Apr 10 2012, 06:27 PM
QUOTE(neo110 @ Apr 10 2012, 05:20 PM)
Hi gregy,
You are right on the interest diff is minimal but you miss out one point here.
Based on your calculation, you have RM15k for a RM115k car. After 3 years if you plan to sell your car.
If you took a 5 year loan - you get back RM31,885.25
If you took a 7 year loan - you get back RM13,386.20
If you took a 9 year loan - you get back RM3,105.40
Am sure after 3 years, you'll plan to have a better car which will cost more than RM115k, or even same value. But you won't have RM15k d/p as you first bought it 3 years ago. If you take a shorter loan tenure, see how much you get back in cash to upgrade or even for other usage
Moral of the story is, if you can't afford the more expensive car, get one which you can afford and not regret it later. It's never an advantage in taking a longer tenure for car loan.
gregy has an interesting idea actually. i nvr thought of it that way before. You are right on the interest diff is minimal but you miss out one point here.
Based on your calculation, you have RM15k for a RM115k car. After 3 years if you plan to sell your car.
If you took a 5 year loan - you get back RM31,885.25
If you took a 7 year loan - you get back RM13,386.20
If you took a 9 year loan - you get back RM3,105.40
Am sure after 3 years, you'll plan to have a better car which will cost more than RM115k, or even same value. But you won't have RM15k d/p as you first bought it 3 years ago. If you take a shorter loan tenure, see how much you get back in cash to upgrade or even for other usage
Moral of the story is, if you can't afford the more expensive car, get one which you can afford and not regret it later. It's never an advantage in taking a longer tenure for car loan.
anyway, regarding the downpayment you mention, i did a quick calculation on my own. you are forgetting that the 9 year loan guy have extra cash in bank due to lower repayment monthly. if you take that into account, ex: 5(A) years vs 9(B) years
amount paid in 3 years diff:
67500 - 40834.80 = 26665.2 (in B account)
A get back 31,885.25 + 0 in bank
B get back 3,105.40 + 26665.2 in bank = 29,770.6
So B only loose out by 2114.65 compare to A, while enjoy the benefit of having xtra cash in case of emergency. not bad if you ask me. And this is not calculating if he actually used the money for investment purposes, which will further multiply the effect.
This post has been edited by WhitE LighteR: Apr 10 2012, 06:34 PM
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