Trusty 1st Gear June 12, 2009 Share June 12, 2009 im thinking of refinancing my current loan. car is coming to 3rd yr and paying 3.5% interest. the refinancing offers 2.2% which is much lower. should i take up? what are the things i should take note? ↡ Advertisement Link to post Share on other sites More sharing options...
Kungming 1st Gear June 12, 2009 Share June 12, 2009 do take note the bank will charge a fee for early settlement too, so step 1 is to contact yr bank to find out the cost of settlement to date, then u can work out if its worth it. Hope tat helps Link to post Share on other sites More sharing options...
Teezo 1st Gear June 12, 2009 Share June 12, 2009 Which bank is offering refinancing? Can I have the bank's contact details? I'm also interested to refinance my loan as well :) Link to post Share on other sites More sharing options...
Ixat 1st Gear June 12, 2009 Share June 12, 2009 I assume you are refinancing with another bank. So you will need to find out your full settlement amount including penalty, etc if any. Work out based on 2.2% and see how much savings you will gain. Late last year when my car was 3 years old I also did a similar calculation. To refinance from 3.25% to 2.18%. End of the day I would save arnd $2-3K (can't really remember) IF i drove for the remaining 7 years. Decided it wasn't worth it and chucked the idea. My situation won't apply to you if you are taking a smaller loan with shorter tenure than current for the refinancing. Cheers. Link to post Share on other sites More sharing options...
Trusty 1st Gear June 12, 2009 Author Share June 12, 2009 I assume you are refinancing with another bank. So you will need to find out your full settlement amount including penalty, etc if any. Work out based on 2.2% and see how much savings you will gain. Late last year when my car was 3 years old I also did a similar calculation. To refinance from 3.25% to 2.18%. End of the day I would save arnd $2-3K (can't really remember) IF i drove for the remaining 7 years. Decided it wasn't worth it and chucked the idea. My situation won't apply to you if you are taking a smaller loan with shorter tenure than current for the refinancing. Cheers. can i assume it works this way? (full settlement amount x the 2.2% for 7 years) - (current mthly x 7 years) = the savings if really this way, not much can be saved. only thing is enjoy lower mthly payment Link to post Share on other sites More sharing options...
Trusty 1st Gear June 12, 2009 Author Share June 12, 2009 yeah factored that in Link to post Share on other sites More sharing options...
Sg2303 2nd Gear June 12, 2009 Share June 12, 2009 (edited) Hi, I was contemplating refinancing my loan previously. Refinancing will save you money if the interest rate is of great difference or the loan period is shortened. However, IF you do intend to change car soon, it may not be feasible. Maybe you can state your loan amount, loan period and number of instalments paid and also the intended loan amount, loan period. I can do a calculation for you. Edited June 12, 2009 by Sg2303 Link to post Share on other sites More sharing options...
Trusty 1st Gear June 12, 2009 Author Share June 12, 2009 (edited) its a pathetic figure i can save if i use the above unless i shorten the period and pay higher mthly which is going to be much higher than current 1.. Edited June 12, 2009 by Trusty Link to post Share on other sites More sharing options...
Weewee1976 3rd Gear June 12, 2009 Share June 12, 2009 Now still got bank doing refinance? I'm interested leh. Can intro the lobang? Link to post Share on other sites More sharing options...
Sg2303 2nd Gear June 12, 2009 Share June 12, 2009 Original Loan Amount $50,000.00 Interest Rate 3.50% Total Interest $17,500.00 Total Payable $67,500.00 Years of loan taken 10 No. of months of instalment 120 Amount per instalment $562.50 No. of months paid 36 No. of months balance 84 Amount paid $20,250.00 Unearned Interest $8,605.37 Rebate of unearned interest (less 20%) $6,884.30 Interest Penalty $1,721.07 Total amount payable for full redemption $40,365.70 For refinancing Loan Amount $40,365.70 New Interest Rate 2.20% Total Interest $6,216.32 Total Payable $46,582.02 Years of loan taken 7 No. of months of instalment 84 Amount per instalment $554.55 Amount saved $667.98 I did a sample calculation. Assuming you took 50k loan and has repaid 3 years instalment. Doing a refinance with 7 years loan will save you $667.98. Link to post Share on other sites More sharing options...
CarsNStars Neutral Newbie June 12, 2009 Share June 12, 2009 Personally I think you should also check if the new loan package has other hidden charges and any lock-in period and what are the penalties if you do decide to sell your car in the very near term. It will not be worthwhile if you get yourself tied to a new loan after having serviced 3 yrs of loan. On top of that, like what the rest says, work out the new monthly instalment based on the same remaining months (as you would have if you continue with your original loan) and see if the difference is justifiable based on your own plan as to when you want to change your car. Just my humble opinion for your reference. Cheers! Link to post Share on other sites More sharing options...
Imamiah Clutched June 12, 2009 Share June 12, 2009 How about the 'admin fee' for early settlement? some charge damn high woh. Link to post Share on other sites More sharing options...
Sony 1st Gear June 12, 2009 Share June 12, 2009 Original Loan Amount $50,000.00 Interest Rate 3.50% Total Interest $17,500.00 Total Payable $67,500.00 Years of loan taken 10 No. of months of instalment 120 Amount per instalment $562.50 No. of months paid 36 No. of months balance 84 Amount paid $20,250.00 Unearned Interest $8,605.37 Rebate of unearned interest (less 20%) $6,884.30 Interest Penalty $1,721.07 Total amount payable for full redemption $40,365.70 For refinancing Loan Amount $40,365.70 New Interest Rate 2.20% Total Interest $6,216.32 Total Payable $46,582.02 Years of loan taken 7 No. of months of instalment 84 Amount per instalment $554.55 Amount saved $667.98 I did a sample calculation. Assuming you took 50k loan and has repaid 3 years instalment. Doing a refinance with 7 years loan will save you $667.98. seems like you know the system well. so can I ask further. From the above, if the refinancing also come with the shortening of loan period from 7 years to maybe 3 years, will the saving be more? can help to work out? of coz I presume the lock in period penalty need to be taken into consideration, otherwise another early redemption will eat into the saving, correct? Cheers Link to post Share on other sites More sharing options...
Sg2303 2nd Gear June 12, 2009 Share June 12, 2009 Based on Rule of 78 Original Loan Amount $50,000.00 Interest Rate 3.50% Total Interest $17,500.00 Total Payable $67,500.00 Years of loan taken 10 No. of months of instalment 120 Amount per instalment $562.50 No. of months paid 36 No. of months balance 84 Amount paid $20,250.00 Unearned Interest $8,605.37 Rebate of unearned interest (less 20%) $6,884.30 Interest Penalty $1,721.07 Total amount payable for full redemption $40,365.70 For refinancing Loan Amount $40,365.70 New Interest Rate 2.20% Total Interest $2,664.14 Total Payable $43,029.84 Years of loan taken 3 No. of months of instalment 36 Amount per instalment $1,195.27 Amount saved $4,220.16 Based on 50k, if paid 3 years instalment and refinance to 3 years loan, the savings would be more significant. Link to post Share on other sites More sharing options...
Sg2303 2nd Gear June 12, 2009 Share June 12, 2009 (edited) I have asked around. Most finance institutes do not have early redemption penalty, but rule of 78 definitely applies. Hence, if you intend to change car soon, it may not be feasible to do a refinance. Edited June 12, 2009 by Sg2303 Link to post Share on other sites More sharing options...
Trusty 1st Gear June 12, 2009 Author Share June 12, 2009 it hard to change car anytime soon if its a 10yrs high loan Link to post Share on other sites More sharing options...
Trusty 1st Gear June 12, 2009 Author Share June 12, 2009 it might be an alternative to shorten the period to sell off the car through paying a higher mthly via the refinancing. Link to post Share on other sites More sharing options...
Sg2303 2nd Gear June 12, 2009 Share June 12, 2009 If you have no intention to change car soon, it would be worthwhile to refinance, though savings may be little. ranges from few hundreds (small initial loan amount) to thousands (large initial loan amount). HOWEVER, if you have taken cash rebate for the purchase, then you have to work out how much you have to pay back the bank and calculate again. ↡ Advertisement Link to post Share on other sites More sharing options...
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