hey guys over here
since everybody owned various of loan product,
do u guys really know about how to count the reducing balance rate and the flat rate..?i found out alot of ppl make mistake about it

This post has been edited by ultramanbabe: Mar 11 2008, 12:09 AM

how do u find out alot PPL make mistake about it?

Home Loans are generally reducing balance.

Car loans are flat rate.

Can rephrase your question ? What you would like to know ?

nope,im working in bank,which need to explain to customer about the package ,product...i found out most of the customers who loan for more than 2 loan and above,still cant differentiate about flat rate,reducing rate
maybe they just heard about 6% is cheaper than 10%,didnt bother whether is flat rate or maybe reducing rate


kindly make clear everything before u sign a loan ....

You make two calculations that showing one is using reducing balance, one is flat rate using the same amount of principal and repayment amount.

Then show them that using reducing balance, you will pay lesser and interest charged is lower. Whereas using flat rate, they need to pay more.

haha you should just do ur job and hope for a better commission

reducing balance is the rate which just depend of outstanding
let say the monthly rate is 0.5%
and your outstanding amount is RM1000 for 9moths
so the total amount u need to pay for that month is 1000+(1000x0.5%) then divide into 9 months

for flat rate is monthly rate 0.5%,interest+principal divide install months



This post has been edited by ultramanbabe: Mar 23 2008, 12:45 AM

I know my company car loan is 4% on Reducing Balance. After calculated, it is actually equilevant to 2.1% of fixed rate

I understand flat rate is only allowed in Malaysia ( not other parts of the world ).

Formerly very popular with finance companies. BNM should put a stop to flat rate as it works more like ah long business i.e allowing banks to earn interests on " paid" instalments.

In the old days when financial calculators were not inverted, so flat rates were logical, but not at current computer age.

many bankers still promoting flat rate loans to consumers ( credit card balance transfers for example ) as if they are are reducing balance ( silently ). Some bankers call it " effective rate " basically to confuse the consumers. By right, the bankers have the duty to educate the consumers, and not to confuse them.

just my 2sen opinion.

This post has been edited by SKY 1809: Mar 24 2008, 09:24 AM

Where got car loan (HP) is using reducing balance de?

He did mention company loan