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Car loan settlement
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aeiou228
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 Jul 26 2009, 09:10 AM
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Your cash is currently bringing you an income yield of 2.5% if you place it in 12mth FD. I don't know what is the interest rate of your car loan. If it is also 2.5%, then you can consider to make a early settlement of your car loan. Because the hire purchase interest rate is based on flat rate per annum, therefore 2.5% HP rate is not an effective rate and it could be probably 3.5% to 4% effectively.
Aother important consideration is that whether you need to use the cash for other contingency or purchases in 5 years time.
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aeiou228
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Jul 26 2009, 10:20 AM
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QUOTE(advantt @ Jul 26 2009, 09:10 AM) if u can make early settlement within 1 yr only perhaps u shud get discount frm interest Right. For HP loan, it is still worth while to settle it within the first half of your loan tenure. The bank will rebate your loan interest based on rule78 pro-rate formula. Don't bother to settle your HP loan if your repayment is in 2nd half of the loan tenure. The loan interest rebate will be negligible. |
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aeiou228
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Jul 27 2009, 05:19 PM
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QUOTE(gastacopz @ Jul 27 2009, 04:25 PM) so meaning..no point to pay full settlement for car HP since there is no rebate wif d interest isnt it? mine is 9 years wif 4.3% interest....  Your effective rate is 7.59% p.a. If your HP loan is still new and you have more than enough cash sitting lazily in FD at 2.5%, by transferring the funds from FD to HP. you make your money work 3 times harder. |
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aeiou228
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Jul 30 2009, 01:47 PM
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QUOTE(Baby_Milo @ Jul 29 2009, 02:45 AM) how to calculate the effective interest rate? what actually is that? You need a financial calculator to compute effective interest rate. |
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aeiou228
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Jul 31 2009, 08:56 PM
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QUOTE(ch_leong @ Jul 31 2009, 02:32 PM) 2. Do you know settle you car loan earlier you can save interest? Let say u take 5 year loan and now you at 3rd year. if you settle it at 3rd year, they will fine you 1 year interest and deduct the last year interest for you. Check out the $ you can save from Hong Leong website. https://www.ecloan.com.my/calculator/loan_settlement.asp. You should negotiate with the bank regarding the fine. Anything under the sun can be discussed. Fine ?? Very unlikely. Car loan is under HP act 1967, There is no such provision in the HP act. |
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