Buyer beware - Loan rates in Singapore

[Puny]

Originally Posted by kuvesh

Can someone explain to me rule of 78?
This is some sort of prepayment penalty right?

Kuvesh, this is quite straightforward - banks will impose a 20% penalty on forgone/unearned interest due to early settlement.

Upon full settlement, bank takes 20% of outstanding interest, for e.g. 2K, based on 20% of $10,000. This penalty is usually more severe in the earlier parts of the loan and due to the loan structure (i.e. more interest rather than principal repayment).

[thetuffmouth]

Originally Posted by kuvesh

Can someone explain to me rule of 78?

This is some sort of prepayment penalty right?

Click on the link and scroll to bottom of the page for explanation + calculations on rule of 78. Pretty straightforward.

DBS Singapore | Personal Banking | Loans & Mortgages | Auto Loan

[Jedi R]

It has being like that for a long time. Rule of thumb to calculate the effective interest rate is to multiple by 2 the interest rate that the dealer quote you. So if he/she said the rate is 2.5%. You just x 2 to get 5%.

[MTM_Racing]

Good info., but I guess that has to be the case if you need to take loan

[proscar]

Occasionally may work to your advantage.

I took a $30k loan for my Sti, repay over 1 year to qualify for loan discount of $1.5k. Interest for that 1 year only works out to about $600 at their 1.98% interest rate. So I still earn $900, not to mention the essentially interest free loan for a year.

They refuse to give me the discount if I don't take the loan, but min repay period is 1 year, so works well

[bmwers]

if you have cash, its better not to loan .

know a guy who prefers to pay for 10 years installment who believes that if any unfortune happened to him, his family still have the cash and the loan coy will not go after his family...

told him more economical to save the interest by reducing loan and buy life insurance from the savings...

he is a bankrupt now.....

think he is a smart ass or stupid F?

[bimmerguy]

BTW, so far at BMW / Volvo / Toyota / Honda, if you dun take up the in-house loan and insurance, I have told that there will be an additional $1000-$2000 on top of the list price.

In fact, some SEs will only give out freebies if you take up certain amt of loan. In my case, apparently the total interest incurred is more than covered the freebies amt. So I told the SE that what is diff?! If it is freebie, why am I paying for it indirectly! She managed to work out something, based on the lower loan amt I agree to sign up. But I know I have been screwed somewhere still.......buying car in SG is a liabliity, no matter what

[vd383]

just sold my car.....

total interest for a 40k loan over 36 months = $3420
total int i paid incl surcharges after 16 months [out of 36 months] = $3224 !!!!

blood suckers!

Maybank - not only rule of 78
but also 20% surcharge
& 1% of principal ($400)
[plus $1500 if settled within first 12 months!!!]

hence.... if i had continued paying for the car.... my interest would have been $196 for 20 months!!

[kickboxer]

so cool! i am sgrean residing in bkk and thinking of getting a loan to finance my 523i bmw. thanks for the insight!

[sting936]

I think the real fact is most people are unwilling to fork out the lump sum cash upfront, and also there are many who do not have that much cash to pay for a car.

Most people are living on borrowed monies - or living on future earnings to put it nicely.