I had made an comparision between car loan(fix rate) and house loan(reduce rate)

eg.
Borrow 30k, 5year repayment period.

car loan 4%
4% x 5year = 20%
30k x 1.20 = RM36k /84month = RM600/month

house loan
loan interest 7.4% X 4year
repayment amound = RM600/month(using calculator)



so i made a conclusion that fix interest rate 4%@5year = reducing rate 7.4%
If you're currenly paying installment your house at 6.75(BLR rate) or less(BLR -1%). And intent to buy a new car, its more feasible to REFINANCE your house and loan ur car as low as possible.


Here come my question, because the above example i'm using trial n error to made the repayment period & installment amount same and get the interest rate. Anyone know what are the formula to convert FIX Rate with year to Reducing rate?


HELP!!!

This post has been edited by ychwang: Dec 26 2007, 08:37 PM

Car loan normally using rule of 78 to calculate profit.

Car loan
Loan 30k,
Term 5year repayment period. = 48 month
Rate 4%

30000 x 4% x 5 = 6000(total profit)

monthly = (30000+6000)/48 = RM750
Interest for car loan is recognize monthly.

For housing loan normally it's call reducing balance. Same goes to personal loan. Which means Interest is calculate based on current balance on our account. Interest is usually calculate daily based on current account balance(loan's balance)

the calculation is a bit complicated to show here.

http://www.fiscal-wise.com.my/FiscalWiseWe...fEstimator.aspx

may i ask u r doing ur car loan calculation for 5yr or 7yrs ?



the last i remember, 5yrs= 60months.

i know what diff fix and reduce interest rate, but i just want to do a conversion

i could find a fix and reduce(home loan) interest calculator
but i cant find fix interest to reduce interest calculator. I want to compare 4% fix rate @ 3,5,9year is equavelent to how many percent reduce rate(AKA effective rate APR)

This post has been edited by ychwang: Dec 26 2007, 08:57 PM

hmppp.... off topic...

based on the website you give...my retirment EPF would be >1m (conservative value)....

can get a ferrari....

that is 30year later? i dun think 30years later u could get a ferrari @RM1m, a a benz C class maybe.
ok, back to the topic, anyone can help me?

This post has been edited by ychwang: Dec 26 2007, 09:10 PM

how come its 4% for car loan? isit for 2nd car? is a bit steep leh

housing loan at 7.4% is also very steep. the housing loan today is charging BLR - 1.3 to 1.8. when did you get the loan? its time to call your banker to ask for lower rate.

it is just an example, pls back to the topic

This post has been edited by ychwang: Dec 26 2007, 10:24 PM

sorry, i can;t help u coz never tot of doing this comparison, simply bcoz my car price vs house price will never fall into this comparison.

as u said, it's a website, it doesn't limit to EPF calculation only.

anyobody study finance can help?

I don't think it's finance to be exact.
It's more towards mathematics.....actuarial science in exact.
Personally I don't think it's appropriate to co-relate both method as you need to keep something constant and over time to look at the impact. And by doing so, reducing rates would charge you lesser interest than fix rate.