the dealers will do is to up the price of the car if you are taking a full loan so you don't have to pay the down payment. The maximum loan for cars is dependent on it open market value which is more commonly known as OMV. Omv more than 20k you can only take a 60% loan whereas OMV less than 20k you will be able to take a 70% loan.

For example, if your cost is 100k for the car which has a OMV of less than 20k. By MAS regulations you can only take a loan of 70% which in this case is 70k loan. What the dealer will do is declare that they sold you the car at 143k in that case you will get a 70% loan of 100k. This will allow you to get a full loan.

The cost of the method to finance your car is that your interest on the loan will definitely be higher. The banks I believe are smart enough to tell whether you are employing this method of financing your car as they can judge based on the fact that the declared price is much higher than usual.

I highly suggest that you do not take a full loan unless you are confident that your future cash flow will be able to cover the installments. Instead maybe a car with lower depreciation or look for coe renewed cars which are quite a bang for your buck. You can easily get a Merc for 7-8k depreciation looking at sgcarmart if you get a renewed one.

Hope this helps in your journey of car shopping!

Its legal. It seems unusual because its a sales tactic that attracts ppl who dont have much cash on hand to do so, which is a risk because the chances are, they may not be able to repay the loan if anything happens.

The "side effect" of 0 down-payment, is that the interest will kill you. If you can and wish to afford a car, you should def pay some form of downpayment. I have a friend who pays maximum downpayment to minimise interest.