Jun 18 2025, 05:06 PM
QUOTE(yhtan @ Jun 18 2025, 04:59 PM)
From month to month when u repay HP Loan, the amount is slowly reducing and no way the return can be higher.
Let say u take HP for the car for 100k, after repay RM5k monthly instalment
Month 1 owe bank - 95k
Month 2 owe bank - 90k
Slowly your cash is lower month by month
Coz they are confused about two different things.Let say u take HP for the car for 100k, after repay RM5k monthly instalment
Month 1 owe bank - 95k
Month 2 owe bank - 90k
Slowly your cash is lower month by month
1. Car loan works on EIR basis. So the 2.x% eventually ends up to 4-5% depending.
2. 100k in FD at 4% returns more - possibly but you must first have 100k in bank and keep it for 7 years.
3. If you keep 100k in bank, that means you don't have a car.
4. If you get a car and pay using that 100k, you won't have the entirety of the 100k to compound for 7 years, so the math at No. 3 no longer applies.
I'm not sure why they think somehow if you put 100k in bank account then they don't need to service the loan. And if you are not using the 100k to service the loan, why need to be concerned over the 100k in FD or not?
The only argument to make is that you have better cashflow which carries an opportunity cost if you use it to service the loan, maybe you can't pay your CC debt, you can't so starbucks or pump Ron97 etc.
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