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24 replies to this topic | 0 praises

#1

Posted 23 December 2010 - 11:11 AM

Chrispie
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Hi everyone,

I often hear of ppl doing refinancing for cars.. what does that really means and what is the advantage?

Say i took up a 7 yr loan at 2.5%, so when i refinance, do i transfer this loan to another bank with lower interests? But I understand early settle fetches a penalty. So after taking in the penalty, will there be any real saving?

thanks for enlightening me.

#2

Posted 23 December 2010 - 11:12 AM

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DBS...

RESPECT is only for the DEAD!

#3

Posted 23 December 2010 - 11:14 AM

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Hi everyone,

I often hear of ppl doing refinancing for cars.. what does that really means and what is the advantage?

Say i took up a 7 yr loan at 2.5%, so when i refinance, do i transfer this loan to another bank with lower interests? But I understand early settle fetches a penalty. So after taking in the penalty, will there be any real saving?

thanks for enlightening me.


apparently not... =(


“Everybody is a genius. But, if you judge a fish by its ability to climb a tree, it’ll spend it’s whole life believing that it is stupid.” – Albert Einstein

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#4

Posted 23 December 2010 - 11:14 AM

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now still got bank do refinancing? i thought dont have already
天王?可不是人人都能當!除了我和你!

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#5

Posted 23 December 2010 - 11:15 AM

Chrispie
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i also dont know leh.. this thing came to my mind and i just ask lor.. coz it didnt really make any sense to me..

and.. wah.. u guys reply fast!

#6

Posted 23 December 2010 - 11:16 AM

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sibei eng now, xmas mood mah
天王?可不是人人都能當!除了我和你!

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#7

Posted 23 December 2010 - 11:18 AM

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but i think probably wont save. cos now got penalty for early redemption. last time i took loan and there was no penalty for early redemption. but that was years back.
天王?可不是人人都能當!除了我和你!

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#8

Posted 23 December 2010 - 11:24 AM

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but i think probably wont save. cos now got penalty for early redemption. last time i took loan and there was no penalty for early redemption. but that was years back.


unless your loan very big laugh.gif

cheapo cars small loan nia... bo bak to save
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#9

Posted 23 December 2010 - 11:56 AM

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i enquired before.
yes, they still have it.
i enquired with dbs and uob before.
if u took 10yr 100% loan at 2.5%, their lower rates of 1.8% is lower but is nt effective.
this is becoz other than covering for the loan balance, we still need to factor in penalty charges for early repayment.
for the re-finance to be effective, we must have had taken a higher loan rate like maybe 3.xx% then when u re-finance, you will in fact be paying a lower monthly rate.

#10

Posted 23 December 2010 - 12:00 PM

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i enquired before.
yes, they still have it.
i enquired with dbs and uob before.
if u took 10yr 100% loan at 2.5%, their lower rates of 1.8% is lower but is nt effective.
this is becoz other than covering for the loan balance, we still need to factor in penalty charges for early repayment.
for the re-finance to be effective, we must have had taken a higher loan rate like maybe 3.xx% then when u re-finance, you will in fact be paying a lower monthly rate.



thanks buddy. very helpful. :)

#11

Posted 23 December 2010 - 09:21 PM

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Some terms that bankers use other people cant understand as a student of Finance I want to tell every body about these terms for better understanding.

Front-loaded loans
are the Loans that require payback of mostly interest in the beginning so that the lender gets paid first, if you buy a car 0f 25,000 $ and going to pay in lump sum amount of 30,000 $ lets say in 5 years, your first payments of 5000$ will only cover interest.

Term
The length of the loan in months


Trade-in allowance

The amount of money taken off the purchase price of the new car for the trade-in of your old car

Principal
The term principal refers to the actual amount borrowed and that needs to be repaid with interest.


Prepayment Penalty

A fee that some loans charge if you pay off the loan before the end of the term.

Edited by Dreamer143, 23 December 2010 - 09:22 PM.


#12

Posted 23 December 2010 - 10:46 PM

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Hi everyone,

I often hear of ppl doing refinancing for cars.. what does that really means and what is the advantage?

Say i took up a 7 yr loan at 2.5%, so when i refinance, do i transfer this loan to another bank with lower interests? But I understand early settle fetches a penalty. So after taking in the penalty, will there be any real saving?

thanks for enlightening me.



Honestly, I have never heard of refinancing that saved money.
To have to refinancing means one is screwed.
When one is screwed, one pays more overall.
Refinancing just allows a bit of stretching so that on a monthly basis, the screwed one can still take it.
repeat, when on eis screwed, one pays more overall

""chang tong bu ru duan tong ".



#13

Posted 23 December 2010 - 10:50 PM

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Hi everyone,

I often hear of ppl doing refinancing for cars.. what does that really means and what is the advantage?

Say i took up a 7 yr loan at 2.5%, so when i refinance, do i transfer this loan to another bank with lower interests? But I understand early settle fetches a penalty. So after taking in the penalty, will there be any real saving?

thanks for enlightening me.


well u can calculate?

#14

Posted 23 December 2010 - 10:51 PM

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Not totally true. Home loans also have refinancing.

But for car loans, unless loan amount is huge and you are ready to commit the car for many years, otherwise, it doesn't make sense.
In MCF, 有些人就是唯恐天下不乱。

#15

Posted 24 December 2010 - 12:54 AM

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refinancing usually incur more money, will not save money. unless the refinancing interest rate is extremely low which i doubt so.

giving a simple refinancing concept.

- 50k loan, 2% interest p.a, repayment 5 years (60 months)
- principal is 50k, interest is $5,000 for whole term, monthly $916.67

- after 12 months repayment ($11,000), outstanding is $44,000

you decide to refinance with 1.5% interest
- 44k loan, 1.5% interest p.a, repayment 4 years (48 months)
- principal is 44k, interest is $2,640 for whole term, monthly $971.67
- in addition, you incur a 20% penalty of outstanding interest on previous loan, about (4000 x 0.2 = $800)

With refinancing, you actually paid -> 11k + 44k + 2,640 + 800 = $58,440 ... that is $3,440 more
With original loan, you pay $55,000


People who refinance are usually those who are having trouble to pay their monthly repayment.
By refinancing, they try to prolong their loan period, reducing monthly payment, but at a great cost.

Continue from above original loan, following is the typical scenario of why people refinancing.
That is extending loan period to reduce monthly repayment. In this example, extend by 1 year.

you decide to refinance with 1.5% interest due to high monthly repayment
- 44k loan, 1.5% interest p.a, repayment 5 years (60 months)
- principal is 44k, interest is $3,300 for whole term, monthly $788.33
- in addition, you incur a 20% penalty of outstanding interest on previous loan, about (4000 x 0.2 = $800)

With refinancing, you actually paid -> 11k + 44k + 3,300 + 800 = $59,100
With original loan, you pay $55,000

By refinancing and reducing your monthly repayment, it cost you $4,100 compare to your original loan.


#16

Posted 24 December 2010 - 01:01 AM

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now there are no refinancing being offered by any banks....so 4get about refinancing for cars....and if they do..go and ask the bank or banks directly what refinancinf means to them...dun go to dealers rxpecially beyond motor...they cheat you of your money....go directly to the banks....

#17

Posted 24 December 2010 - 01:30 AM

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i've calculated wrongly in my above example. forgot about the interest refund.


refinancing usually incur more money, will not save money. unless the refinancing interest rate is extremely low which i doubt so.

giving a simple refinancing concept.

- 50k loan, 2% interest p.a, repayment 5 years (60 months)
- principal is 50k, interest is 5k for whole term, monthly $916.67
- after 12 months repayment ($11,000), outstanding is $44,000

you decide to refinance with 1.5% interest
- you incur a 20% penalty of outstanding interest on previous loan, about (4000 x 0.2 = $800), interest refund $3,200
- $40,800 loan, 1.5% interest p.a, repayment 4 years (48 months)
- principal is $40,800, interest is $2,448 for whole term, monthly $901


With refinancing, you actually paid -> 11k + 40,800 + 2,448 + 800 = $55,048 ... that is $48 more
With original loan, you pay $55,000


People who refinance are usually those who are having trouble to pay their monthly repayment.
By refinancing, they try to prolong their loan period, reducing monthly payment, but at a great cost.

Continue from above original loan, following is the typical scenario of why people refinancing. That is extending loan period to reduce monthly repayment. In this example case extend by 1 year.

you decide to refinance with 1.5% interest due to high monthly repayment
- you incur a 20% penalty of outstanding interest on previous loan, about (4000 x 0.2 = $800), interest refund $3,200
- $40,800 loan, 1.5% interest p.a, repayment 5 years (60 months)
- principal is $40,800, interest is $3,060 for whole term, monthly $731

With refinancing, you actually paid -> 11k + 40,800 + 3,060 + 800 = $55,660
With original loan, you pay $55,000

By refinancing and reducing your monthly repayment, it cost you $660 compare to your original loan.


Anyway, the idea is, refinancing incur you more money unless the interest rate is extremely low.





#18

Posted 24 December 2010 - 02:50 AM

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Hi everyone,

I often hear of ppl doing refinancing for cars.. what does that really means and what is the advantage?

Say i took up a 7 yr loan at 2.5%, so when i refinance, do i transfer this loan to another bank with lower interests? But I understand early settle fetches a penalty. So after taking in the penalty, will there be any real saving?

thanks for enlightening me.



few years back quite popular i think.....
People are more violently opposed to fur than to leather because it's safer to harass rich women than motorcycle gangs.

#19

Posted 24 December 2010 - 03:05 AM

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i've calculated wrongly in my above example. forgot about the interest refund.


refinancing usually incur more money, will not save money. unless the refinancing interest rate is extremely low which i doubt so.

giving a simple refinancing concept.

- 50k loan, 2% interest p.a, repayment 5 years (60 months)
- principal is 50k, interest is 5k for whole term, monthly $916.67
- after 12 months repayment ($11,000), outstanding is $44,000

you decide to refinance with 1.5% interest
- you incur a 20% penalty of outstanding interest on previous loan, about (4000 x 0.2 = $800), interest refund $3,200
- $40,800 loan, 1.5% interest p.a, repayment 4 years (48 months)
- principal is $40,800, interest is $2,448 for whole term, monthly $901


With refinancing, you actually paid -> 11k + 40,800 + 2,448 + 800 = $55,048 ... that is $48 more
With original loan, you pay $55,000


People who refinance are usually those who are having trouble to pay their monthly repayment.
By refinancing, they try to prolong their loan period, reducing monthly payment, but at a great cost.

Continue from above original loan, following is the typical scenario of why people refinancing. That is extending loan period to reduce monthly repayment. In this example case extend by 1 year.

you decide to refinance with 1.5% interest due to high monthly repayment
- you incur a 20% penalty of outstanding interest on previous loan, about (4000 x 0.2 = $800), interest refund $3,200
- $40,800 loan, 1.5% interest p.a, repayment 5 years (60 months)
- principal is $40,800, interest is $3,060 for whole term, monthly $731

With refinancing, you actually paid -> 11k + 40,800 + 3,060 + 800 = $55,660
With original loan, you pay $55,000

By refinancing and reducing your monthly repayment, it cost you $660 compare to your original loan.


Anyway, the idea is, refinancing incur you more money unless the interest rate is extremely low.



U forgot abt Rule 78!

#20

Posted 13 September 2016 - 12:18 PM

tormentedspanish

I still have an existing car loan and yet I'm planning to avail another loan. I need a car for our business use. Others tell me that I could save more in a car refinance because it can lower my interest loan rates. How true is it? How can it help me save cash? I'm still thinking if I would push through with my plan to purchase another car and consider a car refinancing. What's your advice?




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