Outline ·
[ Standard ] ·
Linear+
Settling personal loan early?
|
lee82gx
|
 Nov 19 2021, 02:40 PM
|
|
QUOTE(deleted @ Nov 19 2021, 01:25 PM) If I do early settlement that money would likely come out of ASB. Based on phone conversation with bank, I would save around 4k if early settlement by end of this year (will check again in Jan what the rate is) - which is about 10 months of repayment only. not really enticing and doesn't feel worth reducing my ASB's dividend earnings for. you are saying the loan interest is less than ASB dividend rate? ok WOW. Take more loan then, park it in ASB. What a great time to be alive (for you). Print money. This post has been edited by lee82gx: Nov 19 2021, 02:41 PM |
|
|
|
|
|
lee82gx
|
Nov 19 2021, 03:03 PM
|
|
|
QUOTE(DragonReine @ Nov 19 2021, 02:46 PM) Personal loans unfortunately calculate based on rule of 78, AKA most of your early years repayment is used to pay off interest, not the actual loan principal. Which means that by around the halfway point of the tenure, you've paid approximately 70% of the interest charged, while a large chunk of the loan has yet to be paid off. Since you're very near the halfway point of your loan tenure, your “rebates” / “discounts” from early settlement is going to be extremely low (in fact these early settlement discount/rebate is not true rebates, but actually the amount of interest that you won't be paying if you settle the loan early). The only solid reason you would want to settle early at this point is if you want to improve credit score and/or the commitment is affecting your monthly cashflow. Because you're withdrawing from an ASB account rather than using cash on hand, I would advise to simply continue repayment and let the loan run its full tenure, because as you said ASB dividends will be higher than whatever interest you'd have saved. thanks for this explanation, i learn new thing. Damn. So its a fixed contract with no way to reduce interest? I'm still perplexed, because if we are to return our principal early to the lender doesn't it give them the opportunity to loan it out more quickly? Either way, I support TS if the final calculation says keep it is more beneficial (Aside from improving credit score). |
|
|
|
|
|
lee82gx
|
Nov 19 2021, 03:26 PM
|
|
|
QUOTE(deleted @ Nov 19 2021, 03:19 PM) Haha most asb loans interest are lower than dividend, so can make some small profits yearly this explains a lot lol. Ah well, mistakes to educate others about not to repeat not to bash you, but before signing the agreement to take the loan I would've assumed you already know what's the progression of the loan, early settlement options etc. if not, imagine they ask you to slave for another 30 years...die la. |
|
|
|
|
|
lee82gx
|
Nov 19 2021, 11:06 PM
|
|
|
QUOTE(deleted @ Nov 19 2021, 07:23 PM) I was 23 and not very financially wise at the time and under a lot of pressure to keep my family afloat. all i thought at the time was "ok la monthly repayment rm400, i can afford that". I don’t blame you at all for taking the loan, I’m just a bit confused you dont already know the terms…. We all live and learn. As long as you are alive, and can post words here I assume you are ok! This post has been edited by lee82gx: Nov 19 2021, 11:07 PM |
|
|
|
|
|
lee82gx
|
Nov 20 2021, 06:20 PM
|
|
|
QUOTE(WaCKy-Angel @ Nov 20 2021, 04:00 PM) Thats why "those of them" that are smart would take loan and dump into ASB, especially loan from ASB iinm lower than bank to no interest iinm. its really a no brainer. afaik, we are the only country in the world offering something like this. I know of even more elaborate schemes than you mention, and just slightly more risky but a lot more rewarding. |
|
|
|
|
Quote
0.0185sec
0.79
6 queries
GZIP Disabled