Your real life example is misleading because you missed out certain important things.
I don't want to spend the time to do all the calculation to justify how much one can save by taking flexi loan as oppose to term loan with the above scenario but i can give simple reasoning to support my statement.

1) With 10k parked in the flexi account for the next 30 years, one is effectively taking a loan of 90K only. Even if the interest rate is 0.20% higher than the term loan interest, the monthtly instalment for the flexi loan will be much lower than the term loan instalment.
2) The 10k in the flexi account is actually earning interest of 3.95% per annum in the way of interest saved as oppose to the 2.5% earned by placing the 10k in FD. If you subtract the difference between the term loan and flexi loan interest of 0.20%, the 10k in flexi account is still earning 1.25% higher than the 10k in FD.

Comments are welcomed.

I don't understand how the term loan of 30 years which is equivalent to 360mths can suddenly reduced to 319 months when the instalment for each month is fixed.
As for your earlier question why i didn't support my arguement with figures, I really don't have the time to do it but i am 100% sure that based on the above scenario, flexi loan is definitely a better choice than fixed term loan.

Term loan has the following advantage :
-0.20% reducing balance interest lower than Flexi loan and
-2.5% interest on 10k put int FD compounded for 30 years
- The RM10 monthly maintenance fee paid by flexi loan which can be put into FD over 30years. I don't know how much interest can be earned by putting 10 into FD every month for 30 years compounded for 30 years. Maybe 500 to 1k.

Flexi loan has the following:
- 3.95% of 10k in the form of interest saved for 30 years fixed
-Assuming both term and flexi loan is repaid over 30 years, monthly instalment for Flexi loan is lower because effective borrowing is only 90k.
- Flexi loan had to pay RM3,600 in the form of maintenance fee.

As far as i know, a term loan repayment is fixed for every month provided the BLR does not change and therefore the repayment period is fixed.
If your monthly instalment is $485, then that is not a 30 years loan anymore and all the previous comparisons are meaningless.

It is you who got it all wrong . Bro SonyBravia already said in his last post (#117) that the loan can already be fully settled on instalment no.298. If he continues to pay $475 for another 21 months until month no.319, he would have RM10k debit balance in the flexi loan account which he can withdraw. The 10k is hard cold cash that he can take home. Your term loan account will only be settled fully on month no. 331 and that's it. Do you have the extra 10K to take out from the loan account at that time? The answer is NO!
Should i repeat the work OH MY GAWD for you ?

This post has been edited by sochaiapk: Jun 27 2009, 05:43 PM

Yah i admitted i made a mistake. As for your post 123, his calculation had actually included the instalment until month 331 so there is no need to folk out another $5,820

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Added on June 27, 2009, 6:27 pmBro Jasonhanjk, sorry for being offensive in my previous post. I guessed it was due to your avatar which look very intimidating to me. Hehe.
Anyway i think the difference between the total interest saved between the 2 type of loanloan is minimum considering the period we are talking is almost 30 years.
Also has to bear in mind that between instalment 299 to 331 (32 months) the Flexi Loan applicant can actually use his monthly instalment to place in FD as well to earn 2.5% interest which i think could be add up to a few hundred bucks.
The Flexi Loan applicant can also use his loan account as his salary account which can save him interest as well when the money is not used. Flexi loan is calculated on daily rest interest and every single cent you put inside will save you interest even for one day. We cannot place 1cent into FD for 1 day to earn interest do we? So i guess that is the major benefit of choosing a flexi loan.

This post has been edited by sochaiapk: Jun 27 2009, 06:27 PM

Flexi loan account will become zero after instalment no.298 if the intialial 10k is still inside. What i mean is from that point onwards (i.e. 299 till 331) no need to put 475 into loan account anymore every month and the 475 can put into FD to earn 2.5%.