Welcome Guest ( Log In | Register )

Forum Announcement

New user registrations disabled until further notice.

Bump TopicReply to this topicRSS feed Start new topic Start Poll

Outline · [ Standard ] · Linear+

> Car loan "trick"?

icebryanchan
post Jul 7 2017, 01:45 PM, updated 2y ago

Getting Started
**
Group: Junior Member
Posts: 133

Joined: Oct 2010


Hi all,

recently I am going to buy a car and my car dealer told me they will use a higher spec car's price to apply for loan from bank. (they say that will be easier to pass the loan)

I would like to know is this a common thing in car dealing? Is this against the law? Will I be repaying more than I am supposed to?
acbc
post Jul 7 2017, 01:49 PM

Look at all my stars!!
*******
Group: Senior Member
Posts: 5,574

Joined: Jan 2003

Yes. Known as full loan.

U fork out less deposit in return.
hightechgadgets8
post Jul 7 2017, 01:49 PM

Rất Vui Được làm quen với bạn
*******
Group: Senior Member
Posts: 3,309

Joined: Sep 2011
From: HCMC


1. common thing
2. you pay for how much u loan + interest
TOMEI-R
post Jul 7 2017, 01:50 PM

Extraordinaire
********
Group: Senior Member
Posts: 14,773

Joined: Mar 2007
From: Kuala Lumpur


If you have the 10% downpayment or more, then the dealer would not need to do that.
icebryanchan
post Jul 7 2017, 01:52 PM

Getting Started
**
Group: Junior Member
Posts: 133

Joined: Oct 2010


But I told them I would be paying 10% downpayment but they still suggest to use this method.

So it is like the bank is considering that I have "paid 20% downpayment of higher spec car" but in fact I only paid 10% of lower spec car?

Sorry this is my first car I know nothing at all.
WaCKy-Angel
post Jul 7 2017, 01:57 PM

PeACe~~
********
Group: Senior Member
Posts: 16,098

Joined: Dec 2004
From: KL




QUOTE(icebryanchan @ Jul 7 2017, 01:45 PM)
Hi all,

recently I am going to buy a car and my car dealer told me they will use a higher spec car's price to apply for loan from bank. (they say that will be easier to pass the loan)

I would like to know is this a common thing in car dealing? Is this against the law? Will I be repaying more than I am supposed to?
*
more you loan more u pay
COOLPINK
post Jul 7 2017, 01:57 PM

Regular
******
Group: Senior Member
Posts: 1,583

Joined: Oct 2010
QUOTE(icebryanchan @ Jul 7 2017, 01:52 PM)
But I told them I would be paying 10% downpayment but they still suggest to use this method.

So it is like the bank is considering that I have "paid 20% downpayment of higher spec car" but in fact I only paid 10% of lower spec car?

Sorry this is my first car I know nothing at all.
*
im not very sure about this.
but anything that will be put down in a signed agreement i would be very cautious because who knows one day it will come around and kick you in the backside.

WaCKy-Angel
post Jul 7 2017, 02:01 PM

PeACe~~
********
Group: Senior Member
Posts: 16,098

Joined: Dec 2004
From: KL




QUOTE(icebryanchan @ Jul 7 2017, 01:52 PM)
But I told them I would be paying 10% downpayment but they still suggest to use this method.

So it is like the bank is considering that I have "paid 20% downpayment of higher spec car" but in fact I only paid 10% of lower spec car?

Sorry this is my first car I know nothing at all.
*
Perhaps they put the car value higher and loan lesser so its easier to get approved.
means the car actual value 100K supposed to loan 90K (90% loan) so instead they put car value 110K and loan 90K (erm 85% loan?? didnt count) so bank likes it thinking in any circumstances u cant afford to pay, they tarik the car also get high value to sell out

something like that? lol
Ginny88
post Jul 7 2017, 02:08 PM

Getting Started
**
Group: Junior Member
Posts: 106

Joined: Oct 2011
For used car banks may not approve 90% loan so to get around this dealer jacks up the price of the car so it becomes 80% loan.

If it is a new car and you can pay 10% down payment should not need to do this.

icebryanchan
post Jul 7 2017, 02:11 PM

Getting Started
**
Group: Junior Member
Posts: 133

Joined: Oct 2010


QUOTE(WaCKy-Angel @ Jul 7 2017, 02:01 PM)
Perhaps they put the car value higher and loan lesser so its easier to get approved.
means the car actual value 100K supposed to loan 90K (90% loan) so instead they put car value 110K and loan 90K (erm 85% loan?? didnt count) so bank likes it thinking in any circumstances u cant afford to pay, they tarik the car also get high value to sell out

something like that? lol
*
not very sure but that's what I am thinking.

The car dealer also said they scare the bank would ask for more downpayment so they do this.

However, as long as the loaned amount is still the same, I am not losing anything, am I? hmm.gif hmm.gif
WaCKy-Angel
post Jul 7 2017, 02:14 PM

PeACe~~
********
Group: Senior Member
Posts: 16,098

Joined: Dec 2004
From: KL




QUOTE(icebryanchan @ Jul 7 2017, 02:11 PM)
not very sure but that's what I am thinking.

The car dealer also said they scare the bank would ask for more downpayment so they do this.

However, as long as the loaned amount is still the same, I am not losing anything, am I? hmm.gif  hmm.gif
*
i guess so
mot88
post Jul 7 2017, 02:16 PM

Getting Started
**
Group: Junior Member
Posts: 66

Joined: Oct 2005
QUOTE(icebryanchan @ Jul 7 2017, 02:11 PM)
However, as long as the loaned amount is still the same, I am not losing anything, am I? hmm.gif  hmm.gif
*
Your insurance sum insured will also based on higher spec.
WiLeKiyO
post Jul 7 2017, 02:20 PM

Look at all my stars!!
*******
Group: Senior Member
Posts: 3,993

Joined: Oct 2009
QUOTE(icebryanchan @ Jul 7 2017, 02:11 PM)
not very sure but that's what I am thinking.

The car dealer also said they scare the bank would ask for more downpayment so they do this.

However, as long as the loaned amount is still the same, I am not losing anything, am I? hmm.gif  hmm.gif
*
Not not sure why use higher priced car to apply loan, doesn't make sense to me.

If I were you, I will insist to use the actually car price to apply loan.

If loan does not approve, increase the DP, provide guarantor etc.

Make sure to ask the sales agent to apply multiple banks so that you can compare the interest rate.
JungWoo
post Jul 7 2017, 02:23 PM

On my fvcking way
****
Group: Senior Member
Posts: 670

Joined: Feb 2012
From: Where the fvck I'm?



there is many car sales man to choose around. usually typical c race salesman will have all kind of tricks
icebryanchan
post Jul 7 2017, 02:27 PM

Getting Started
**
Group: Junior Member
Posts: 133

Joined: Oct 2010


QUOTE(WiLeKiyO @ Jul 7 2017, 02:20 PM)
Not not sure why use higher priced car to apply loan, doesn't make sense to me.

If I were you, I will insist to use the actually car price to apply loan.

If loan does not approve, increase the DP, provide guarantor etc.

Make sure to ask the sales agent to apply multiple banks so that you can compare the interest rate.
*
erm, actually I am a fresh graduate and only start working in August.

I have prepared 10% down-payment and guarantor.

I am thinking they do the "mark up" thing because my condition is not really in favor for me to pass the loan. ( I also have read some news on car loan saying that the deny rate of car loan in the first half of 2017 had increased to 40+%).

For the choice of bank the dealer told me they will ask for the loan from the same bank as my guarantor's.
dannygoh
post Jul 7 2017, 02:31 PM

Casual
***
Group: Junior Member
Posts: 341

Joined: Aug 2007
QUOTE(mot88 @ Jul 7 2017, 02:16 PM)
Your insurance sum insured will also based on higher spec.
*
i also kena buying a used car. my insurance premium can different 1k which i argue why u jack up the car price to get loan and u didnt inform.

finally dealer bear the 1k difference. icon_rolleyes.gif
WaCKy-Angel
post Jul 7 2017, 02:37 PM

PeACe~~
********
Group: Senior Member
Posts: 16,098

Joined: Dec 2004
From: KL




QUOTE(icebryanchan @ Jul 7 2017, 02:27 PM)
erm, actually I am a fresh graduate and only start working in August.

I have prepared 10% down-payment and guarantor.

I am thinking they do the "mark up" thing because my condition is not really in favor for me to pass the loan. ( I also have read some news on car loan saying that the deny rate of car loan in the first half of 2017 had increased to 40+%).

For the choice of bank the dealer told me they will ask for the loan from the same bank as my guarantor's.
*
buy cheaper car then

QUOTE(dannygoh @ Jul 7 2017, 02:31 PM)
i also kena buying a used car. my insurance premium can different 1k which i argue why u jack up the car price to get loan and u didnt inform.

finally dealer bear the 1k difference.  icon_rolleyes.gif
*
Usually insurance price already covered in the selling price no? if not covered they will show you the differential price and ask u to pay.
And premium different 1K ?? that is like jack up 200K car value?
dstl1128
post Jul 7 2017, 03:02 PM

Look at all my stars!!
*******
Group: Senior Member
Posts: 4,418

Joined: Jan 2003
You loan more they get commission more lor - commission from both side: bank & insurance.

jimmychangas
post Jul 7 2017, 03:08 PM

New Member
*
Group: Junior Member
Posts: 12

Joined: Jul 2012


I'm a salesman myself.

For this example, I'll assume a RM50,000 car that you'll be buying.

Bank Negara laws prohibit banks from doing full loan (100%) for customers. Full loan here means 0% downpayment, a.k.a you don't have to pay a single cent and drive the car off the dealer.

2 banks in Malaysia, however, are exempted from this law. One is Bank Rakyat, which, under the right circumstances, offers true full loan. Another bank is Bank Islam, via the graduation scheme (meant for fresh grads).

So some customers wouldn't want (or rather, can't afford) to pay the required 10% downpayment. On paper, if the car price is RM50k, and the dealer submit a loan request of RM50k to the bank, it will be rejected almost right away.

Here's where the "trick" comes in. The principle is simple. Mark up the price of the car.

So, back to the RM50k car. To get around this problem, the dealer will add in several optional extras into the Vehicle Sales Order (VSO) form, such as accessories and bodykits. The purpose is to make the car even pricier, say RM59k.

Now the price is RM59k, an extra 9k. But the dealer will still submit the loan request to the bank of RM50k, because that's the actual price of the car. The extra 9k is just for show to the bank. You are not supposed to pay that extra 9k.

Your loan should be much easier to pass now, because in the bank's eyes, you're buying a RM59k car and requesting a RM50k loan, meaning you have "put down" a downpayment of 9k. But in reality, you didn't.

HOWEVER (big one), the added accessories will incur additional GST charges to your final car price. But this typically won't exceed RM1k, depending on the car you buy . And, depending on your documents, some banks won't even allow you to have RM50k loan. That all depends on your credit score.

You might be asking, "do they have to do all this if I pay an actual downpayment to my car?" The answer is a definitive no. But it has to be at least 10% of the total car price. If you are paying the downpayment already and still your dealer wants to markup the price, then something fishy is definitely going on. It could be meeting loan sales target, just saying. But you as the customer have the full rights to question them about it.

Let me know if you need anything. I'd be more than happy to help. Good day! smile.gif
williamjr
post Jul 7 2017, 04:03 PM

Getting Started
**
Group: Junior Member
Posts: 93

Joined: Jul 2012
QUOTE(jimmychangas @ Jul 7 2017, 03:08 PM)
I'm a salesman myself.

For this example, I'll assume a RM50,000 car that you'll be buying.

Bank Negara laws prohibit banks from doing full loan (100%) for customers. Full loan here means 0% downpayment, a.k.a you don't have to pay a single cent and drive the car off the dealer.

2 banks in Malaysia, however, are exempted from this law. One is Bank Rakyat, which, under the right circumstances, offers true full loan. Another bank is Bank Islam, via the graduation scheme (meant for fresh grads).

So some customers wouldn't want (or rather, can't afford) to pay the required 10% downpayment. On paper, if the car price is RM50k, and the dealer submit a loan request of RM50k to the bank, it will be rejected almost right away.

Here's where the "trick" comes in. The principle is simple. Mark up the price of the car.

So, back to the RM50k car. To get around this problem, the dealer will add in several optional extras into the Vehicle Sales Order (VSO) form, such as accessories and bodykits. The purpose is to make the car even pricier, say RM59k.

Now the price is RM59k, an extra 9k. But the dealer will still submit the loan request to the bank of RM50k, because that's the actual price of the car. The extra 9k is just for show to the bank. You are not supposed to pay that extra 9k.

Your loan should be much easier to pass now, because in the bank's eyes, you're buying a RM59k car and requesting a RM50k loan, meaning you have "put down" a downpayment of 9k. But in reality, you didn't.

HOWEVER (big one), the added accessories will incur additional GST charges to your final car price. But this typically won't exceed RM1k, depending on the car you buy . And, depending on your documents, some banks won't even allow you to have RM50k loan. That all depends on your credit score.

You might be asking, "do they have to do all this if I pay an actual downpayment to my car?" The answer is a definitive no. But it has to be at least 10% of the total car price. If you are paying the downpayment already and still your dealer wants to markup the price, then something fishy is definitely going on. It could be meeting loan sales target, just saying. But you as the customer have the full rights to question them about it.

Let me know if you need anything. I'd be more than happy to help. Good day! smile.gif
*
You mean with this method, one needs to pay the GST incurred by the fake 9k?

2 Pages  1 2 >Top
Bump TopicReply to this topicTopic OptionsStart new topic
 

Switch to:
| Lo-Fi Version
0.0709sec    1.96    5 queries    GZIP Disabled
Time is now: 10th December 2018 - 03:12 AM