Concur with above reply.

Why do all the thinking and calculations now on what will cost less when the goose is cooked? All the loans are commitments with fixed monthly installments; so why take the loans if you can't keep the commitments and are now trying to find ways to lessen the commitments?

If cannot stand firm, this attempt in reducing the monthly installments (and increasing the loan tenure) will be an ongoing activity.

The loans are agreements with the bank; isn't it a bit too convenient to forget about the bank's help when you need the loans and now trying to lower their business profits?

The only debt that is not a fixed monthly installment is the CC debt - which can be closed at any time. It should also be having the highest interest cost, so clear this first. Bear the pain and pay as much as you can instead of just the minimal every month, and clear it as soon as possible.

If you seriously need another loan to clear it, then do it. But think first whether you can commit and keep to the commitment of another monthly installment.

This post has been edited by j.passing.by: Apr 6 2016, 04:19 PM

Somewhat agrees with you; generally, financial savviness is rubbed off from immediate family members and close friends, and if it is not found within this closed circle of relatives and friends, it is easier said than done "better borrow from family members" as all could be in the same boat.

The damaged was already done once the loans was signed, as the bulk of installment payments in the first several months/years was for interest payment. So how much would one really saves by using a loan of lower interest to replace another loan? I doubt there would be hardly any difference, especially if the installment is lower than the previous installment such that the tenure would be longer.

7-9 years car loan. Damage already done. Convert the flat rate interest to effective rate to know the true cost of interest. Read the rule of 78 on how much is the outstanding balance if to fully pay and terminate the loan. Basically, would only end the loan immediately if a cart load of money suddenly dropped onto my lap.

Same with personal loans with flat rate interest. Unless of course there is a guardian angel who can provide help with very low or no interest.

As for housing loans, damage already done when the longest possible tenure of 30 or 35 years was signed. Why the longest possible tenure? To have the highest possible loan amount with the lowest possible installment. Again, the bulk of the interest cost is in the first several years; the lowest possible installment would hardly cover the monthly interest.

Ideally, it should have been paying the highest possible installment when taking any loans. Not the lowest possible.

Consolidation of loans. This is only applicable if there are 2 or more credit card debts, where the outstanding balance of the higher interest card is transfer to the other card.

I doubt it would be applicable to consolidating several personal loans by getting another new loan. It could be merely for the sake of convenience of paying one installment instead of several times a month. It could be worse if this one big loan is defaulted; while previously there was an option to delay payments on the loan with the lowest interest when there is inadequate money to pay all of them.

=============

Above is out of topic, no reference to TS situation... my 2 cents on TS situation still remains as in previous post... tighten belt, bear the pain and continue on with the existing loans instead of thinking too much. It's only about half of his income.

Practice makes perfect. To live within our incomes need practice too; and it is better to start immediately without any further prograstination. Once the cc and personal debts are ended one by one, and if the changes in budgeting practice still remains, the 'installments' would continue on as 'savings'.

This post has been edited by j.passing.by: Apr 7 2016, 07:07 PM

Is above a clariification of my "inaccuracies" or clarification of your first post?

Anyway, let's explain early settlement of house loan and credit card a bit further.

Credit card. Please re-read the last 2 para in my 1st post... "The only debt that is not a fixed monthly installment is the CC debt - which can be closed at any time. It should also be having the highest interest cost, so clear this first. Bear the pain and pay as much as you can instead of just the minimal every month, and clear it as soon as possible.

If you seriously need another loan to clear it, then do it. But think first whether you can commit and keep to the commitment of another monthly installment."

Early settlement of House loan. This is the biggest loan for most people in their life. And as pointed out by you yourself, the cheapest loan too. So how early settlement is early? Since the 1st portion of the tenure is about reducing the outstanding balance, and hence lowering the total value of the cost of interest. For sure we could "save" a lot of interest, if we have the money to settle it immediate after the lock-up period (if there is any lock-up period).

That is IF we have the money in hand. Or are you suggesting to take another loan to settle this cheap loan?

In most cases, the early settlement of house loan is when the house is sold. In other cases, it is in the last several years of the tenure when there is enough money to fully clear the loan, which maybe from savings or from EPF at age 50 or 55.

In the latter case, this settlement is debatable. If installments were paid in the past 20-25 years. why not continue it further the next several years? How much interest would it really save? What if a fatal accident occurs, is it worth it to terminate the loan and also the MRTA assurance on the loan?

And needless to say, early termination (and advance payment to reduce the outstand balance) of an existing housing loan is desirable when the current interest rate has changed significantly. But this re-financing; not replacing it with another loan like a personal loan.

As pointed out by Supersound, we don't have to work out all the nitty-gritty details and calculations when ball-park figures and common sense suffice. Interest free, or 50% cheaper - yes. Otherwise, don't waste time.

The answer is as above. Use ball-park numbers, rough estimations and common sense first before sweating the detail calculations. 3.9%. How much is the current interest rate? If it is not half, don't waste time figuring it out.

If you want to go down this path of discovering new and cheaper loans, there is no end to it. You are not the only person receiving these "fantastic" offers every now and then. Why waste time to entertain these type of calls and calculate the details, unless of course the offer is too good to be true. Which is often as it is, not true.

This post has been edited by j.passing.by: Apr 8 2016, 03:41 PM