Which bank loan would you go with?

[Sexytoy]

I understand that all the banks are offering 3 per cent for 1-5 years and 3.25% for 6-10 years.

But I was offered UOB by my SA? Did not give me a choice to choose from....

Took a 7 year loan for the 3% rebate

Any suggestion or clause that I should look out for?

Thanks in advance

 

[Kenzo]

Re: Which bank loan would you go with?

check gemoney..

with 3% rebate, there should be a clawback period where u have to pay penalty for redeeming loan early..

also check if rule of 78 applies for early redemption..

got the e90? how much were u offered?

 

[Sexytoy]

Re: Which bank loan would you go with?

Thank you

you got pm!

cheers

 

[black320]

Re: Which bank loan would you choose?

I had taken Hong Leong
I think the same t and c applies

 

[Scuderia]

Re: Which bank loan would you go with?

I would not go for the rebate as they will hit you when you want to sell the car.

My advice is to look for one with the best rate with lowest interest. Bear in mind that all these rates are negotiable and everyone wants your business. They can be reduced as much as 0.5% per year. There are also early settlement penalty on top of the rule 78, beware and read the T&C.

Hope this helps.

 

[black320]

Re: Which bank loan would you go with?

For the rebate - 3 years clause
ie penalty for early redemption
For the loan, same T&C , 3 years, otherwise additional 10% on your interest rebate from loan

 

[Puny]

Re: Which bank loan would you go with?

Hi all,

Is the penalty for the 3% rebate pro-rated or in the event that you perform an early settlement, you have to repay the entire 3%?

Gotta hate the Rule of 78 though..

 

[Physicist]

Re: Which bank loan would you go with?

Last I remember, you have to repay the entire 3% rebate if you do an early redemption. Not sure if it still holds. The best is to call the bank and ask. And also check check check before signing the hire purchase agreement

 

[BMWSILVER]

Re: Which bank loan would you go with?

Last I remember, you have to repay the entire 3% rebate if you do an early redemption. Not sure if it still holds. The best is to call the bank and ask. And also check check check before signing the hire purchase agreement

Yes ! Totally agreed that you need to check all Terms and Conditions before you sign the Hire Purchase Agreement. Don't be fool by their offer and later have to pay more if you need to do early settlement.

The best is to take-up 3 to 5 years loan not 7 to 10 years loan

 

[DreamDriver]

Re: Which bank loan would you go with?

Actually with the liberalisation of loan rules there is now no good reason to take up Hire Purchase loans anymore. I'll prefer to look at term loans that offer several advantages: can do partial redemption, and can do full redemption without Rule78 and/or penalty (depends on bank). Only downside is the rate is usually not fixed (or only fixed for initial years), but this type of loan makes a lot of sense if you have intention to fully repay early but want to take longer tenure to keep monthly instalment down.

I know ABN used to offer this. Not sure if they still do. Other places worth checking are DBS and Citibank.

 

[Puny]

Re: Which bank loan would you go with?

Hi DreamDriver,

The partial redemption sounds attractive and flexible.. What are the ballpark rates like by any chance?

This means that during purchase of the car from a dealership, if they do not have collaborations with the banks mentioned, we will opt for an external loan and forgo any forms of in-house bank rebates that may be available (2-3K)?

Thanks and cheers,
Alvin.

 

[DreamDriver]

Re: Which bank loan would you go with?

Hi DreamDriver,

The partial redemption sounds attractive and flexible.. What are the ballpark rates like by any chance?

My rates info is way outdated liow, but back in 2003 when flat rate loans were going for like 2+ percent, I was paying effective rates of 3+% for 1st yr, 4+ for 2nd yr for a 7yr loan. Note the difference between flat and effective rates.

Such loans operate in a very similar way to housing loans, so if you're familiar with how those work you should know how these will work.

But I suspect they'll take some hunting down. I just checked and could not find them on ABN and Citibank sites anymore.

 

[ykh1]

Re: Which bank loan would you go with?

Can anyone explain what is rule 78???? Thank u....

 

[Puny]

Re: Which bank loan would you go with?

Can anyone explain what is rule 78???? Thank u....

I hope I don't miss anything out.. Here's my understanding.

The rule of 78 is a loan that skews the repayment towards the interest rather than principal in the earlier parts of repayment. In other words, your principal will decrease much slower in the early parts of the loan.

Regardless of loan duration (1yr OR 10yrs), by the time you hit about 30% of your loan duration, you would have effectively paid close to 50% of the interest owed to the bank.

So if the total interest incurred in your loan is $20,000 for example in a 7yr loan.
By the end of the 2nd year, aprx $10,000 would have been paid to the bank as interest earnings.

If you service the entire loan without selling your car in the loan duration, you are not really affected. However, if you intend to sell your car in the earlier parts of the loan (e.g. 1-2 year), you'll notice that the principal has hardly gone down despite you paying alot more than that.

For a more detailed explanation, you can check out this url:
http://www.tiac.net/~mabaker/rule_of_78.html

 

[Puny]

Re: Which bank loan would you go with?

My rates info is way outdated liow, but back in 2003 when flat rate loans were going for like 2+ percent, I was paying effective rates of 3+% for 1st yr, 4+ for 2nd yr for a 7yr loan. Note the difference between flat and effective rates.

Such loans operate in a very similar way to housing loans, so if you're familiar with how those work you should know how these will work.

But I suspect they'll take some hunting down. I just checked and could not find them on ABN and Citibank sites anymore.

Hmm.. even at 2+ percent auto (hire purchase) loan, it's already effectively closer to 4.5% interest then..

With 3+/4+ in the first 2 years, it's actually even lower than the 2 percent (eff. 4-5%) auto loan.. that's really quite attractive. plus little penalty for early settlement and partial payment, it seems really reasonable. Would you happen to know what the current floating effective rates are like right now for this plan?

I just read that car interest rates are going up again.
1-5 yrs = 3.25%
6-10 yrs = 3.5%

 

[DreamDriver]

Re: Which bank loan would you go with?

Hmm.. even at 2+ percent auto (hire purchase) loan, it's already effectively closer to 4.5% interest then..

With 3+/4+ in the first 2 years, it's actually even lower than the 2 percent (eff. 4-5%) auto loan.. that's really quite attractive. plus little penalty for early settlement and partial payment, it seems really reasonable. Would you happen to know what the current floating effective rates are like right now for this plan?

I just read that car interest rates are going up again.
1-5 yrs = 3.25%
6-10 yrs = 3.5%

I'm sorry I don't know. In fact even if you ask me which banks now offer such loans I can't tell you already, cos my info is super outdated. I took mine from ABN but last I checked their website no longer lists it.

I think the only reason why more people did not take up such loans is simply because of obscurity. Not many people will go to such lengths that you and I do for such things.

 

[ykh1]

Re: Which bank loan would you go with?

I hope I don't miss anything out.. Here's my understanding.

The rule of 78 is a loan that skews the repayment towards the interest rather than principal in the earlier parts of repayment. In other words, your principal will decrease much slower in the early parts of the loan.

Regardless of loan duration (1yr OR 10yrs), by the time you hit about 30% of your loan duration, you would have effectively paid close to 50% of the interest owed to the bank.

So if the total interest incurred in your loan is $20,000 for example in a 7yr loan.
By the end of the 2nd year, aprx $10,000 would have been paid to the bank as interest earnings.

If you service the entire loan without selling your car in the loan duration, you are not really affected. However, if you intend to sell your car in the earlier parts of the loan (e.g. 1-2 year), you'll notice that the principal has hardly gone down despite you paying alot more than that.

For a more detailed explanation, you can check out this url:
http://www.tiac.net/~mabaker/rule_of_78.html

Thanks 4 the info........u explain it veri clear....................