Hi Wild Card my,
I have read about your message from forum. I'm from the [REDACTED]. I'm currently seeking for advice, because the one who sell me ASB loan didnt know much about the ASB loan. Didnt really explain in details and just mention is good to take. So I did took it last year in [REDACTED] for 100k at 5% with Insurance Rm3k and two months interest charges.
They even give me wrong rate....at first put 5.05%, till i argue with her and complain to the top management. and change back to 5%. but dont know why, she resigned in [REDACTED]. They even dont know how to do calculation,and didnt mention about the refinance things. The sales person said recently she has a customer already got back their 50k cert Loan in 5 years. So I'm curious? how come so fast? not sure is she cheat me to invest.
I got a cousin, loan for 10 years. she said she havent finished loan, so wondering what went wrong using islam finance. whats the difference between conventional and islam finance?
As I read through your forum, it mention about refinance and some friend even ask me to wait for 10 years till the compound dividend have enough money then pay full to the principle and get the cert. Some advice me to take another 100k loan after two years, then took the first cert dividend to cover the second cert 100k loan.
would like to know more about ASB. If you have enough time for free lesson. Thank You
The insurance at RM3k is on the higher side given that you may need to surrender it
if you so choose to cancel/settle/refinance the loan.
Generally Islamic financing has no lock-in period
, I do not think there is anything wrong with using Islamic financing.
You can refinance your ASB-finance at any time, there is no hard and fast rule about when to do it. There are plenty of gurus out there that are giving different views, some stay true to a fixed time line of 3 to 5 years, others may say not to refinance at all. However, I trust calculators more than anything else. If in doubt, calculate.
As for myself, I would calculate the losses that I would incur if I stayed with the current financing vs refinancing
it over to a different bank. This could be in the form of tenure, differences of the interest rates between mine and the current best.The current best financing rate for ASB-financing is 4.85% p.a. by the way.
Morning, so, normally you will not encourage customer to take the insurance is it? or there is other alternative ways to choose the insurance. actually when i already sign up then i realise there is insurance coverage, because i ask why is not 100k, why charge me more then the sales person said is the insurance but i already sign everything and already proceeded. meaning to say refinance after 5 years and surrender the insurance is it? or surrender now for better? im not sure how they do the calculation... im not sure how much is the interest charges and insurance charges. because it all combine.
1. It is difficult to determine if you should refinance and thus surrender your policy now vs later. The insurance you took for the ASB is a term-insurance, the earlier you surrender the policy, the more losses you incur in the sense of getting low surrender value and thus shorter term of protection than you originally took - basically you paid a lot for very little protection. This is why financial literacy is important
, you are signing up for a 5-10 year insurance policy, you didn't even know that you were going to pay for it through the installments until everything was already too late to reverse.
2. In my opinion, you should NOT surrender for the sake of getting rid of the insurance itself
- you have already paid for it. The insurance that you took is absolute-assigned to the bank (meaning the bank owns the policy now, not you), in this situation, if you refinance your loan, the insurance would have to be surrendered as well. You may consider surrendering it if you want to refinance in the future due to much better interest rates.
3. As it is, your rate is 5%, while the best rate is 4.85%, so it may not make too much sense to refinance now. However in the future your rate may climb to 5.45%, and the best rate may be 4.80%. So that margin between the rates may be good enough
reasons (for you) to refinance.
4. Since you combined the funding for both items into the same loan
, both would incur the same interest and to be paid through a single account. In general, you would end up having paying more each month, and would have higher loan balance in the end of the day. Here is an example:
a) RM100,000 loan, RM 536/m, after 5 years, balance is RM91,828
b) RM103,000 loan, RM 553/m, after 5 years, balance is RM94,583
5. Yes, I would generally have borrowers not to go with the bank's insurance. If you feel like you really need an insurance for this ASB financing, getting it externally may be a better bet
as you actually own the policy and can assign the coverage to whichever liabilities you like - and would not have it be force-surrendered whenever you cancel/settle any financing with the banks.
Thanks so much for your explanation, really appreciate it. So will the bank charge me the insurance interest? or should I settle by cash in order not to be charge?
As you have mention that in future rate it might go up from 5% to 5.45% ? I thought it will remain 5% forever according to the package? and if it goes up.....does it change monthly or yearly?
1. Oh definitely. You took a RM3,000 loan for the insurance which you combined with the RM100,000 loan to buy the units, but you would have to repay this RM3,000 over the next 30 years (according to your loan tenure), even though the RM3,000 insurance, may or may not cover you for 30 years - do yourself a favor and ask the banker for the insurance quotation or policy
2. It is a little too late to settle this RM3000 by cash, it has to be done upfront
, you have already paid for it through the loan.
3. Of course the rate will go up over time, it is not a question of "will it go up?" but more a "when will it go up"
? If it goes up a little, the banks may not change the installment but would extend the tenure, but if it goes up too high the banks will definitely increase your installment. Since you already have a loan under your name, do follow news about the changes of the Overnight-policy-rate (OPR) by BNM and your bank's Base-Rate (BR) over the years. They will change in the next 30 years and so will your interest rate for this loan
4. Remember, your rate is quoted as the bank's BR + [spread]
. The [spread] is fixed, but the BR will change. For example, if you look at your letter offer (LO) you may see your rate quoted as BR + 0.75%. This bank's current BR is 4.25%, hence your effective rate is 5%. When this bank's BR increases (or decreases), so will your effective rate.
5. Eh btw, forgot to mention, as I help you with your questions, I would post them along with your messages, with sensitive information redacted, so others can benefit from my 5-minute time-spent writing each replyThis post has been edited by wild_card_my: Jan 11 2019, 08:59 AM