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> Car loan "trick"?

dares
post Jul 7 2017, 04:16 PM

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very common. You see those "special edition" variants of a model with leather seats and bodykits, that is exactly 10% more expensive than the normal model? that's what they are used for.
6UE5T
post Jul 7 2017, 04:20 PM

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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
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This is common practice and yes, it exploits a loop hole in the loan procedure by marking up the purchase price but no impact on you coz you still just owe the same amount.
jimmychangas
post Jul 7 2017, 04:29 PM

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QUOTE(williamjr @ Jul 7 2017, 04:03 PM)
You mean with this method, one needs to pay the GST incurred by the fake 9k?
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unfortunately yes. that's the price to pay for exploiting this hole.
isr25
post Jul 7 2017, 05:18 PM

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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.
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Really weird... if you already have money for the downpayment, why go through all this? Your (1st year anyway) insurance would be higher, and your monthly repayment would be higher as well.

You should only do this if you really2 don't have the money and really2 want that car... Else, just stick to the normal loan amount and tenure that you want.
Ginny88
post Jul 7 2017, 06:40 PM

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Tell the dealer you have the 10% down payment so no need to do this. I doubt it makes much difference to getting the loan approved.


This post has been edited by Ginny88: Dec 8 2018, 11:02 AM
WiLeKiyO
post Jul 7 2017, 07:14 PM

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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
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Thanks for your brief explanation. thumbup.gif
icebryanchan
post Jul 7 2017, 07:22 PM

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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
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Thanks for the very detailed explaination.

TBH I am going to buy the new saga executive edition but my dealer marks up the price to the premium edition (which is around RM3k difference).

so here's my questions:

1. So I have to bare with the GST of the extra RM3k which is around RM180?

2. I have asked them about increased insurance but they told me there will be no increased insurance for the car by doing this. Is this true?

3. By paying a 10% downpayment as well as doing the mark up price thing, will the bank pass the loan with even greater chance? ( I don't want to do this if it doesn't help with increase chance to pass the loan)

4. What will I rugi besides the extra GST to be paid?

This post has been edited by icebryanchan: Jul 7 2017, 07:24 PM
rcracer
post Jul 7 2017, 08:17 PM

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If you can't afford a cheaper car , why would the bank think a more expensive car is better , LOL
acbc
post Jul 7 2017, 08:21 PM

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Dealer also earn bigger commission by getting buyer to loan more.
-Aktan-
post Jul 8 2017, 08:11 AM

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QUOTE(rcracer @ Jul 7 2017, 08:17 PM)
If you can't afford a cheaper car , why would the bank think a more expensive car is better , LOL
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DSR score is ok, by adjust the margin lower for higher score ,

Higher overall score can be achieved...


BLjack
post Jul 8 2017, 09:44 AM

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QUOTE(acbc @ Jul 7 2017, 08:21 PM)
Dealer also earn bigger commission by getting buyer to loan more.
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Really? How much bigger you think?
JunJun04035
post Jul 8 2017, 11:11 AM

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QUOTE(icebryanchan @ Jul 7 2017, 07:22 PM)
Thanks for the very detailed explaination.

TBH I am going to buy the new saga executive edition but my dealer marks up the price to the premium edition (which is around RM3k difference).

so here's my questions:

1. So I have to bare with the GST of the extra RM3k which is around RM180?

2. I have asked them about increased insurance but they told me there will be no increased insurance for the car by doing this. Is this true?

3. By paying a 10% downpayment as well as doing the mark up price thing, will the bank pass the loan with even greater chance? ( I don't want to do this if it doesn't help with increase chance to pass the loan)

4. What will I rugi besides the extra GST to be paid?
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LOL Why not you ask the dealer clearly.

It's your purchase rolleyes.gif
jimmychangas
post Jul 9 2017, 12:35 AM

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QUOTE(icebryanchan @ Jul 7 2017, 07:22 PM)
Thanks for the very detailed explaination.

TBH I am going to buy the new saga executive edition but my dealer marks up the price to the premium edition (which is around RM3k difference).

so here's my questions:

1. So I have to bare with the GST of the extra RM3k which is around RM180?

2. I have asked them about increased insurance but they told me there will be no increased insurance for the car by doing this. Is this true?

3. By paying a 10% downpayment as well as doing the mark up price thing, will the bank pass the loan with even greater chance? ( I don't want to do this if it doesn't help with increase chance to pass the loan)

4. What will I rugi besides the extra GST to be paid?
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To answer your questions:

1. Yes. Because you chose to go with full loan thus the dealer will incur you an extra GST charge from the mark up. If the SA is very generous, he/she might cover the GST for you with his/her commission lol

2. This depends. Because the mark up was applied to the price of the car in the VSO, the insured amount will be higher, thus increasing the premium as well. Once again, if the SA is generous, he/she might cover it up with his/her commission, and I think that's the case when it comes to your situation.

3. Banks approve loan based on the credit score, as well as your documents, among other things. Person A with RM3k salary paying 10% downpayment will most likely have a different loan outcome than Person B with RM6k salary paying 10% downpayment. So to answer this question, it all really boils down to the individual's credit score and financial background.

4. Besides extra GST and insurance premium, nothing else really.

Ginny88
post Jul 9 2017, 12:13 PM

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Don't take the risk. The bank has the right to cancel the loan if it finds any irregularity. The original car card will be lodged with the bank so they will see that it doesn't tally with what they are supposed to be financing.


icebryanchan
post Jul 11 2017, 06:07 PM

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QUOTE(JunJun04035 @ Jul 8 2017, 11:11 AM)
LOL Why not you ask the dealer clearly.

It's your purchase  rolleyes.gif
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asking more parties will ensure more details and avoid scamming
dares
post Jul 11 2017, 06:33 PM

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QUOTE(Ginny88 @ Jul 9 2017, 12:13 PM)
Don't take the risk. The bank has the right to cancel the loan if it finds any irregularity. The original car card will be lodged with the bank so they will see that it doesn't tally with what they are supposed to be financing.
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That's why they usually markup the financing by including the price for bodykit lah, leather seat lah, tinting lah etc.etc..... things that are not reflected in the car registration.

For example, last time Preve Limited Edition was selling at 80k, where as the normal Preve was 72k. But on the car registration they are all just refered to as Proton Preve. The dealer apply RM72k loan for the Preve LE, but actually sold a normal Preve, the bank wouldn't know just by looking at the car registration card.

This post has been edited by dares: Jul 11 2017, 06:36 PM
JunJun04035
post Jul 12 2017, 06:42 AM

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QUOTE(icebryanchan @ Jul 11 2017, 06:07 PM)
asking more parties will ensure more details and avoid scamming
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you are technically engaging a scam bro laugh.gif
spikey2506
post Dec 7 2018, 09:48 PM

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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
*
Quick question, the extra charges, payable by cash is it? Coz I just applied for a full loan car for my bro. Loan amount is around RM36k. And the SA told me I need to pay additional around RM800 by cash to them, the dealer branch
Ginny88
post Dec 8 2018, 11:05 AM

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QUOTE(spikey2506 @ Dec 7 2018, 09:48 PM)
Quick question, the extra charges, payable by cash is it? Coz I just applied for a full loan car for my bro. Loan amount is around RM36k. And the SA told me I need to pay additional around RM800 by cash to them, the dealer branch
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Any balance after deducting the on the road price from the loan amount is payable by cash. You should get a breakdown of the price from the dealer to justify the extra RM800.


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