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Car loan rate vs Fixed.deposit, Compare
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cheefai7
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 Jun 20 2018, 09:10 AM
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QUOTE(moon yuen @ Jun 20 2018, 07:35 AM) Let said, I have saving of 50k and my car is 50k. Car loan rate 3%, Fixed deposit rate 4%.
So, I better get a car loan of 50k rather than pay cash?OR the car loan rate is different calculations? Definitely pay cash for your car. Imagine no payment in your next 4-5 years, and i believed you can just rebuild 50k back sooner than you think, it's psychology win-win. Imagine there are better opportunity in the future and you are not bound to these debt. This post has been edited by cheefai7: Jun 20 2018, 09:10 AM |
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cheefai7
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Jun 20 2018, 09:15 AM
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QUOTE(HoNgZ @ Jun 20 2018, 08:43 AM) I would choose put in FD not only for interest but also it's liquidity, I can use it in case emergency or invest into better return tools like stocks or businesses when the time is right. If the outlay of 50k will compromise your liquidity, meaning you are not able to afford a car now. Better return tools in stocks and business with debt laden in car loan are just self illusion. This post has been edited by cheefai7: Jun 20 2018, 09:15 AM |
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cheefai7
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Jun 20 2018, 11:29 AM
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QUOTE(aspartame @ Jun 20 2018, 10:07 AM) Like that how the bank make money oh? They pay u FD interest and earn lower interest from car loan? You sure have give a deeper thought on it, that we are all deceived with the % vs %, but if look at MBB, CIMB, PBB building all big and shinny. Don't think we can outsmart the banks. QUOTE(HoNgZ @ Jun 20 2018, 11:14 AM) Bank not only has few customers what  Sure there're many people can afford to loan a car, but inside their bank account / FD don't even have 20k savings. Affordability for buying car now is considered affordability to pay the installment of loans. |
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cheefai7
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Jun 20 2018, 12:06 PM
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QUOTE(weichong @ Jun 20 2018, 11:53 AM) Car loan uses something called Flat Interest Rate, you can convert it to Effective Interest Rate(something similar to FD) using some online calculator . https://loanstreet.com.my/calculator/flat-t...rest-calculator3% flat rate for 7 years is about 5.57% effective interest rate. In summary, Scenario 1 if you take RM50,000 car loan for 7 years and dont touch the FD, you will have RM 65,796.59 in FD after 7 years compounding. Scenario 2 if you pay with FD money and put the monthly installment you have to pay every month into FD, you will have RM 62,989.57 in FD after 7 years. For Scenario 1, have it factored in Financing cost? Second, it does cost emotionally that you are indebted to the lender and ought to serve the installment for 7 years. For Scenario 2, you have a freedom of choice and you owned the car. |
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