No, it is quite standard according to banking practice .

They earn lot of interest during the first year ( could have considered the penalty odeli ).

My last calculation was about 5 years back, a bit old to recall.

This post has been edited by SKY 1809: Jun 19 2008, 11:42 AM

just to give you guys an idea

HIRE PURCHASE (HP) LOAN is not exactly the same as SALES PURCHASE (SP) LOAN

@SKY 1809,
Well.. no point to deliberate this here. Might as well get TS to call up the bank to get the actual figure.

This is what i get when i made early settlement of my car loan previously, the bank used the above formula to calculate the rebate on my full settlement amount.
Last time i early settle my car loan for 2 year, they discount back the 2 year interest on my full settlement amount.

@keonglck79,
Did the bank charge U a penalty fee or some form of administrative fee?

No, they did not charge me any fee, mine is CIMB bank, other bank have no idea ?

@keonglck79,
Now that sure is odd but ah well.. *shrugs*

I am sure you will have to pay certain penalty fee. I did that before.

i just setted my car loan

loan amount was 68k.
+ interest was rm11k@ 7 yrs

so taotal amount is rm79K

after almost 8 months paying, i kena toto first prize.
paid of my 8 month old car cash.
bank gave me rm8K rebate

From my understanding, if you made full settlement on first or second year, the bank maybe will charge u penalty (still depend on your loan T&Cs), for my case did not have any penalty charge coz my loan is already >3 years.

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Added on June 19, 2008, 4:32 pmWah ! u so lucky man !

This post has been edited by keonglck79: Jun 19 2008, 04:32 PM

no such thing as penalty for car loan

try to use NPV to calculate the repayment for paying lump sum now and paying continuously, compare it... u will find that it is not worth paying now (But the bank like u to do so, they can hv greater NPV)... This just my opinion

The interest charged is based sum of digits method ( if still applicable today )

1st cal the total int = total inst - loan amount

9 yrs loan , sum of digit ( 108+107+......................+1) =5886 total digits ( using spreadsheet to cal )
18 months , sum of digit ( 108+ 107+...................+91) = 1791 digits

108 ( total months for 9 years in descending )

Int earned by your bank for 18 months would be

(a ) total int x1791/5886

therefore discount given should be total int x 4095*/5886 ( interest yet to earned by bank ).

* 5886-1791=4095

though, just paying 18 months, int earned by bank 30%,

another 70% on bal of 90 months. Bcos weightage used is descending ( sort like penalty )

Correct me if i am wrong.

This post has been edited by SKY 1809: Jun 19 2008, 07:41 PM

samquah,

"Know how to calculate".

You PAID for the penalty and you do not even know it. If there is NO penalty, you should only pay around 1K for interest. But, you get 8K back. That means you pay 11K - 8K = 3K interest. The penalty was 3K - 1k = 2K.

Dreamer

@samquah,
U did pay a certain penalty I'm sure. Anyhow, at the v least U got RM8k discount.. U could look at it that way I suppose

i've settled my car full loan amount of 85k in year 2014 now receive call from inland revenue teluk intan about my payment details. how i purchase and how much i put deposit the car...where i got money to settle tht full of amout..my payslip..moreover


please advice me gor such a issues?

I thought car loan early settlement=still the same of total amount? Why settle ler?

Please correct me if I'm wrong.

well you have to inform them how you have the money to settle it then, no other way. Just need to convince them your money is legal and you did not cheat them by declaring less income and pay lesser tax.

I have done some readings previously as i was tempted to settle my car loan early as well.
You will get rebate when you settle your car early, but the during the first few years of your car loan, the majority of your installment goes to your interest and small portion goes to your principle. After a few years unto your loan, the lender would have recoup most of the interests, therefore to consumer, there is not much difference when we settle our car with a couple of years of loan left.

My car loan is 7 years, now left around 5. Worth to settle earlier?

You can try use this site to calculate. Not sure if it is 100% accurate. Best way is to call up your bank and ask them to provide the settlement amount of your car loan.