Why you should NEVER do $0 driveaway or 10 years loan

[Mazdaowner]

46 minutes ago, Enye said:

wah mod....what happened to keeping mcf classy and no uncouth postings? 😅

anyway my advice to this sales lady to change to selling mattresses instead of cars.  she will huat until buay lin choo.

🤣

This one is INTERNAL Mod, *ahem* 

[Cavinlau]

Hi all, not really related but still post here. Recently i bought a yaris cross from PI with 40% downpayment and 60% loan (7 years). However, PI just recently came back and said OMV is less than 20k, i am allowed to downpay 30%. But i don want to change to 30% because im comfortable with 60% loan payment. 70% means im paying more.

Can the PI do that and force me to downpay less?

[Rickster]

34 minutes ago, Philipkee said:

A lot of people dont realise.  A car can be an asset.  It's just not a financial one

It's an asset that can improve your quality of life.  That is why people want to get a car even if they might have issues affording a car.

True also. I used to be in a sales job when I was in my mid 20s, having a car is both a requirement and an asset to me as I see my quality of life and income improving way beyond what I spent on the car.

I bought a Mazda 2 brand new back then, drove it till scrap. 

[Rickster]

3 hours ago, Kopites said:

Imo it doesn't matter getting a new or resales (do home work).

Depend on your capability pay up as it is merely your transportation from A to B. Why take loan!

Transportstion also need to assume credit liability?

Agree. 

At the end of the day, it's about not over leveraging. Nothing wrong with taking loan, I feel. Just don't over leverage till u will go bankrupt when u lose your job.

I'm not so rich like many mcfers here that always go full cash when buying their luxury cars. Not many people may agree with me, but my personal guidelines when taking a loan for a car is:

1) The loan quantum I take must be something that I can pay it up at one shot without the need to sell house/assets.

2) The installment must not impact my quality of life as well as savings and investment goals.

3) I have plans for the loan quantum that I take such as investments, investing in business or just as some additional financial bullet to stanby for opportunities.

I hope what I share can help young guys who aspire to own their first car. It's always good to have aspirations as it is one of the driving forces for us to be constantly improving and working hard.👍

[ferrytales]

1 hour ago, Dinofied said:

Hi, What about those ADs Offering 'pay interest only for 1,2,3 years' ? Any opinions or thoughts ?  I saw alot of ADs offering those schemes. 

You can go check it and come back to share with us? Just make sure to do the sums to figure out whats the final amount. Some even have first year interest free, etc. 

End of the day, its just creative accounting.

[ferrytales]

13 minutes ago, Rickster said:

Agree. 

At the end of the day, it's about not over leveraging. Nothing wrong with taking loan, I feel. Just don't over leverage till u will go bankrupt when u lose your job.

I'm not so rich like many mcfers here that always go full cash when buying their luxury cars. Not many people may agree with me, but my personal guidelines when taking a loan for a car is:

1) The loan quantum I take must be something that I can pay it up at one shot without the need to sell house/assets.

2) The installment must not impact my quality of life as well as savings and investment goals.

3) I have plans for the loan quantum that I take such as investments, investing in business or just as some additional financial bullet to stanby for opportunities.

I hope what I share can help young guys who aspire to own their first car. It's always good to have aspirations as it is one of the driving forces for us to be constantly improving and working hard.👍

Thats also the purpose of my post, I absolutely agree with you and thats what I follow too. Everyday I wake up knowing that I won't have to panic paying off my car.

[SuPerBoRed]

Im just curious .. is there another loan avenue that has sub3% effective interest rate?

[Macrosszero]

1 hour ago, Cavinlau said:

Hi all, not really related but still post here. Recently i bought a yaris cross from PI with 40% downpayment and 60% loan (7 years). However, PI just recently came back and said OMV is less than 20k, i am allowed to downpay 30%. But i don want to change to 30% because im comfortable with 60% loan payment. 70% means im paying more.

Can the PI do that and force me to downpay less?

The bigger the loan the fatter their commission. That’s why when you go walk around Turf City and Ubi you see some businesses have Credit or Finance in their names.

PI technically cannot do that because you already signed the purchase agreement.

[Cavinlau]

Yea lor.. thats what i thought so.. for that.. i am pay 6k more in interest due to the 10%.

Is there anyway i can get out of this?

[Philipkee]

12 minutes ago, SuPerBoRed said:

Im just curious .. is there another loan avenue that has sub3% effective interest rate?

Borrow from yourself

Jokes aside, check with your employer.  Sometimes they have benefits like subsidised car loans for employees like subsidised handphone plans, gym memberships etc etc.

But obviously if you take a loan subsidised by your employer, resignation is out of the question.

 

[SuPerBoRed]

lol my point was that over the radio, i was hearing how POSB was offering 7.x% effective interest rate for personal loan and how good that loan interest rate was... 

i think this kind of thing is willing buyer willing seller... 100% full loan interests rates are indeed cheaper than wat the market is offering for other stuff.. of cus .. the main thing here being that you need the $$ in the first place 

 

[ferrytales]

48 minutes ago, Cavinlau said:

Yea lor.. thats what i thought so.. for that.. i am pay 6k more in interest due to the 10%.

Is there anyway i can get out of this?

Did they force you to take more loan or the agreement has already been signed? If you had already signed the agreement to loan 60% then just tell them to shut up and proceed with the initial agreeement, they can't technically force you with a new agreement to loan 70% instead. 

Thats why PI is always hit and miss with their funny schemes. 

Edited January 25, 2021 by ferrytales

[Cavinlau]

agreement signed and indicated the loan amount to be 60%. i will rather stick to 40/60. 

PI also funny. So if i buy car with OMV less than 20k and it turn out to be more than 20k. they will confirm also force me to downpay more and if i cant afford they will confirm ask me to take their in-house loan.

[ferrytales]

1 hour ago, Cavinlau said:

agreement signed and indicated the loan amount to be 60%. i will rather stick to 40/60. 

PI also funny. So if i buy car with OMV less than 20k and it turn out to be more than 20k. they will confirm also force me to downpay more and if i cant afford they will confirm ask me to take their in-house loan.

End of the day if you are no comfy with it, can always walk away. They can't exactly force you to do anything anyway. 

If agreement signed then stand firm and stick to it. 

[Fyo8822]

0% Downpayment is really not adviseable.

I check with my PI when i bought my new car during Phase 1.

The interest rate is utterly high and end up the car cost almost 100k thru the span of 10 years ownership. Which typically cost only 65k at that time.

Monthly installment is $900 plus plus. Still need to factor in season parking and insurance. Petrol road tax as well.

That is alot of depreciation per year noting that cars are depreciating assets. Not assets are it is not generating money. For some it may be an asset as it can generate income i.e grab delivery small bussiness owners.

Even for those who need to purchase a car for doing grab business. The interest is also a killer based on the loan amount.

Edited January 25, 2021 by Fyo8822

[Rickster]

32 minutes ago, Limalimuthu said:

In Singapore now, easy loans, too much liquidity and wage/asset inflation has led to rise in self-importance and show-offs with a resulting drop in common sense, consideration for others and graciousness. So many want a car to signal their status that they have arrived. Look at number of Mercs sold.

Never forget that a car, no matter the badge, is a LIABILITY. Cars are not "depreciating asset". Assets consistently earn you an income and rise in value n price. Singaporeans who need to show off with a car are "assets" to car salesmen.

Bro, I think the key driving force to the numbers of these luxury marques are mainly the entry level cars such as the Bmw 1/2 series, Merc A/B class, Audi A3/Q2 etc. 

These cars falls into the B&B price bracket similar to a Camry/Accord level.

This is very unlike back in the 90s whereby the entry point of a luxury car is easily $200K. $200K back in the 90s is like what... half a million dollars today.

[Soya]

On 24/01/2021 at 4:42 PM, Heartlander said:

If I were you, I would have taken the new gen Sorento with 50k loan. Let me try to convince you that it is worth it.

With most AD giving 2% interest term for new cars, lets say for 5 years loan, it means interest of 0.02x50kx5=5k over 5 years.

That means the new car will cost you 55k extra in all.

If you buy the few year old gen 3 Sorento, 100k can get you a 3.5 year old Sorento base on sgcarmart listings.

With a average dep of 12k/yr, it means you will fork out additional 55k-(12kx3.5)=13k considering your new car come with a 10 year COE cert while the gen3 left only 7 years.

So, the golden question is whether it is worth to spend 13k to get a brand new gen 4 Sorento with brand new design and safety features.

My opinion is YES I will definitely spend the money as the new car is so much better than the older one. Even if you let the 2nd hand agent take additional 10k as profit for taking in the gen 3 Sorento, 23k is still very enticing proposition to consider. And with some persuasion, more realistic to put it at 20k. It will be even lower considering the 1/2 or 1 yr road tax and the bundled free servicings haha. 

U forgot to mention no car loan doesn't mean no depre...

Best is save the spare cash to pay down property loan instead. On top of bank loan interest saving, ah gong pay u 2.5% interest instead of u ownself pay ownself 2.5% of forgone cpf accrued interest 

 

[Sdf4786k]

On 1/24/2021 at 11:36 AM, Lurpsexx said:

Then how do they account for 2nd n thereafter years annual depn/value? The 1st yr 30k/25% also plucked from the air figure?

I never trust the second hand dealers numbers, for they could never give me the detailed proof of their calculations.. not that they are highly educated accountants in the first place..lol..

There’s not a need for validation..

first of all the margin set by the AD already took a huge chunk off the value ..

second hand value is then base on the pitch by the use car dealer themselves