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PHV Bank Loan Help for my Dad!


dnumde
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Supersonic

The agent is not lying.  Because Z10 is a money earning tool, interest rate will be higher.

 

1) If z10 and private vehicle gets the same interest, then what is the benefit of being a private vehicle? u see all phv vehicles instead?

2) The time spent on the road is a lot more, naturally the risk is higher and increases a lot, and bank won't offer the same type of interest rate.

3) even your car insurance for z10 is a lot more expensive.

 

for #2, how does more time spent on the road translate to more risk? Shouldn't it be the insurance company that is concerned about that?

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Turbocharged

for #2, how does more time spent on the road translate to more risk? Shouldn't it be the insurance company that is concerned about that?

 

insurance may pay lower than the outstanding loan amount in cases of write off.. which may translate to bad debt for the finance house.

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for #2, how does more time spent on the road translate to more risk? Shouldn't it be the insurance company that is concerned about that?

Just guessing but default on privately owned car for family use are probably lower than those use for commercial purpose historically, so the risk is deemed higher and more capital is required for the bank. So must charge more lah.
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The agent is not lying.  Because Z10 is a money earning tool, interest rate will be higher.

 

1) If z10 and private vehicle gets the same interest, then what is the benefit of being a private vehicle? u see all phv vehicles instead?

2) The time spent on the road is a lot more, naturally the risk is higher and increases a lot, and bank won't offer the same type of interest rate.

3) even your car insurance for z10 is a lot more expensive.

 

1. by ur logic home loan also must see is owner occupied or for rental? all those rental must be subjected to commercial rates ? 

 

2. What has risk (vehicle) gotta do with loan repayment ? 

 

3. That is of cos lah ................ its perfectly fine. But again, what has it gotta to do with loan ?? 

Just guessing but default on privately owned car for family use are probably lower than those use for commercial purpose historically, so the risk is deemed higher and more capital is required for the bank. So must charge more lah.

 

you mean the risk of default is higher ? 

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insurance may pay lower than the outstanding loan amount in cases of write off.. which may translate to bad debt for the finance house.

 

why should that be the case?

 

Wouldn't private hire insurance premium already take into account this risk

 

It has nothing to do with the bank

Just guessing but default on privately owned car for family use are probably lower than those use for commercial purpose historically, so the risk is deemed higher and more capital is required for the bank. So must charge more lah.

 

i would think it is likely the other way around. commercial purpose would be a revenue generator compared to a privately owned car which is just a liability

The agent is not lying.  Because Z10 is a money earning tool, interest rate will be higher.

 

1) If z10 and private vehicle gets the same interest, then what is the benefit of being a private vehicle? u see all phv vehicles instead?

2) The time spent on the road is a lot more, naturally the risk is higher and increases a lot, and bank won't offer the same type of interest rate.

3) even your car insurance for z10 is a lot more expensive.

 

1) hahahahahaha....

2) nothing to do with bank

3) yes because more time spent on road = higher possibility of accident. Note is possibility not risk

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why should that be the case?

 

Wouldn't private hire insurance premium already take into account this risk

 

It has nothing to do with the bank

 

 

i would think it is likely the other way around. commercial purpose would be a revenue generator compared to a privately owned car which is just a liability

 

 

1) hahahahahaha....

2) nothing to do with bank

3) yes because more time spent on road = higher possibility of accident. Note is possibility not risk

Like shophouse vs residential own stay property loan? Which has a higher default rate? One is revenue generating while the other is a consumption item.

 

The failure rate of business is probably higher than someone losing his or her job for prolonged period of time. But i could be wrong. Like i say, it is a wild guess.

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1. by ur logic home loan also must see is owner occupied or for rental? all those rental must be subjected to commercial rates ?

 

2. What has risk (vehicle) gotta do with loan repayment ?

 

3. That is of cos lah ................ its perfectly fine. But again, what has it gotta to do with loan ??

 

 

you mean the risk of default is higher ?

Yes default risk.

 

Higher risk is confirmed lah.

 

Higher mileage means lower resale / collateral value,

 

More time on the road means higher chance of accidents. If the car is the tool used to generate $$$ to pay instalment, vs an independent income source (owner, spouse employment, etc) to support enjoyment/ convenience, which one is riskier?

 

Just guessing the logic of it.

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(edited)

1. by ur logic home loan also must see is owner occupied or for rental? all those rental must be subjected to commercial rates ? 

 

2. What has risk (vehicle) gotta do with loan repayment ? 

 

3. That is of cos lah ................ its perfectly fine. But again, what has it gotta to do with loan ?? 

 

you mean the risk of default is higher ? 

 

1) home loan is different, it has not much of a huge risk like car loan, the property is there for bank to reoccupy if defaulted on payment, bank can repossess it easily

2)  many things can happen in car loan, car driver can die, car can crash, maybe drive into water,  insurance can be voided, no claim allowed, even claim insurance will take a lot of time, and there will be a lot of debate and scenarios possible, bank is at risk to recover the money.

3) no nothing haha, just stating the difference between private and z10.

Edited by kschan
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The agent is not lying.  Because Z10 is a money earning tool, interest rate will be higher.

 

1) If z10 and private vehicle gets the same interest, then what is the benefit of being a private vehicle? u see all phv vehicles instead?

2) The time spent on the road is a lot more, naturally the risk is higher and increases a lot, and bank won't offer the same type of interest rate.

3) even your car insurance for z10 is a lot more expensive.

Went through this recently, so what my SE shared is pretty similar to this. 

 

Only that he took the time to explain this, 

 

2) He said it's mainly due to the "risk-assessment" of the bank. If have to tow the car back in 3-5 years in the case of non-payments, at least if it's a personal vehicle won't be too hard for the bank to put up for resale, but if it's a PHV used vehicle with 400k clocked on the mileage then jialat for them lo. 

 

Not too sure if this is the real reason, but what he said did make sense to me then. 

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On hindsight after reading through the threads, TS shld commend the agent for being honest and upfront about it. Even to the point that she would not close the sale. An unscrupulous one would just be coy and close the sale with the lower interest loan and leave the car buyer to his own device. Any dispute just say buyer wanted the lower interest loan.

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On 6/18/2018 at 1:44 AM, dnumde said:

Hi all.

Thanks alot for all the advice.

I have been reading up on the guidance given and doing some research on my own.

 

So apparently, LTA have confirm that there is NO such regulation.

Called up multiple agent from different dealer and they all gave they same statement as my Agent which disagrees with LTA's statement.

Called up the CSO of UOB, they say that my Dad CAN drive for PH and pay for the 2.48% interest rate under personal loan as long as the vehicle remains under my Dad's name instead of under a registered business.

Request to speak to a Banker and he advise otherwise saying that this is not possible, relaying the same message as my agent.

 

To surmise, everyone say it's fine with the personal loan BUT the bank and agents (who got the information from the bank) disagree.

 

But after reading up on all the comments on the forum, I have to agree that LTA does not have much say in this matter as they are not the one dispersing the loan.

I suppose their "We allow personal loan vehicle to convert to Private Hire" simply implies that "they do not have a say in this matter".

And I suppose the onus is up to the bank which is the one dispersing the loan.

Hence, I went to take the loan contract from my Agent and read up on the terms.

I'm just a layman. But base on what I read, there is strictly NO TERMS saying that the vehicle cannot be converted to private hire.

But like all big organisation's contract, the clauses are always phrased in such a grey area to cover themselves.

Although there is no terms stating explicitly that we cannot use it for private hire, but base on my layman understanding, the clauses can be twisted to such a way that I cannot alter the vehicle in any way without the bank's consent and knowledge. Otherwise, I will will have to repay the loan in full.

 

Afterwhich, I thought to take the personal finance first. Thereafter if I cannot convert it to PH, I will refinance it to private hire loan.

But there are 3 possible scenerio.

One being the bank will exercise it's rights and terminate the loan and request I repay the loan with interest in full.

Two being UOB may grant me a loan with interest rate much higher than the one being offered currently offered by the AD.

Three being a third party creditor will help me refinance the loan. But that will come at a heavy price of 0.5% charges on the current outstanding loan, a revised interest rate to 4% on the new loan amount and a $350 admin fee.

The above scenerios were suggested by UOB Banker, different AD sales rep and the third party financial institution which I contacted.

 

Therefore, to save all the hassle and risk involve, I have no choice but to take up the commercial loan, and increase the downpayment to offset the higher interest charges involve.

 

Once again, thanks alot of all the guidance.

I hope this discussion can help fellow Singaporean to have a better sense on what is happening on the ground.

 

My personal thoughts is that the bank has every right to do so.

But having such rights doesnt imply it is is morally right.

But again business is business.

At the end of the day, it is fellow retirees like my Dad who end up being a sucker.

 

Whether or not my Dad should drive PH or buy the car is a discussion for another day. 🙂

I've a hire purchase under UOB signed up in late 2018, spoke to someone from the car finance department recently, they don't allowed conversion of my Personal car to Private Hire. Even when I said if can pay a higher interest rate under private hire loan they also said no. The only way is to clear the loan or sell off. 

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On 9 June, 2018 at 7:45 PM, Jusnel said:

To TS,

 

I still think rent from Grab to drive is still better than buying a car for the purpose.

  fully agreed, no body actually buy brand new car as Grab usage, Just Gran / share not too sure, if anything happens during the course of driving, juz report for repairs work and touch-up. Less hassle !

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I have a question on this as well.

If I'm don't have a PHV license, but would like to buy a car for my Dad whom has PHV license, can I still be the owner of the vehicle (later convert to PHV) and be the one financing the bank loan?

If I understand correctly, to convert private car into PHV, the owner needs to have PHV license?

This case, means I can't act as the owner of the car, while if my dad gets the car, he might not be able to get bank loan approved due to he doesn't have income.

Anyone knows?

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