the problem is this, if already have 100k and if car loan is 100k:

let's take for example 2.85% p.a. car hire purchase and 7 years period. Total paid in the end around 120k

so got 2 option, keep 100k in bank or paid it off all

First scenario: Pay the car off, then you pay 1428 per month (just like when paying the car monthly loans) and the savings account keep compound it with interest. Need to remember the 1428 already includes 20% in it, so the money actually compound twice: 20% hire purchase interest compounds to another interest rate

Second scenario: the 100k starts to compound for total 7 years in the account.

But need to remember the second scenario the 100k needs to compound for few years before it reaches the base of 120k that it chases on the first scenario. That's why people here keep pointing to the "effective rate".

But no use if you have no discipline to constantly put in the money yourself lor

This post has been edited by terradrive: Jun 18 2025, 05:15 PM