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

[Ct3833]

13 minutes ago, ferrytales said:

Guess your car coe was around 86k? 😱

Parf value left 9k meaning not an expensive car, should have scrap it and bought a new car when COE was lower in 2019 or early last year.

[Ginyu]

2 hours ago, ferrytales said:

Here we go! 

They are targeting large number of potential customers who cannot afford it.  They have done their research 😂 

Edited January 27, 2021 by Ginyu

[Rickster]

16 minutes ago, Ginyu said:

They are targeting growing number of potential customers who still want a badge when they cannot even afford it.  They have done their research 😂 

I think cartimes will just make the buyer sign a 10 year lease @ 2+K per month

[Rickster]

9 hours ago, slim1989 said:

hi i left 3 years COE with my car. Left with Parf rebate $9157 and COE rebate $26,060 - total $35217.

does it mean when i sell my car i use this $35217 to pay my outstanding car loan. and any excess i can use it before getting another car? if there is excess to begin with

I would recommend that you sell your car by yourself as u can get much higher than the $35K.

In the event that you are unable to pay off the outstanding loan, approach a consignment dealer to assist. They can do the paperwork and also help u settle your loan so that your car can be transferred to the buyer. https://www.sgcarmart.com/main/sell.php

[Davidklt]

On 1/24/2021 at 10:30 AM, ferrytales said:

Been seeing alot of dealers offering such promotions to unknowing customers or customers whom are financially unsound.

This is the WORST decision you should NEVER ever make as people tend to get tempted only by looking at the monthly instalment. There are some hidden sums that people are unaware of and the interest accumulated is absolutely insane. You will be STUCK few years down the road if you decide not to keep the car and sell it off unless you have $$ to pay off your outstanding loan.

You need to have $0 outstanding loan to do a transfer of car ownership (ignoring whatever grey areas possible).

'Disclaimer: The numbers are for illustration only and by no means an accurate reflection.'

__________________________________________________________________________________

Let me give you an illustration based on the conditions below. 

1. You get excited at this $0 driveaway promotion + 10 years loan and decided to buy a car @ $100,000 with parf value @$2500.

2. Loan interest rate est. 3% pa and you decided to loan for 10 years.

3. Now its time to do the sums!

Car Purchase Price: $100,000

Interest incurred @ 3% pa: $100000 * 3% * 10 years = $30,000 [YES IT IS $30k]

Total Cost: $100,000 + $30,000 = $130,000/-

Monthly instalment: $130,000/10years/12mths = $1084/mth

__________________________________________________________________________________

3 Years Later

So you've made the purchase and happily drove off but 3 years down the road, you had a change of mind and decided to sell off the car. Based on an estimated trade in price at a depreciation of $6.5k from dealers and now lets do the sums again.

Trade in price: ($6500 * 7 years remaining) + parf value of $2500 = $48,000 + $5,000 (token sum from dealer) = $53,000

Outstanding loan (before rule 78): $13,000 * 7 = $91,000

With a trade in price of $53,000 and outstanding loan of $91,000, you have to fork out $38,000 to clear off the loan.  

__________________________________________________________________________________

5 Years Later

So you've made the purchase and happily drove off but 5 years down the road, you had a change of mind and decided to sell off the car. Based on an estimated trade in price at a depreciation of $6.5k from dealers and now lets do the sums again.

Trade in price: ($6500 * 5 years remaining) + parf value of $2500 = $35,000 + $5,000 (token sum from dealer) = $40,000

Outstanding loan (before rule 78): $13,000 * 5 = $65,000

With a trade in price of $40,000 and outstanding loan of $65,000, you have to fork out $25,000 to clear off the loan.  

__________________________________________________________________________________

7 Years Later

So you've made the purchase and happily drove off but 7 years down the road, you had a change of mind and decided to sell off the car. Based on an estimated trade in price at a depreciation of $6.5k from dealers and now lets do the sums again.

Trade in price: ($6500 * 3 years remaining) + parf value of $2500 = $22000 + $5,000 (token sum from dealer) = $27,000

Outstanding loan (before rule 78): $13,000 * 3 = $39,000

With a trade in price of $27,000 and outstanding loan of $39,000, you have to fork out $12,000 to clear off the loan.  

__________________________________________________________________________________

Hope this post and sharing will help as many people as possible to not fall into the debt trap for the sake of owning a car. These sums are already relatively conservative for illustration purposes. 

Seen and heard too many reasons for those that take up that scheme.

1) I would surely drive for 10 years. Wont change car one.

2) Its only a few hundreds more a month.

 

[Spidey10]

18 minutes ago, Davidklt said:

Seen and heard too many reasons for those that take up that scheme.

1) I would surely drive for 10 years. Wont change car one.

2) Its only a few hundreds more a month.

 

how many pple can "tahan" 10 yrs with the same car.....some 2 yrs backside alredy itchy..

this is really for pple who have a strong mentality...

[Mkl22]

2 hours ago, Spidey10 said:

how many pple can "tahan" 10 yrs with the same car.....some 2 yrs backside alredy itchy..

this is really for pple who have a strong mentality...

my parents.....almost all10years except for a Lemon Opel vectra and when coe was low in 2006, which made more sense to scrap early and replace with a new one. 😁

Edited January 27, 2021 by Mkl22

[BobbyTan_74287]

15 hours ago, slim1989 said:

hi i left 3 years COE with my car. Left with Parf rebate $9157 and COE rebate $26,060 - total $35217.

does it mean when i sell my car i use this $35217 to pay my outstanding car loan. and any excess i can use it before getting another car? if there is excess to begin with

This is the minimum value. Your buyer may pay higher depending what car model you are driving. If normal Japanese or Korean cars, then this is the minimum sales price.

[BobbyTan_74287]

8 hours ago, Ct3833 said:

Parf value left 9k meaning not an expensive car, should have scrap it and bought a new car when COE was lower in 2019 or early last year.

Yes , agreed. I bought my continent car when the COE was $28k (2 years ago) as my COE is very high. Mine previous car is Japanese brand and they took the parf and coe as trade in value.

[BobbyTan_74287]

6 hours ago, Ginyu said:

They are targeting large number of potential customers who cannot afford it.  They have done their research 😂 

Mercedes GLB now a very popular 7-seaters SUV.

[Jwee85]

I am not financial expert.

But if TS  or anyone got the time to entertain me. Can you do a simple comparision of buyer who has the cash but decides to do 10 year year loan instead. Means for the $100,000 car, the buyer has $50,000 in his bank. But chose to go with the ten years 0-downpayment loan instead. Assuming the $50,000 remains in the fix deposit or bank account untouched till the car is sold. 

Ignoring teheconcept of using the cash for investment with higher returns, but also got possiblilities of losses.

Is it still wise to use the cash for the downpayment? Or is is simple math, since the car loan interest is 1.99% vs the bank interest of 1%.

But since the bank loan is compounded interest, will it be LLPT whether is it still against to do 0% or better to do 30-40% downpayment.

 

Anyone?

 

 

[ferrytales]

 

On 1/27/2021 at 7:02 PM, Jwee85 said:

I am not financial expert.

But if TS  or anyone got the time to entertain me. Can you do a simple comparision of buyer who has the cash but decides to do 10 year year loan instead. Means for the $100,000 car, the buyer has $50,000 in his bank. But chose to go with the ten years 0-downpayment loan instead. Assuming the $50,000 remains in the fix deposit or bank account untouched till the car is sold. 

Ignoring teheconcept of using the cash for investment with higher returns, but also got possiblilities of losses.

Is it still wise to use the cash for the downpayment? Or is is simple math, since the car loan interest is 1.99% vs the bank interest of 1%.

But since the bank loan is compounded interest, will it be LLPT whether is it still against to do 0% or better to do 30-40% downpayment.

 

Anyone?

 

 

Simple let me do it for you based on hypothetical numbers of a fixed deposit @ 1.5% for 10 years. Your estimated interest earned is $7500 which is $750/year. 

I dont think there is a need for me to do the sums of the $100,000 car with a 10 year loan since its already in my first post. At the i/r of 3%, you are paying a total of $30,000 interest which is $3000/year. 

If you follow the rules of doing a 30%-40% downpayment according to OMV and loaning the rest, you are basically paying the bank at xx% i/r to borrow that sum of money. Legit car loans from reputable institutions are around the 1.8% to 2.3% range so you can do the calculations.

Unless you can find some investments or have better plans with the money that can beat the borrowing cost of 1.8%-2.3% then i will say go for it.

Do the sums mate. 

[slim1989]

hi all thanks for your responses. will be looking to sell my car soonest. in the meantime any advice which is a better deal between this two civics? TIA, not the most knowledgeable when it comes to cars 

 

Spoiler

 

[Vinceng]

On 27/01/2021 at 10:26 AM, Ginyu said:

They are targeting large number of potential customers who cannot afford it.  They have done their research 😂 

During the last Motorshow in Jan 2020 at Suntec, when the C160 was launched, I overheard a young couple asking if there's zero down payment and 10 yrs loan. That's a serious cause for concern.

If financially stretched and MUST buy a brand new car, there's loads of choices available looking at Malaysian and Korean makes @ < half the price of the C160. But sia suay and no face to face peers.

Edited January 30, 2021 by Vinceng

[Ginyu]

6 hours ago, Vinceng said:

During the last Motorshow in Jan 2020 at Suntec, when the C160 was launched, I overheard a young couple asking if there's zero down payment and 10 yrs loan. That's a serious cause for concern.

If financially stretched and MUST buy a brand new car, there's loads of choices available looking at Malaysian and Korean makes @ < half the price of the C160. But sia suay and no face to face peers.

Likewise for those who  rather buy COE Mercedes than a brand new Kia for the same price. They also say drive Korean makes no face, xia suay🤣

Edited January 31, 2021 by Ginyu

[ferrytales]

On 1/31/2021 at 9:42 AM, Ginyu said:

Likewise for those who  rather buy COE Mercedes than a brand new Kia for the same price. They also say drive Korean makes no face, xia suay🤣

But everyday i look at my bank account, i feel shiok with a peace of mind that I don't need to set aside a sum of funds to fix my car and it will start every morning without funny leaks or having to top up any EO. 🤣

[Zxcvb]

1 hour ago, ferrytales said:

But everyday i look at my bank account, i feel shiok with a peace of mind 🤣

Other people can’t see your bank account, but they surely can see the car you drive and the watch you’re wearing. 

[ferrytales]

36 minutes ago, Zxcvb said:

Other people can’t see your bank account, but they surely can see the car you drive and the watch you’re wearing. 

but i dont really care..