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> Advance Payment or Prepayment better, Which one saving more interest?

ITzai
post May 17 2018, 11:08 AM, updated 2w ago

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As per title, which saving more interest in semi flexi loan?

Scenario A: (Advance Payment)
RM1500 monthly installment but I pay rm3000 for three months, so every month I pay extra rm1500, end up rm4500 extra in my loan account.

Scenario B: (Prepayment)
I save rm1500 in my personal account for three months, then go over bank counter and do prepayment for rm4500 in one shot.

If both scenario saving the same amount of interest I will opt to scenario A as advance payment we can withdraw the money inside whenever we need it but it is not applicable to prepayment.
realitec
post May 17 2018, 11:19 AM

yltm iwltyt =)
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From: Labuan Federal Territory


Scenario A save more interest. As you will pay 1500 extra at the first month. While, Scenario B you only pay extra at 3rd month in one shot.
xinyang
post May 17 2018, 12:23 PM

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May I ask about the difference between these 3:

Monthly Loan Installment
Advance Loan Payment
Reduce Loan Principal

Let's the monthly installment = 3100
And I pay 3500 per month.
Should I choose monthly installment or advance?
or I have to pay twice.. 3100 for monthly installment and 400 for advance loan payment?

Thanks.
realitec
post May 17 2018, 12:33 PM

yltm iwltyt =)
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Group: Senior Member
Posts: 2,424

Joined: May 2017
From: Labuan Federal Territory


QUOTE(xinyang @ May 17 2018, 12:23 PM)
May I ask about the difference between these 3:

Monthly Loan Installment
Advance Loan Payment
Reduce Loan Principal

Let's the monthly installment = 3100
And I pay 3500 per month.
Should I choose monthly installment or advance?
or I have to pay twice.. 3100 for monthly installment and 400 for advance loan payment?

Thanks.
*
Are those 3 is a package? Abit confuse here, but it might work as below:
1) Monthly Loan Installment = only pay 3100
2) Advance Loan Payment = 3100 (monthly loan repayment) + 400 (advance). Meaning to say in the next month, you may only pay 2700. No interest reducing here.
3) Reduce Loan Principal = 3100 (monthly loan repayment) + 400 (to reduce your loan principal), save interest. Next month still paying 3100 or you will make another 400(extra) as per previous month to reduce principal amount. Do check with bank, sometimes to reduce your principal, you need to notify the bank.

Hope it helps, but I might be wrong :S Somebody please correct me, as I am going toward that direction soon for purchasing my first house.

Thanks.

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