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 personal loan offer 3.99%, advisable to take?

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anz87
post Jun 9 2015, 03:40 PM

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QUOTE(bringit6 @ Jun 9 2015, 11:44 AM)
I got an offer from bank for personal loan RM22K at 3.99% per anum. They say they offer for sleected customers only. Advisable to take or not?  hmm.gif
*
Lets me tell u a story about me...on 2012 i took personal loan - angkasa for rm200k , interest 3.88% for 20 years tenure(currently not available),
that money i used for apartment purchase, full settlement for car and ptptn,
last year - 2014, that apartment just sold for rm310k , and the gains for that sale already can cover the personal loan , but I'm not do the full settlement of that personal loan because I campak rm200k at ASB and the rest i used for down payment of double storey house
cherroy
post Jun 9 2015, 04:16 PM

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QUOTE(bringit6 @ Jun 9 2015, 01:43 PM)
How did you get 7.3%?

I calculated per year the interest is 877. Loan amount is 22k. The percentage shouldn't it be 877/22000 = 3.99%?
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Simple question,
After you have repaid the loan by half, left with 11k outstanding, you still being charged 877 pa.

So tell me how much 877 interest rate is?

877/11k = 7.9%, you are paying 7.9 loan interest rate on that year, and lesser the outstanding on later year the higher the interest rate is.

Sums up you only pay 3.99% for the first year. laugh.gif
TSbringit6
post Jun 9 2015, 04:25 PM

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QUOTE(cherroy @ Jun 9 2015, 04:16 PM)
Simple question,
After you have repaid the loan by half, left with 11k outstanding, you still being charged 877 pa.

So tell me how much 877 interest rate is?

877/11k = 7.9%, you are paying 7.9 loan interest rate on that year, and lesser the outstanding on later year the higher the interest rate is.

Sums up you only pay 3.99% for the first year.   laugh.gif
*
according to this:-

user posted image

The monthly installment is RM1907 if tenure for 1 year.
RM 532 monthly if tenure for 4 years.

This post has been edited by bringit6: Jun 9 2015, 04:27 PM
max_cavalera
post Jun 9 2015, 04:53 PM

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QUOTE(bringit6 @ Jun 9 2015, 01:09 PM)
can do early settlement. its actually called cashlite cimb. the amount is charged to credit card. worth it or not?
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3.99% for 1 year worth it..cheap

Sekali 3.99% for 6 month payment lol
cherroy
post Jun 9 2015, 04:54 PM

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QUOTE(bringit6 @ Jun 9 2015, 04:25 PM)
according to this:-

user posted image

The monthly installment is RM1907 if tenure for 1 year.
RM 532 monthly if tenure for 4 years.
*
For 1 year repayment, total you need to pay Rm22884. You incurred RM887 interest rate.
Turn out to be RM73.9 per month interest rate. which is equivalent to 3.99% pa out of 22K.

After you have paid the for 6 months of Rm1907, your outstanding loan is RM11,445 after 6 months, you still pay Rm73.9 interest rate per month on the 7th month, which is equivalent to 7.7% pa.

So sums up you only pay 3.99% for first month.
Same outcome. laugh.gif
taitianhin
post Jun 9 2015, 04:55 PM

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xuzen
post Jun 9 2015, 05:26 PM

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QUOTE(bringit6 @ Jun 9 2015, 11:44 AM)
I got an offer from bank for personal loan RM22K at 3.99% per anum. They say they offer for sleected customers only. Advisable to take or not?  hmm.gif
*
based on a 84 months repayment schedule (7 years), your real effective interest rate is 7.28% p.a. 3.99% p.a. is another way to present the interest rate and is calculated using the straight line method which is also the same way car loan is calculated. This straight line method is also called simple interest rate.

For ease of comparing financial instruments it is convention to use real effective interest rate instead of simple interest rate as we need to convert them into apple to apple comparison.

Back to the question, now you know that the real effective rate is 7.28% p.a., what are you going to do with this debt? For investment, you must find an instrument that generate more than 7.28% p.a. consistently for the next seven years. I can tell you, such instruments are almost non-existent. Please share if you do find one.

If you are buying a non income generating asset, then it is a no brainer answer.... DON'T DO IT!

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wodenus
post Jun 9 2015, 06:14 PM

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QUOTE(Pink Spider @ Jun 9 2015, 11:45 AM)
take for buy gadgets, vacation, shopping etc, no

take for investments, yes
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loan for investments?
wodenus
post Jun 9 2015, 06:16 PM

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QUOTE(bringit6 @ Jun 9 2015, 11:44 AM)
I got an offer from bank for personal loan RM22K at 3.99% per anum. They say they offer for sleected customers only. Advisable to take or not?  hmm.gif
*
If it's really 3.99% put it here :

https://www.pbebank.com/Personal-Banking/Pr...A-Campaign.aspx

Easy money or what lol. But seriously the banks aren't stupid are they? smile.gif


This post has been edited by wodenus: Jun 9 2015, 06:17 PM
cherroy
post Jun 9 2015, 06:55 PM

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Unless the money is for emergency use, or you have good idea what to do with the money aka can generate more profit like use the money to do grab some good business opportunity etc. I don't see any reason why one need to take up personal loan.

If you take personal loan to buy a smart phone, it just means you are paying extra 7% (if the personal loan EIR is 7%) more as compared other paying by cash one, as simple as that.
Whatever you buy using the personal loan, it indirectly means you are paying 7% more.

If the store raised price 7%, people cursing the store, why so expensive, raise price etc.

But when taking personal loan to buy the smartphone from the store, people do not notice they are paying 7% more.




cdspins
post Jun 9 2015, 09:31 PM

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QUOTE(anz87 @ Jun 9 2015, 03:40 PM)
Lets me tell u a story about me...on 2012 i took personal loan - angkasa for rm200k , interest 3.88% for 20 years tenure(currently not available),
that money i used for apartment purchase, full settlement for car and ptptn,
last year - 2014, that apartment just sold for rm310k , and the gains for that sale already can cover the personal loan , but I'm not do the full settlement of that personal loan because I campak rm200k at ASB and the rest i used for down payment of double storey house
*
That's the advantage of bumiputra, ASB pay very high dividend
Let me tell you another story, some uncle auntie neighbour's son go an borrow 200k , with interest rate of 3.88%
He go and buy blue chip stock thinking it should give better return, but in the end, he find outs that he is just merely being a KULI for the bank, the return is not high, he need to always keep track of the loan payment as it charges credit card late payment fee ...

It all boils down to your risk appetite. High risk high return, if you dare to play the game, go ahead. But if you are the rock solid type.... I advise against it.
anz87
post Jun 10 2015, 11:54 AM

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QUOTE(cdspins @ Jun 9 2015, 09:31 PM)
That's the advantage of bumiputra, ASB pay very high dividend
Let me tell you another story, some uncle auntie neighbour's son go an borrow 200k , with interest rate of 3.88%
He go and buy blue chip stock thinking it should give better return, but in the end, he find outs that he is just merely being a KULI for the bank, the return is not high, he need to always keep track of the loan payment as it charges credit card late payment fee ...

It all boils down to your risk appetite. High risk high return, if you dare to play the game, go ahead. But if you are the rock solid type.... I advise against it.
*
ASB most secure investment currently , FYI I'm also investing in blue chip - currently holding TM share...keep for dividend not for intraday and contra play
anz87
post Jun 10 2015, 11:54 AM

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QUOTE(cdspins @ Jun 9 2015, 09:31 PM)
That's the advantage of bumiputra, ASB pay very high dividend
Let me tell you another story, some uncle auntie neighbour's son go an borrow 200k , with interest rate of 3.88%
He go and buy blue chip stock thinking it should give better return, but in the end, he find outs that he is just merely being a KULI for the bank, the return is not high, he need to always keep track of the loan payment as it charges credit card late payment fee ...

It all boils down to your risk appetite. High risk high return, if you dare to play the game, go ahead. But if you are the rock solid type.... I advise against it.
*
ASB most secure investment currently , FYI I'm also investing in blue chip - currently holding TM share...keep for dividend not for intraday and contra play
METALRAGE
post Jun 10 2015, 05:28 PM

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QUOTE(bringit6 @ Jun 9 2015, 11:44 AM)
I got an offer from bank for personal loan RM22K at 3.99% per anum. They say they offer for sleected customers only. Advisable to take or not?  hmm.gif
*
Hi TS,
As some have already pointed out, please understand the diff between effective interest rates vs flat/simple interest rates. Confused why your calculation shows 3.99%? Here is a simple explanation

Even if you don't understand it, at least use the http://loanstreet.com.my/calculator/flat-t...calculator.html they have to find the effective interest rate.


On whether you should take it, most of the explanations in this forum tend towards the simplistic (borrow to invest lah. only if you know waht you're doing la. take it cos its cheap lah). but not all are good advice. If i distill it:

TAKE THE LOAN ONLY IF
1) You have a higher interest rate credit balance / loan to settle. Use this loan to settle the earlier balance
2) You know an investment vehicle giving better yields than your financing interest cost. Even then, consider if it's the cheapest form of financing (this means it's stupid to take a P.loan to buy ASB units, or to buy a prop, because there is mortgage / ASB financing which is sure as hell cheaper than this)
3) If you are certain there is something you want/need and you need financing to buy it. E.g., medical bills for parents.

Good luck making the right decision

This post has been edited by METALRAGE: Jun 10 2015, 05:28 PM
TSbringit6
post Jun 15 2015, 09:35 AM

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QUOTE(METALRAGE @ Jun 10 2015, 05:28 PM)
Hi TS,
As some have already pointed out, please understand the diff between effective interest rates vs flat/simple interest rates. Confused why your calculation shows 3.99%? Here is a simple explanation

Even if you don't understand it, at least use the http://loanstreet.com.my/calculator/flat-t...calculator.html they have to find the effective interest rate.
On whether you should take it, most of the explanations in this forum tend towards the simplistic (borrow to invest lah. only if you know waht you're doing la. take it cos its cheap lah). but not all are good advice. If i distill it:

TAKE THE LOAN ONLY IF
1) You have a higher interest rate credit balance / loan to settle. Use this loan to settle the earlier balance
2) You know an investment vehicle giving better yields than your financing interest cost. Even then, consider if it's the cheapest form of financing (this means it's stupid to take a P.loan to buy ASB units, or to buy a prop, because there is mortgage / ASB financing which is sure as hell cheaper than this)
3) If you are certain there is something you want/need and you need financing to buy it. E.g., medical bills for parents. 

Good luck making the right decision
*
Thanks for the reply. I'm paying about RM800 per month out of which RM260 on interest alone for my car.

From the RM 22k loan, I would be able to do principle reduction on my car loan and save about RM 100 on interest.

The loan is subjecting me to RM73 on interest initially and reduced every month. So I guess I'm saving about RM 30+ per month by taking this loan.

This is the method #1 that you mention. Makes sense. Even though it's not a lot of money, but hey, it's something.

METALRAGE
post Jun 19 2015, 03:30 PM

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QUOTE(bringit6 @ Jun 15 2015, 09:35 AM)
Thanks for the reply. I'm paying about RM800 per month out of which RM260 on interest alone for my car.

From the RM 22k loan, I would be able to do principle reduction on my car loan and save about RM 100 on interest.

  The loan is subjecting me to RM73 on interest initially and reduced every month. So I guess I'm saving about RM 30+ per month by taking this loan.

  This is the method #1 that you mention. Makes sense. Even though it's not a lot of money, but hey, it's something.
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Careful. there is no point in doing principal reduction for car loan. Only if you can settle it in entirety do you enjoy the savings.

Because car loan interest payable is not calculated on existing balance.
duckaton
post Jun 19 2015, 05:43 PM

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3.99 good rate

take and invest in something more profitable
Limpehken
post Aug 1 2015, 07:56 AM

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That's a good rate.. I would take it..

Kelifu
post Aug 1 2015, 11:57 AM

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This post has been edited by Kelifu: Aug 4 2015, 11:32 PM
hangus
post Aug 1 2015, 06:07 PM

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QUOTE(bringit6 @ Jun 9 2015, 11:44 AM)
I got an offer from bank for personal loan RM22K at 3.99% per anum. They say they offer for sleected customers only. Advisable to take or not?  hmm.gif
*
I think that 4% of personal loan interest is very low. You gotten a big bargain here. But if you take the money for vacation, paying downpayment for a car, spending it on furniture etc, then you are ruining your personal finance. You still have to pay back the principal. But if you take the money for education courses, investment or buying a house, then it is a good deal because your return can easily exceed the cost of 4%.

Please read the fine details before you borrow though. Certain banks may put in extra condition in the loan agreement like late payment fee. Make sure the interest rates is fixed at 4% and do take care when you need to pay back the loan amount. Good luck ~

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