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25 replies to this topic | 14 praises

#1

Posted 11 September 2010 - 03:19 PM

Shingkyo
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Hi,

Is it that nowadays the banks will charge 20% on unearned interest for early car loan repayment irregardless of your car <55K (Governed under Hire Purchase Law) or >55k (Governed under Common Law)?

#2

Posted 11 September 2010 - 03:30 PM

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Why don't you call your bank and check? They can advise you immediately on the amount...
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#3

Posted 11 September 2010 - 03:33 PM

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Yes, they said they need to impose 20% + some admin charge... But my car is under 55k which is to be governed by HP Law where the bank should not be charging this 20%...

Advise?

#4

Posted 14 September 2010 - 04:15 PM

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that is consider 78 rule, under early resettlement.

#5

Posted 14 September 2010 - 04:24 PM

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Yes, they said they need to impose 20% + some admin charge... But my car is under 55k which is to be governed by HP Law where the bank should not be charging this 20%...

Advise?


not necessary.... because due to change in law for rule 78...... the 20% may still be charged under HP law.... but it must be stated in your contract... look thru your contract details and see if it is stated....

i used to work in a finance company.... hopefully my info is not our dated
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#6

Posted 14 September 2010 - 04:24 PM

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that is consider 78 rule, under early resettlement.


it is not.. it is a different matter altogether... dun mislead leh
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#7

Posted 14 September 2010 - 04:38 PM

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quite standard, due to the curiousity, after reading this thread.

i called up my bank and find that the penalty is also around 20% of the 'rebate'.
but what is the 'rebate', need the loan department to call me up and explain.

Edited by Kurty, 14 September 2010 - 04:39 PM.

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#8

Posted 14 September 2010 - 04:46 PM

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quite standard, due to the curiousity, after reading this thread.

i called up my bank and find that the penalty is also around 20% of the 'rebate'.
but what is the 'rebate', need the loan department to call me up and explain.


rebate is based on interest not earned on the loan...

an example in layman terms...

7yr loan will have 7yr interest but if you full settle on 3rd yr... you have 4 yrs of interest rebate as you did not use the loan for the remaining 4 yrs... but because of rule 78.. the calculation is not as simple as interest divide by 7yrs X 4years

because rule 78 in layman terms means you pay more interest upfront....

for eg:
1st yr $1,000 installment = 900 to interest + 100 to principle
2nd yr = 800 to interest + 200 to principle
etc

so if you want to full settle after 3yrs.... your rebate may not be alot... as you have paid most of the interest during the 1st 3yrs installments.... this is why rule 78 is a killer

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#9

Posted 14 September 2010 - 04:58 PM

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so bro, based on your experience, what do you reckon?

early settlement or just leave it alone..
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#10

Posted 14 September 2010 - 05:05 PM

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so bro, based on your experience, what do you reckon?

early settlement or just leave it alone..


to me.. as long as you have taken a loan.. it is best to carry on till end of tenure....

i know you intending to change car.... try not to....unless absolutely necessary
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#11

Posted 14 September 2010 - 05:14 PM

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Even those under Rule 78, they still can have other admin fees eg. a % of balance loan or something like dat. The details will be in your loan contract.

#12

Posted 14 September 2010 - 05:26 PM

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so bro, based on your experience, what do you reckon?

early settlement or just leave it alone..

Leave it alone and make them do transactionary work.
My loan from one American Bank put ALL the Interest in 1st Year OK... KNN...
After 1st year I still owe them my full loan amount. I was so C2Pid not to read the fine lines...
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#13

Posted 14 September 2010 - 05:27 PM

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not necessary.... because due to change in law for rule 78...... the 20% may still be charged under HP law.... but it must be stated in your contract... look thru your contract details and see if it is stated....

i used to work in a finance company.... hopefully my info is not our dated


yes, this is right.
the new rule came into being about 5 yrs ago.
all hire purchase contracts should contain the revised clause already.
otherwise, it must simply be the company sleeping, which is quite unlikely given that this is a P&L issue to them.

#14

Posted 14 September 2010 - 05:41 PM

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it is not.. it is a different matter altogether... dun mislead leh



opps.. my bad

#15

Posted 14 September 2010 - 08:07 PM

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to me.. as long as you have taken a loan.. it is best to carry on till end of tenure....

i know you intending to change car.... try not to....unless absolutely necessary


wah, like tat also know... power laugh.gif

apart from intending to change car, my interest is high. 3%, thus was thinking of clearing the debt, then my cost of ownership will be further decrease happy.gif
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#16

Posted 14 September 2010 - 08:09 PM

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i just took a iHP loan from posb, the int rate is low and no penalty (insignificant) upon early redemption.
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#17

Posted 14 September 2010 - 08:14 PM

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i just took a iHP loan from posb, the int rate is low and no penalty (insignificant) upon early redemption.


Same here. 1.88%, no penalty for early redemption.

#18

Posted 15 September 2010 - 12:50 AM

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to me.. as long as you have taken a loan.. it is best to carry on till end of tenure....

i know you intending to change car.... try not to....unless absolutely necessary


wah, like tat also know... power laugh.gif

saw your accident thread before

apart from intending to change car, my interest is high. 3%, thus was thinking of clearing the debt, then my cost of ownership will be further decrease happy.gif

how long loan you take and left how many years?

anyway anything more than 3yrs... you carry on lar.... overall you will lose more when refinancing..

also fyi if you duno... interest rate quoted is nominal rate... the effective rate (actualy rate you are paying) is about double....

Edited by Galantspeedz, 15 September 2010 - 12:50 AM.

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#19

Posted 15 September 2010 - 12:38 PM

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I am not sure about my Jazz loan with DBS, whether got the rule78 or what.

Actually once I take the loan I already expected to pay the full interest(considering it as total car prices), any lowered payment for early redeemption, should be considered as savings.

The SE told me got lock in 18 months before I can do any redemption.
Seems like some cash rebate type of thing that PI used to practice.
Else I wonders how the hell they can sell the Jazz at a so-called 'loss'.


#20

Posted 15 September 2010 - 10:31 PM

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Hmm.. interesting question.
For cars below $55k (excluding COE), it is governed by the HP Act. Given that the HP Act is more stringent than HP Common Law in terms of protecting the consumer's rights, does the bank or FI actually have the right to impose the additional 20% penalty on top of the rule of 78 penalty? The consumer is already penalised once by the rule of 78 during early settlement. Does the Act prevent him from being penalised a second time?



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